UK Budget Tax Changes
Last updated: February 2026
Complete guide to all tax changes announced in the Autumn Budget 2024, now in effect from April 2025. Major increases to Employer NI, Capital Gains Tax, and continued threshold freezes.
In This Guide
Employer National Insurance Changes
The largest revenue-raising measure in the Autumn Budget 2024, employer National Insurance contributions saw significant increases from April 2025 (now in effect).
| Element | 2025/26 (Old) | 2025/26 (New) | Change |
|---|---|---|---|
| Employer NI Rate | 13.8% | 15% | +1.2% |
| Secondary Threshold | £9,100/year | £5,000/year | -£4,100 |
| Per Employee Minimum | £175/week | £96/week | Lower threshold |
| Employment Allowance | £5,000 | £10,500 | +£5,500 |
| EA Eligibility Threshold | NI bill < £100,000 | No limit | Removed |
Cost Impact Example
Employee earning £30,000
Old: £2,884 employer NI
New: £3,750 employer NI
Increase: +£866/year
Employee earning £50,000
Old: £5,644 employer NI
New: £6,750 employer NI
Increase: +£1,106/year
Calculate Your Employer NI Costs
See exactly how much employer NI you'll pay under the new rates
Use Employer NI CalculatorCapital Gains Tax Increases
Capital Gains Tax on non-property assets increases significantly, with main rates now aligned with residential property CGT rates.
| Asset Type | Basic Rate (Old → New) | Higher Rate (Old → New) |
|---|---|---|
| Shares, Investments, Other Assets | 10% → 18% | 20% → 24% |
| Residential Property | 18% (unchanged) | 24% (unchanged) |
| Business Asset Disposal Relief | 10% → 14% (April 2025) → 18% (April 2026) | |
| Investors' Relief | 10% → 14% (April 2025) → 18% (April 2026) | |
Annual Exempt Amount
The Capital Gains Tax Annual Exempt Amount remains at £3,000 for 2025/26 (reduced from £6,000 in 2023/24 and £12,300 in 2022/23).
Example: £50,000 Share Sale Profit
Higher rate taxpayer:
Old Tax: (£50,000 - £3,000) × 20% = £9,400
New Tax: (£50,000 - £3,000) × 24% = £11,280
Increase: +£1,880
Example: Business Sale (BADR)
£1m business disposal:
2025/26: £1m × 10% = £100,000
2025/26: £1m × 14% = £140,000
2026/27: £1m × 18% = £180,000
Income Tax Threshold Freeze Extended
Income tax thresholds remain frozen until at least April 2028, continuing the "fiscal drag" effect that pulls more earnings into higher tax bands.
| Band | Threshold | Rate | Status |
|---|---|---|---|
| Personal Allowance | £12,570 | 0% | Frozen until 2028 |
| Basic Rate | £12,571 - £50,270 | 20% | Frozen until 2028 |
| Higher Rate | £50,271 - £125,140 | 40% | Frozen until 2028 |
| Additional Rate | Over £125,140 | 45% | Frozen until 2028 |
Scottish Income Tax Rates 2025/26
Scotland maintains its own income tax rates with six bands:
| Band | Income | Rate |
|---|---|---|
| Starter | £12,571 - £15,397 | 19% |
| Basic | £15,398 - £27,491 | 20% |
| Intermediate | £27,492 - £43,662 | 21% |
| Higher | £43,663 - £75,000 | 42% |
| Advanced | £75,001 - £125,140 | 45% |
| Top | Over £125,140 | 48% |
Inheritance Tax Changes
Significant changes to Inheritance Tax on pensions and agricultural/business property from April 2027.
Key Changes from April 2027
- Pensions in IHT: Inherited pension pots will be included in estate value for IHT purposes from April 2027
- Agricultural Property Relief (APR): 100% relief limited to first £1m of combined agricultural and business assets; 50% relief above £1m
- Business Property Relief (BPR): Same £1m cap applies; combined limit with APR
- AIM Shares: Reduce to 50% relief (from 100%)
| IHT Element | Current | From April 2027 |
|---|---|---|
| Nil-Rate Band | £325,000 | £325,000 (frozen) |
| Residence Nil-Rate Band | £175,000 | £175,000 (frozen until 2030) |
| APR/BPR (first £1m) | 100% | 100% |
| APR/BPR (above £1m) | 100% | 50% |
| Inherited Pensions | Exempt | Included in estate |
National Minimum Wage Increases
The National Living Wage and Minimum Wage rates increased from April 2025 (now in effect):
| Category | Current Rate | April 2025 Rate | Increase |
|---|---|---|---|
| National Living Wage (21+) | £11.44 | £12.21 | +6.7% |
| 18-20 Year Olds | £8.60 | £10.00 | +16.3% |
| Under 18 | £6.40 | £7.55 | +18.0% |
| Apprentice Rate | £6.40 | £7.55 | +18.0% |
Stamp Duty Land Tax Changes
The temporary SDLT threshold increases introduced in September 2022 will end on 31 March 2025:
| Threshold | Until 31 March 2025 | From 1 April 2025 |
|---|---|---|
| Main Residence Nil-Rate | £250,000 | £125,000 |
| First-Time Buyer Nil-Rate | £425,000 | £300,000 |
| First-Time Buyer Maximum | £625,000 | £500,000 |
| Additional Property Surcharge | 3% | 5% |
Pension Tax Updates
Annual Allowance
The pension Annual Allowance remains at £60,000 for 2025/26 (or 100% of earnings if lower).
