As you must have seen, Rachel Reeves presented Labour’s first Budget for 2025/6 today.
Here are some key takeaways from today’s announcements.
Business Taxes
Employers NI going up from 13.8% to 15% on salaries above £5,000 from April.
Employment allowance going up from £5,000 to £10,500.
Corporation Tax remaining at 25% on profits over £250,000.
Personal Taxes
Basic rate capital gains tax on profits from selling shares to increase from 10% to 18%, with higher rate rising from 20%to 24%. This is effective from today.
Rates of income tax, NI for employees and VAT remain unchanged.
Wages and Pensions
Over 21 minimum wage to increase from £11.44 to £12.21.
Rate for 18-20 year olds to go up from £8.60 to £10
Basic and new state pension payments to go up by 4.1% next year.
Housing
Stamp duty surcharge, paid on second homes to increase from 3% to 5%.
Point at which house buyers start paying stamp duty on a main home to drop from £250,000 to £125,000 in April.
Threshold at which first-time buyers pay stamp duty will also drop back from £425,000 to £300,000.
Social housing providers to be allowed to increase rents above inflation under multi-year alignment.
Discounts for social housing tenants buying their property under Right to Buy scheme to be reduced.
Inheritance Tax
The current thresholds above which IHTis payable will remain frozen until April 2030.
Unused pension funds and death benefits payable from a pension will become subject to IHT from 6 April 2027.
Agricultural Property Relief (APR) and Business Property Relief (BPR) are set to change from 6 April 2026. From then, full relief from IHT will be capped at the first £1m worth of combined business and agricultural property. Assets above this threshold will only benefit from a 50% rate of relief.
Reflection
It is a good time to digest the Budget impact and assess how it will impact you and your business.
As ever, review your costs and eliminate unnecessary expenditure and ensure you are charging the relevant amount for your services.
Don’t forget I am always here should you want to discuss any items of the budget or need some help with your forecasting and planning.
