The 2025 budget has been one of the most talked about on record – but how will it affect your finances going forward from the 2026-27 tax year?
Increase in Tax on Dividends
– Dividend tax rate increasing from 8.75% to 10.75% and higher rate dividend tax is increasing from 33.75% to 35.75%. This will particularly affect our clients with Limited companies who take a small salary with dividends – slightly more tax will be going to HMRC!
Increase in tax on Land and Property Income
– 2% increase on all land and property income taxes – 20% to 22% at basic rate, 40% to 42% at higher rate and 45% to 47% at the additional rate. This will affect our clients who receive land and property income.
Personal Allowances
– No change! Income tax personal allowances will remain at £12,570 until 2030-31 ISA Changes – As part of a plan to get people investing their money, the allowance for contributing to a cash ISA will be cut from £20,000 to £12,000. Stocks and Shares ISAs are unaffected and the allowance will remain at £20,000.
Capital Gains Tax
– No change! CGT had been increased in the last budget, but the rates are staying the same for now NI on Landlords – This has not been incorporated into the latest budget which is a victory for those with land and property income
Driving an Electric Vehicle
– You may have seen in a previous Tax Digest post about the benefits of buying an electric car through your business. Now, EV drivers will pay 3p per mile as an additional tax from 2028.
NB – There are significant changes made to how SALARY SACRIFICE works however this will mainly affect clients who are employed. These changes will come into place in April 2029.
Get in touch to find out more or to ease any worries you might have about the next tax year 2026-27