Money Purchase Annual Allowance
The MPAA remains at £10,000 for those who have flexibly accessed their pension.
Lifetime Allowance Abolished
The Lifetime Allowance was fully abolished from April 2024 and remains so for 2025/26.
State Pension
| Pension Type | 2025/26 Weekly | 2025/26 Weekly |
|---|---|---|
| New State Pension (full) | £221.20 | £230.25 |
| Basic State Pension | £169.50 | £176.45 |
Business Tax Updates
Corporation Tax
- Main Rate: 25% (profits over £250,000) - unchanged
- Small Profits Rate: 19% (profits under £50,000) - unchanged
- Marginal Relief: Applies between £50,000-£250,000
Capital Allowances
- Full Expensing: 100% first-year allowance on qualifying plant and machinery - made permanent
- Annual Investment Allowance: £1,000,000 - permanent
VAT
- Registration Threshold: £90,000 (from April 2024)
- Deregistration Threshold: £88,000
- Private School Fees: VAT at 20% from 1 January 2025
Dividend Tax Rates
| Band | Rate (unchanged) |
|---|---|
| Basic Rate | 8.75% |
| Higher Rate | 33.75% |
| Additional Rate | 39.35% |
Dividend Allowance: £500 (unchanged from 2025/26)
Implementation Timeline
Capital Gains Tax main rates increase (18%/24%) took immediate effect
VAT on private school fees begins (20%)
Stamp Duty threshold relief ends; Additional property surcharge rises to 5%
Tax year 2025/26 begins: Employer NI 15%, new thresholds, National Minimum Wage increases, BADR rate rises to 14%
Business Asset Disposal Relief rate rises to 18%
Pensions included in IHT; APR/BPR £1m cap takes effect
Frequently Asked Questions
Will employees pay more National Insurance?
No, employee National Insurance rates remain unchanged at 8% (between £12,570-£50,270) and 2% (above £50,270). The increases only affect employers, not employees directly.
How much extra will my employer pay in NI for me?
For a £30,000 salary employee, employers will pay approximately £866 more per year. For a £50,000 salary, approximately £1,106 more. Use our Employer NI Calculator for exact figures.
Will small businesses be protected?
Yes, the Employment Allowance doubles to £10,500, meaning businesses with NI bills below this pay nothing. The £100,000 eligibility threshold is also removed, helping more businesses qualify.
When did CGT rates actually change?
Main CGT rates (18%/24%) changed immediately on Budget Day, 30 October 2024. Only Business Asset Disposal Relief has phased increases (14% from April 2025, 18% from April 2026).
How do the BADR rate changes affect asset sales?
The main CGT rate increase has applied since October 2024. For assets qualifying for BADR, the rate rose from 10% to 14% in April 2025 and rises further to 18% in April 2026. Consult a tax advisor for significant disposals before April 2026.
Will income tax bands ever increase?
The freeze is confirmed until April 2028. After this, the government has indicated thresholds may rise with inflation, but this is not guaranteed and depends on future Budget decisions.
Calculate Your Tax Position
Use our free calculators updated for 2025/26
Employer NI Calculator Salary Calculator CGT Calculator Income Tax CalculatorRelated Guides
UK Tax Rates & Bands 2025/26
Complete guide to income tax thresholds and rates
Salary Calculator 2025/26
Calculate your take-home pay after all deductions
Self-Employed Tax Calculator
Calculate tax and NI for freelancers and contractors
Capital Gains Tax Calculator
Calculate CGT on shares, property and investments
Official Sources
Autumn Budget 2024 - GOV.UK | Income Tax Rates - HMRC | National Insurance - GOV.UK
Information accurate as of February 2026. Tax rates and thresholds may change. This guide is for general information only.
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