The Autumn Budget 2025 has now been released, and our team at Baggette + Co Wealth Management has spent the afternoon analysing the key measures announced by the Chancellor, Rachel Reeves, alongside the economic and fiscal forecasts from the Office for Budget Responsibility (OBR).
With the Government focused on stability, growth and closing long-term funding gaps, today’s Budget introduced a range of measures that may affect individuals, families and business owners across the UK.
Budget announcements can sometimes feel overwhelming for many people.
Headlines move quickly, and it is not always clear what the changes mean for your personal financial planning, investments or long-term goals.
That sense of uncertainty is completely understandable.
Our role as Independent Financial Advisers is to help you understand the practical impact of the Budget, explain what matters, and support you in making informed decisions.
Below, you will find a clear summary of the main areas covered in today’s Autumn Budget.
In the meantime, whilst the below is not an exhaustive list, we explore the high-level points that were covered in the Autumn Budget and what this might mean for you and your money.
We will continue reviewing the finer points of the Budget over the coming days and will share further insights as more information becomes available.
Autumn Budget 2025: At a Glance
If you are short on time, here are the headline announcements from the Chancellor regarding your personal finances and business interests:
- Personal Taxation (Fiscal Drag): Income Tax thresholds have been frozen until April 2031, meaning many earners will see fiscal drag reduce their real take-home pay over time.
- Salary Sacrifice (Pensions): The tax efficiency of higher contributions is being restricted: the National Insurance exemption for salary sacrifice contributions will be capped at £2,000 per year from 2029.
- State Pension: The State Pension Triple Lock has been confirmed, resulting in a 4.8% increase.
- Property Tax (High Value Council Tax Surcharge): A new High Value Council Tax Surcharge (the ‘Mansion Tax’) will apply to homes valued at £2m or more from 2028. Main Stamp Duty surcharges have stayed flat.
- Capital Gains Tax (CGT): The main rates for CGT have stayed the same, but key reliefs for Employee Ownership Trusts (EOTs) have been cut from 100% to 50%.
- Inheritance Tax (IHT): The nil-rate band threshold is frozen at £325,000, with transferable and restricted changes to Business and Agricultural Property Reliefs.
- Business Owners: Corporation Tax is capped at 25%, and the Employment Allowance threshold for National Insurance has been frozen alongside other NIC thresholds until 2031.
Budget Impact for Individuals
Capital Gains Tax (CGT)
Capital Gains Tax (CGT) is charged on the profit you make when selling valuable assets such as shares, investments or second properties. You only pay tax on the gain above the annual allowance. For many people reviewing their investments or long-term financial planning in Dorset, Bournemouth and Poole, CGT is an important part of wider wealth management conversations.
BUDGET IMPACT:
The Government has confirmed that Capital Gains Tax relief for Employee Ownership Trusts (EOTs) will be reduced. At present, business owners who sell their company to an EOT can benefit from 100 per cent CGT relief on the sale. From the date of implementation, this relief will be cut to 50 per cent.
The Government has stated that this change is being made because the cost of the relief has grown far beyond the original forecasts, rising towards £2 billion, significantly higher than anticipated when the scheme was introduced in 2013.
Why this matters:
Clients considering selling a business into an Employee Ownership Trust will now face a potential CGT bill on half of the gain, which could have a material impact on retirement planning, succession planning and long-term wealth strategy. Anyone exploring an EOT sale should seek early advice to understand the financial implications and adjust their plans accordingly.
Dividend Income
Dividend income is money received from shares you hold in a company, whether that is your own business or from wider investments. Dividends are taxed separately from salary and are often used by business owners and investors because they have historically been taxed at lower rates.
BUDGET IMPACT:
From 6 April 2026, the Government will increase the tax rates applied to dividend income:
- The basic rate will rise by 2 percentage points to 10.75%
- The higher rate will rise by 2 percentage points to 35.75%
- The additional rate remains unchanged at 39.35%
Why this matters:
This change will impact many small business owners who take income through a mix of salary and dividends, as well as investors with portfolios held outside tax-efficient accounts. It may influence how income is drawn, how businesses plan remuneration, and how clients structure long-term investment strategies.
State Pension
The State Pension is a regular income the Government pays once you reach State Pension age, provided you have built up enough qualifying National Insurance years. It forms the foundation of many people’s retirement planning and often sits alongside private pensions and other savings.
BUDGET IMPACT:
Rachel Reeves has confirmed a 4.8% rise for both the basic and new State Pension, adhering to the Government’s triple lock commitment.
This results in an annual increase of £575 for the new State Pension and £440 for the basic State Pension.
Salary Sacrifice (Pensions)
Salary sacrifice is an arrangement where an employee gives up part of their gross salary and their employer pays the same amount into their pension. Because these contributions are made before tax, both the employee and employer save on National Insurance, making it an efficient way to build retirement savings.
