Charterhouse Accountants are business and tax accountants working from our office in Harrow and have been established for more than 50 years.
The key theme of the Budget is continued pressure on businesses and higher earners, with measures focusing on raising revenue through tax increases and freezes, while simultaneously increasing welfare spending.
1. Tax & Income
The government is implementing several measures to increase tax revenues by freezing thresholds and raising rates on various forms of income:
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Income Tax and NIC: Thresholds are frozen until 2030-2031.
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Dividend Income: Tax rates will increase by 2% for all tiers, effective from April 2026:
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Basic Rate: Rises from 8.75% to 10.75%.
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Higher Rate: Rises from 33.75% to 35.75%.
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Interest Income: Tax rates will increase by 2% across all income tax bands, effective from April 5, 2027.
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Property Income (Rental Profits): Tax rates will increase by 2% across all income tax bands from April 5, 2027.
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Relief on restricted mortgage interest will also increase from 20% to 22%.
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2. Wages
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National Living Wage (NLW): For those aged 21 and above, the NLW will rise to £12.71 per hour, with corresponding increases for younger age bands.
3. Savings & Pensions
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Cash ISA Limit: The individual limit is reduced to £12,000 for individuals under 65, effective from April 2027.
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Salary Sacrifice: National Insurance (NI) relief on salary sacrifice arrangements will be capped at £2,000 annually.
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Pension Access Age: The age at which you can access cash from a pension will rise from 55 to 57 in 2028.
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Non-UK Resident NIC: Non-UK residents who are UK nationals can no longer pay voluntary Class 2 NIC to meet their UK state pension entitlement from April 2026.
4. Property & Wealth
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Council Tax: A high-value council tax surcharge will be introduced, reaching up to £7,500 extra per year.
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Inheritance Tax: Thresholds are frozen until 2031.
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Agricultural/Business Property Relief (APR/BPR): The £1 million allowance (set in the Autumn Budget 2024) is retained, and the Chancellor confirmed that the allowance can be transferred between spouses and civil partners.
5. Business & Investment
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Employee Ownership Trust (EOT): The rate of relief has been reduced from 100% to 50%, effective immediately.
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Enterprise Management Incentive (EMI): Scheme limits are doubled.
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Venture Capital Trusts (VCT’s): Tax relief is reduced from 30% to 20%.
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Corporation Tax Penalties: Late filing penalties will double from April 2026.
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Written Down Allowance: The allowance on main pool items will be reduced from 18% to 14% from April 2026.
6. Other Notable Changes
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Two-Child Benefit Cap: This cap is set to be scrapped from 2026.
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State Pension: The State Pension will rise by 4.8% annually.
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Electric Vehicle (EV) Road Tax: A road tax of 3p per mile will be introduced for electric vehicles starting in 2028.
