An Expert’s Analysis: Navigating the Autumn Budget 2025

On the 26th of November 2025, Chancellor of the Exchequer Rachel Reeves stepped up to the dispatch box to deliver one of the most anticipated financial statements in recent years – the Autumn Budget of 2025. Here, a plan to raise £26 billion in taxes was set out to balance “tough choices” with a promise to fix the foundations of the economy. And for individuals and business owners in Chester, Wrexham and across the Northwest and North Wales, the devil is very much in the detail. 

While headline rates of Income Tax, VAT and National Insurance (for employees) remained untouched, a raft of threshold freezes and allowance changes will likely mean a higher tax burden for many. Without further ado, here is the Ellis & Co overview of the key announcements and what they mean for your finances:

Personal Tax: The “Stealth” Squeeze Continues

The Chancellor has confirmed that the freeze on Income Tax thresholds (ones that are originally due to end in 2028) will be extended for another three years until April 2031. With the personal allowance fixed at £12,570 and the higher rate threshold at £50,270, wage inflation will significantly have more people paying tax, or rather paying it at higher rates, over the coming years.

In a move to target unearned income, the Budget also announced a 2% increase in tax rates for dividends (from April 2026) and savings income (from April 2027). Furthermore, specifically for property income, new separate tax rates of 22% (basic), 42% (higher) and 47% (additional) will be introduced from the 2027/28 tax year.

John Farrell, Director at Ellis & Co, comments:

“While the Chancellor stuck to her manifesto pledge not to raise the headline rates of Income Tax, the extension of the threshold freeze is effectively a tax rise in all but name. This ‘fiscal drag’ means that as salaries rise to keep up with the cost of living, hence, we will see a larger percentage of our income going to the Treasury. For our clients, this reinforces the need to be incredibly efficient with how they structure their remuneration and utilise remaining allowances.”

Business: Certainty, but at A Cost

For the business community, there was a mix of reassurance and tightening. The government confirmed that the main rate of Corporation Tax will be capped at 25% for the duration of this Parliament. Therefore, providing a much-needed certainty for long-term planning.

However, the generosity of capital allowances is being dialled back, where the main rate of Writing Down Allowance (WDA) will be reduced from 18% to 14% from April 2026. And to balance this, a new 40% First-Year Allowance will be introduced for qualifying expenditure on main rate assets from January 2026. It should be noted that employers also face rising costs with the National Living Wage, as it’s set to increase to £12.71 per hour from April 2026.

James Ellis, Director at Ellis & Co, mentioned:

“Our local businesses in Chester and Wrexham value certainty above all else, so the cap on Corporation Tax is a welcome signal. However, the reduction in Writing Down Allowances combined with the wage increases will squeeze margins. This is why business owners need to look closely at their investment timing. With the new First Year Allowance coming in, there will be specific windows of opportunity to maximise tax relief on capital expenditure. It’s really not just about spending, but spending at the right time.”

Wealth & Inheritance: A Fundamental Shift

Perhaps the most significant changes came in the realm of Capital Taxes and estate planning, where it’s confirmed that the Inheritance Tax (IHT) nil rate bands have been frozen until 2031. More significantly, it has been said that from 6 April 2027, unused pension funds and death benefits will be brought into a person’s estate for IHT purposes. Thus, removing a long-standing planning vehicle for wealth preservation.

Here, farmers and family business owners will also be affected by reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR). From April 2026, the 100% relief will be capped at a combined limit of £1 million, with relief reducing to 50% thereafter.

John Moorhouse, Director at Ellis & Co, explains:

“The inclusion of pension funds in the inheritance tax net is a game-changer for estate planning. Many people have saved into pensions under the assumption that they could pass that wealth down whilst being tax efficient. Combined with the new £1 million cap on Agricultural and Business Property Relief, we’re looking at a complex new landscape for family businesses and the farming community. This is why we can’t stress enough how important it is to review your Wills and IHT planning immediately. What worked yesterday may not work tomorrow.”

Other Key Measures To Note

• Property: A new High Value Council Tax Surcharge will apply to properties valued at £2 million or more from April 2028.
• Employee Ownership: Relief on disposals to Employee Ownership Trusts (EOTs) is restricted to 50% of the gain (previously 100%), effective immediately from 26 November 2025.
• Electric Vehicles: A new Electric Vehicle Excise Duty (eVED) mileage charge will be introduced for electric and plug-in hybrid cars from April 2028.

Overall, this Budget marks a clear shift towards raising revenue from assets and wealth while maintaining the tax freeze on working income. The complexity of the UK tax system has increased once again, making professional advice more vital than ever. So whether you’re concerned about the changes to IHT, the new property tax rates or how the capital allowance changes affect your business investment, the team at Ellis & Co is here to help you navigate these new rules.

Contact Ellis & Co today at 01244 343 504 or info@ellis-uk.com to discuss how the Autumn Budget 2025 affects you and your business.

Download and read more about Ellis & Co’s review of the 2025 Budget here.