BUDGET IMPACT:
From April 2029, salary-sacrificed pension contributions above £2,000 per year will no longer be exempt from National Insurance. Any contributions over this threshold will be treated as ordinary employee pension contributions and will be subject to both employee and employer NICs.
Why this matters:
This change reduces the tax efficiency of salary sacrifice for higher pension contributions. Clients who currently use salary sacrifice to boost retirement savings may face higher costs and lower overall tax benefits, which could influence decisions around pension funding, retirement timelines and long-term financial planning. Reviewing contribution strategies before 2029 will be important, particularly for higher earners and business owners who rely on this approach.
Inheritance Tax (IHT)
Inheritance Tax is charged on the value of your estate when you die, including property, savings and investments. You only pay tax on the amount above the available allowances. With rising house prices across Dorset and Hampshire, more families are being affected, which is why early planning can make such a difference.
BUDGET IMPACT:
A key change announced in the Budget is that the £1 million combined allowance for the 100 percent rate of Agricultural Property Relief and Business Property Relief will now be transferable between spouses and civil partners. This ensures both partners can benefit fully from these reliefs, which is particularly important for farming families and business owners.
The Government is also tightening the rules around how internationally mobile individuals are taxed. This includes closing loopholes and capping certain trust charges to make the system fairer and more consistent.
Why this matters:
For many families, especially those with higher-value homes, business assets or land, these changes make thoughtful Inheritance Tax planning more important than ever. Freezing thresholds increases the risk of estates drifting into the tax net, while adjustments to reliefs and trust charges may influence how wealth is transferred across generations. Speaking with an Independent Financial Adviser can help ensure your estate plans remain effective and tax efficient over the long term.
Individual Savings Accounts (ISAs)
An Individual Savings Account (ISA) is a tax-efficient way to save or invest, allowing you to earn interest or investment returns without paying tax on them. There are several types of ISAs, including Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs and Innovative Finance ISAs. Each offers different benefits depending on your goals, whether that is building an emergency fund, saving for a first home or investing for the long term. ISAs form an important part of many people’s financial planning because they allow savings and investments to grow free from Income Tax and Capital Gains Tax.
BUDGET IMPACT:
From April 2027, the Government will keep the overall £20,000 annual ISA allowance, but change how it can be used:
- For adults under 65, the Cash ISA allowance will be capped at £12,000
- The remaining £8,000 must be placed into a Stocks and Shares ISA or other investment ISA
- Adults 65 and over will keep the full £20,000 cash allowance
These changes are aimed at encouraging more people to invest rather than hold all their ISA savings in cash, reflecting the UK’s historically lower levels of retail investment compared with other G7 countries.
The Help to Save scheme will be made permanent, and ISA limits will remain frozen until 2030/31. Digitalisation of ISAs has been pushed back to April 2028.
Why this matters:
Clients who rely heavily on Cash ISAs may need to rethink how they use their annual allowance. Those new to investing may also need support understanding the risks and opportunities of Stocks and Shares ISAs. These changes make it even more important to seek personalised advice before adjusting savings habits.
Fuel Duty
Fuel Duty is included in the price of petrol and diesel. Any change affects the cost of driving, commuting and transporting goods, which can influence household budgets as well as business running costs.
BUDGET IMPACT:
The Government will extend the 5p cut in Fuel Duty until September 2026, offering continued short-term relief for motorists. After this date, Fuel Duty will be uprated in line with inflation, which is likely to increase fuel costs over time.
New rules will also require petrol forecourts to publish real-time fuel prices, helping drivers compare costs more easily.
Why this matters:
Households may see some short-term savings at the pump, but should plan for higher fuel prices from late 2026 onwards. For business owners, particularly those with vehicles or fleets, these changes may influence budgeting and transport-related expenses.
Income Tax
Income Tax is charged on earnings, pensions and certain types of savings or investment income. The amount you pay depends on your income level and the national thresholds set by the Government. Even small changes can influence take-home pay and personal financial planning.
BUDGET IMPACT:
The Government has confirmed that Income Tax thresholds will remain frozen for an additional three years, keeping the Personal Allowance at £12,570, the Higher Rate threshold at £50,270, and the Additional Rate threshold at £125,140 until April 2031. This extends the freeze first introduced in 2021, meaning tax bands will have been unchanged for almost a decade.
Why this matters:
Although tax rates are not increasing, many people will pay more tax simply because their income grows while thresholds stay still. This reduces take-home pay over time and may affect pension contributions, budgeting, savings rates and long-term financial planning. Individuals who receive pay rises or bonuses may also find themselves unexpectedly entering a higher tax bracket.
