Key takeaways and insights from the 2025 Autumn Budget
The UK Autumn Budget announcement on the 26th November 2025 introduced several changes that will have a direct impact for founders. To break down what this means for you, we are sharing some of the most relevant highlights.
National Living Wage increase
The Living Wage (21+) rose to £12.21 per hour in April 2025, and it is set to rise again after this Budget, to £12.71 from April 2026. For those aged between 18-20 this has also increased to £10.85 per hour.
If you’re a people-heavy business, assume wage compression too, not just the base increase. People slightly above NLW will be expecting an increase too. Build it into your pricing and productivity plans now: we recommend you automate at least one process, renegotiate at least one supplier, or tighten scheduling because absorbing the impact of this without a plan is how margins start to be impacted.
Dividends Tax
From April 2026, dividend tax rates rise by 2 percentage points across bands. For basic-rate taxpayers the dividend rate is set to move to 10.75%, and for higher-rate taxpayers to 35.75%. If you’re using dividends as your main profit-extraction lever, you don’t need to panic, but you do need to re-run the blend. Between corporation tax, NI on salary, and higher dividend rates, the sweet spot salary/dividend mix will shift. Get your forecast updated before year-end so you’re not sleepwalking into 2026.
Savings Tax
The 2025 Autumn Budget is increasing tax paid on savings interest by 2% from April 2027. Enforcement will be sharper and banks will start reporting to HMRC when people breach their Personal Savings Allowance thresholds, so more savers will be pulled into tax automatically. Current allowances stay the same. If you’re sitting on personal cash from past distributions, you might want to revisit where it sits.
ISA’s will also change from 2027 for under 65’s. Cash ISA limits reduce to £12,000 (with the option for the remaining max of £8,000 being allocated to stocks and shares).
EOTs (Employee Ownership Trusts)
There will be a reduction on the Capital Gains Tax relief on disposals to EOT’s from 100% to 50% from next month. EOTs are still an exit route for founders, but the rules have tightened and HMRC expects real employee ownership. Sellers and connected parties can’t keep control after the sale, governance has to be visibly independent, and participation rules for employee bonuses were tweaked to stop selective carve-outs. If you’re considering it for 2026–27, build the trustee/governance model early and treat valuation and employee benefit structure seriously.
EMI eligibility
The EMI criteria for eligibility is being amended. EMI limits are increasing to 500 full time employees (from 250). With an overall limit on value for shares within EMI options at £6 million. The maximim holding period for EMI options will increase to 15 years. All this will be from April 2026.
The requirement to report EMI option grants to HMRC will also be removed from April 2027.
Pensions
There is a future cap on any salary sacrifice pension (from 2029), National Insurance relief on salary-sacrificed pension contributions is capped at £2,000 a year. If you (or senior team members) use salary sacrifice to fund large pension contributions, the tax efficiency drops after that cap and employer NI costs rise on the excess. Plenty of time before 2029, but don’t ignore it: build it into long-range remuneration planning. The annual allowance remains at £60,000 for 2025/26.
High Value Homes, Electric Vehicles and Fuel
A new “mansion tax” on homes valued at above £2 million is being introduced.
A new mileage charge is being implemented from 2028/29 for electric and plug-in hybrid vehicles at £0.03 per mile for electric vehicles and £0.015 per mile for pug in hybrid vehicles.
Fuel duty is frozen until September 2026.
Bottom line for owners
This 2025 Autumn Budget is a set of small tweaks. Dividends a bit pricier. Payroll a bit heavier. Savings and pensions taxed a little harder. And EOTs are still great, but only if you do it right. Plan now to refresh your 2-year plan (pay mix, hiring costs, cash location, succession route).
