Overview
Budget 2025 introduces a range of measures impacting individuals, businesses, and the wider economy. While it does not include major structural reforms, it sets out changes in taxation, compliance, and incentives that will shape the fiscal landscape over the coming years. Key themes include:
- Personal Tax and Employment: Adjustments to marginal tax thresholds and continued fiscal drag, alongside measures affecting childcare benefits and minimum wage earners;
- Business and Investment: Updates to dividend taxation, business rates relief, and expanded investment schemes aimed at supporting growth and entrepreneurship;
- Savings and Compliance: Revisions to ISA limits, consultations on Lifetime ISA, and new anti-fraud initiatives including e-invoicing and enforcement teams;
- Trade and Property: Commitments on customs duty exemptions, Mansion tax implementation, and ongoing discussions around property-related incentives.
This high-level summary provides context for the detailed documents that follow, which will explore each area in depth—covering implications for individuals, businesses, and advisers.
Guides
The 2025 Budget introduces targeted measures to support economic growth, modernise compliance, and influence consumer behaviour, while headline tax rates remain largely unchanged. This series of guides provides clear insights into the most important changes – from corporation tax reforms and employment updates to new duties, investment incentives, and sustainability measures – outlining what’s changing, when it takes effect, and the actions you should consider.
Budget Day: Key Changes to Corporation Tax
- No changes to corporation tax rates.
- New first-year allowances and reduced writing-down allowances from 2026.
- Three-year stamp duty holiday for newly listed companies
Mandatory e-invoicing for VAT from April 2029
- From 1 April 2029, VAT-registered businesses must issue electronic invoices for B2B and B2G transactions, supporting HMRC’s digital and anti-fraud agenda
- E-invoicing improves accuracy, speeds up payments and VAT reclaims, and could cut late payments by around 20%
- Implementation will require system and process changes, with SMEs most affected, so early planning is essential
- Minimum and living wage rates will rise from April 2026; personal tax and NI thresholds frozen until at least 2030/31.
- New NI rules for salary sacrifice pension contributions are effective from April 2029.
- Overseas Workday Relief is capped at 30%, requiring payroll and compliance reviews.
- Income Tax and NI thresholds frozen until April 2031, creating fiscal drag and higher liabilities.
- Partnerships and LLPs remain exempt from new NI charges on profit shares.
- Businesses should plan for long-term cost implications.
- Remittance basis abolished from April 2025; residence-based taxation introduced for foreign income and gains.
- Transitional reliefs for existing non-doms and a four-year FIG exemption for new residents.
- Inheritance tax changes affecting long-term residents and trust assets.
Major UK welfare, tax and savings reforms announced
- Universal Credit two-child limit removed from April 2026, increasing support for families
- Higher and restructured taxes on property income, dividends and savings from 2026/27
- Tighter overseas pension rules and likely replacement of the Lifetime ISA from 2026
Gambling, Soft Drinks, Tobacco, Alcohol
- Gambling Duties: Bingo duty will be abolished from April 2026, while remote gaming duty will rise sharply from 21% to 40%, significantly impacting online gaming operators.
- Soft Drinks Levy: From January 2028, the sugar tax will extend to milk-based drinks and the taxable sugar threshold will drop to 4.5g per 100ml, requiring beverage producers to reformulate products.
- Tobacco and Vaping Duties: A new Vaping Products Duty will be introduced from October 2026 alongside a one-off increase in tobacco duties, maintaining the price gap between vaping and smoking.
- Alcohol Duties: All alcohol duty rates will increase by 3.66% in line with RPI, with adjustments to Small Producer Relief to preserve its relative value for smaller manufacturers.
Electric Vehicle Excise Duty (eVED)
- Mileage-based EV tax introduced from April 2028: 3p per mile for battery EVs, 1.5p for plug-in hybrids.
- Replaces previous tax-free status for EVs.
- Annual costs remain lower than petrol/diesel vehicles.
- EMI and EIS eligibility thresholds and investment limits increased from April 2026.
- Employee caps doubled, asset thresholds raised, and exercise periods extended.
- Certain sectors and regions excluded from changes.
- Partnerships and LLPs become more tax-efficient at higher profits compared to Ltd companies.
- Dividend tax treatment is generally more favourable than salaries, but the advantage reduces from April 2026.
- Detailed comparison of take-home pay scenarios.
The information provided in this guide is intended as a general overview to help readers understand the key measures introduced in the UK Budget 2025. It does not claim to be exhaustive and should not be relied upon as a substitute for tailored professional advice. If you have any questions or require specific guidance, please
speak to one of our experts.