High Value Council Tax Surcharge (commonly referred to as the “Mansion Tax”)
The Government has now given an official name to what has widely been referred to as the ‘Mansion Tax’. Renamed the High Value Council Tax Surcharge, this charge applies to high-value residential properties above a specific threshold. In simple terms, it is designed to raise additional revenue from owners of the most expensive homes, particularly in areas where property prices have risen significantly.
BUDGET IMPACT:
From April 2028, the High Value Council Tax Surcharge will apply to residential properties in England valued at £2 million or more. This surcharge is an additional cost on top of standard Council Tax and will be collected by local authorities on behalf of central Government.
The annual charges will be:
- £2,500 per year for homes valued between £2 million and £2.5 million
- Rising to £7,500 per year for homes valued above £5 million
Only around 1 per cent of properties are expected to be affected.
The charge will be paid by property owners, not occupiers. The Government will update property valuations to determine which homes fall into scope and will consult on the detailed implementation next year, including how households who may struggle to pay could be supported.
Why this matters:
Clients who own high-value homes in Dorset, Poole, Bournemouth, Hampshire and beyond may face a new annual cost that could influence long-term decisions around property ownership, inheritance planning, and family estate strategies. Those with homes close to the £2 million threshold will also want clarity on how the upcoming valuations could affect them. This is an area where personalised financial planning advice will be important to ensure the right decisions are made in the context of wider wealth management goals.
Electric Vehicles (EV) Tax
Electric vehicle tax refers to the charges applied to owning or using an electric car, such as Vehicle Excise Duty (road tax) and company car tax. EVs have historically benefited from little or no tax, but the Government is now bringing these vehicles more in line with petrol and diesel cars. These changes can influence the overall cost of running an electric or hybrid vehicle for both individuals and business owners.
BUDGET IMPACT:
From April 2028, the Government will introduce a new pay-per-mile tax for electric and plug-in hybrid vehicles. This will replace the current zero-rated system and create a more consistent approach to motoring taxes.
The new charges will be:
- 3p per mile for fully electric vehicles
- 1.5p per mile for hybrid vehicles
This means a driver travelling 10,000 miles per year will pay £300 in an electric car or £150 in a hybrid. The charge will also increase each year with inflation.
Why this matters:
For households considering switching to an electric car, this change will affect long-term running costs and may influence whether buying, leasing or delaying a purchase makes the most sense. For business owners with electric fleets, it will impact annual travel budgets and employee mileage policies. Understanding the cost implications now can help clients plan ahead with confidence.
Budget Impact for Business Owners
Minimum Wage
The National Minimum Wage and National Living Wage set the lowest hourly pay that employers must legally give their workers. The rate you receive depends on your age and whether you are an apprentice. The National Living Wage applies to workers aged 21 and over, while younger workers and apprentices have different minimum rates.
Changes to the Minimum Wage can affect both household income and budgeting, especially for those working part-time or in lower-paid roles. For employers, particularly small businesses across Dorset and Hampshire, adjustments can influence staffing costs and overall financial planning.
BUDGET IMPACT:
The Government has confirmed significant increases to wage levels from April 2026.
The National Living Wage for workers aged 21 and over will rise to £12.71 per hour, a 50p increase aimed at supporting living standards during a period of rising costs.
For 18 to 20-year-olds, the minimum wage will increase to £10.85 per hour, reflecting the Government’s long-term ambition to phase out separate rates for younger adults and move towards a single rate for all workers over 18.
The minimum wage for 16 and 17-year-olds, as well as apprentices, will rise to £8.00 per hour, up from £7.55.
While the rises will offer additional support to workers, some businesses have expressed concern about the financial pressure of higher wage bills. For smaller employers in particular, the increases may influence hiring plans or future staffing decisions.
Voluntary National Insurance Contributions (VNICs)
Voluntary National Insurance contributions allow individuals to fill gaps in their National Insurance record so they can qualify for a higher State Pension. This is often used by people who have spent time working abroad or those with missing contribution years who want to boost their entitlement.
BUDGET IMPACT:
The Government has announced changes aimed at closing loopholes that currently allow individuals with limited links to the UK to build State Pension entitlement at a lower cost while living overseas.
The key measures include:
- Removing access to cheaper Class 2 voluntary contributions for individuals living abroad
- Raising the minimum residency or contribution requirement to 10 years before a person can make voluntary contributions
- Launching a full review of the VNIC system, with a formal call for evidence due early next year
These changes are designed to make voluntary contributions fairer and ensure they are used by those with a genuine connection to the UK system.
Why this matters:
Those who have lived or worked overseas, or those relying on voluntary contributions to top up their State Pension, may be affected by these tighter rules. It may become more expensive or more restricted to fill contribution gaps in the future. Reviewing your National Insurance record and understanding your State Pension forecast will be increasingly important as the changes take shape.
