The Budget Announcements: The Essential Takeaways

Rachel Reeves has delivered her Budget. Here are the key announcements:

Income Tax and National Insurance

National Insurance (NI) and income tax thresholds will be frozen for an extra three years from 2028 to 2031.
From 6 April 2026, the rates of income tax applicable to dividends are changing. The ordinary rate will increase by 2 percentage points to 10.75% and the upper rate will increase by 2 percentage points to 35.75%. The additional rate will remain unchanged at 39.35%.
From 6 April 2027, the property income basic rate will be 22%, the property income higher rate will be 42%, and the property income additional rate will be 47%.
From 6 April 2027, the savings income basic rate will increase by 2 percentage points to 22%, the savings income higher rate will increase by 2 percentage points to 42% and the savings income additional rate will increase by 2 percentage points to 47%.
From April 2029, only the first £2,000 of employee pension contributions through salary sacrifice each year will be exempt from NICs.
From 6 April 2026, the VCT and EIS company investment limits will increase to £10 million and £20 million for Knowledge Intensive Companies (KICs), and the lifetime company investment limit will increase to £24 million and £40 million for KICs. The gross assets test will increase to £30 million before the share issue, and £35 million after. Alongside this, the VCT income tax relief will decrease to 20%.

From 26 November 2025, the government will reduce the Capital Gains Tax relief available on qualifying disposals to Employee Ownership Trusts from 100% of the gain to 50%.

Inheritance Tax thresholds frozen for an additional year until 2031.
From 6 April 2026, any unused £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners, including if the first death was before 6 April 2026.

The government will introduce a new 40% First Year Allowance for main rate expenditure - including most expenditure on assets for leasing and expenditure by unincorporated businesses – from 1 January 2026. From 1 April 2026, for Corporation Tax and 6 April for Income Tax, main rate writing-down allowances will reduce from 18% to 14%
The government will double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026.
For eligible companies, the changes that will apply to EMI contracts granted on or after 6 April 2026 are the limit on:

- Company options will be increased from £3 million to £6 million

- Gross assets will be increased from £30 million to £120 million

- The number of employees will be increased from 250 to 500 employees

The High Value Council Tax Surcharge (HVCTS) is a new charge on owners of residential property in England worth £2 million or more in 2026, taking effect in April 2028.
A new electric vehicle excise duty will amount to 3p per mile for electric cars and 1.5p for plug-in hybrids from 1 April 2028.
Training for under-25s on apprenticeships will be made free for small and medium-sized enterprises.
To incentivise businesses to use recycled instead of new plastic in packaging, the government will increase the Plastic Packaging Tax (PPT) rate for 2026-27 in line with CPI inflation.