Enterprise Management Incentives (EMI), VCT and EIS Changes
Enterprise Management Incentives (EMIs), Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) are Government-backed schemes designed to help companies attract investment. These schemes play an important role in supporting start-ups and growing businesses, while offering attractive tax incentives to investors.
BUDGET IMPACT:
The Government has announced several changes aimed at giving growing companies more flexibility and helping them access the talent and investment they need:
EMI eligibility limits will be increased, allowing more scale-ups, not just early-stage start-ups, to offer tax-advantaged share options to employees.
Investment limits for VCTs and the EIS will rise, enabling investors to continue backing businesses as they grow beyond the start-up phase.
To rebalance incentives and encourage more investment into high-growth companies, the upfront Income Tax relief on VCT investments will be reduced from 30% to 20%.
Why this matters:
These changes affect business owners looking to attract and retain key staff, as well as investors who use EIS and VCTs as part of their long-term tax planning. The increased limits give maturing companies more room to grow, but the reduced VCT relief may influence how investors choose between EIS and VCT opportunities within their overall wealth and tax strategies.
Business Rates
Business rates are a tax on commercial properties such as shops, offices, hospitality venues and leisure premises. They represent one of the largest fixed costs for many small and medium-sized businesses, so any changes can have a meaningful impact on cashflow and long-term planning.
BUDGET IMPACT:
The Chancellor has announced two major measures affecting business rates from April 2026:
- Lower business rates for retail, hospitality and leisure – Over 750,000 properties in these sectors will benefit from permanently reduced business rates, worth almost £900 million a year. This offers ongoing, long-term relief for some of the sectors hit hardest by rising costs in recent years.
- A £4.3 billion business rates support package – The Government will introduce a substantial support package to cap business rates bill increases for sectors most affected by the upcoming 2026 revaluation. This aims to protect businesses from sharp, unexpected rises in their rates bills.
Why this matters:
For business owners across Dorset, Bournemouth, Poole and beyond, these measures could help stabilise operating costs, soften the impact of the 2026 revaluation and free up cash for staffing, investment or general growth. Businesses in hospitality and retail, sectors that have faced sustained cost pressures, may see particular benefit. Understanding how the new rates apply to your premises will be important for forward planning and budgeting.
Apprenticeships
Apprenticeships offer young people a way to gain practical skills, earn an income and work towards a recognised qualification at the same time. For many smaller businesses, however, the cost of apprentice training has historically been a barrier to taking on young talent. Changes announced in the Budget aim to remove some of those cost pressures and encourage more employers to offer opportunities.
BUDGET IMPACT:
The Government has confirmed that training for apprentices under the age of 25 will become completely free for Small and Medium-Sized Enterprises (SMEs). This funding is designed to help more young people into work, support employers with training costs and widen access to vocational pathways.
This commitment forms part of a wider “Youth Guarantee,” offering every young person either a college place, an apprenticeship or personalised job support. After 18 months, 18–21 year olds will be offered paid work rather than remaining on benefits.
Why this matters:
For business owners, particularly those in growth phases or sectors struggling to recruit, the removal of training costs lowers the barrier to hiring apprentices. It may also create opportunities to build future talent pipelines at a more manageable cost. For families, it means more accessible routes into work for young people at a time when living costs and training expenses can feel overwhelming.
Talk To Our Independent Financial Advisers in Dorset
Our experienced Independent Financial Advisers (IFAs) in Dorset and Hampshire are here to guide you through what today’s Autumn Budget changes may mean for your financial wellbeing.
We understand that the Autumn Budget announcements can feel unsettling, and it is normal to have questions about how the new measures may affect your investments, retirement plans or wider financial goals.
It is important to remember that none of the information in this insight is intended to be taken as personal financial advice. Every individual’s situation is different, and we strongly encourage you not to make any sudden or unplanned financial decisions based solely on headlines or early analysis.
Speaking with a qualified and truly independent financial adviser is the safest way to understand how the Budget may influence your own financial position.
Our advisers work with clients across Dorset, Bournemouth and Poole, offering clear, expert and personalised financial planning advice to help you make confident, well-informed choices.
Contact Oscar Hjalmas, our CEO and Independent Financial Adviser, on 01202 676983 or email [email protected] to arrange a consultation.
Source: Autumn Budget 2025 Policy Paper – https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html
Baggette & Company Wealth Management Limited is authorised and regulated by the Financial Conduct Authority. Information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed, and you may get back less than you originally invested. Tax rules may change, and the value of tax reliefs depends on your individual circumstances. The Financial Conduct Authority does not regulate Tax Planning or Cashflow Modelling.