How were my Budget 2025 predictions?
Well, to start, I got the time completely wrong! No massive surprise with our Government that details were released early, published by the OBR (The Office for Budget Responsibility) due to a ‘technical error’ just before midday! Is anything done correctly? No need for Rachel Reeves to make an appearance.
So, how were the rest of my predictions? Not great…
Correct:
- Freezing tax thresholds – an easy way to raise additional tax, frozen until 2030-31.
- I was expecting the cut in fuel duty to be removed, I was wrong, however, this is only until September 2026, then expect price increases.
- Increase in alcohol duty – for bottles, cans, but a duty cut on draughts on tap, resulting in 1p less in duty! Will we see a decrease in price in pubs? – I don’t think so.
Wrong:
- No change in tax bands was predicted correctly, but there are increased tax rates on property income, savings income, and dividends by 2 percentage points – another broken promise? Increases from April 2026.
- VAT registration threshold to be lowered? Wrong, previously increased in April 2024, no confirmed change.
- BADR lifetime limit to be lowered? Wrong, remains at £1m.
- No changes to capital allowance? Wrong, changes include a new 40% first-year allowance for qualifying capital expenditure, and the writing‑down allowance rate for main‑rate expenditure will be cut from 18% to 14% from April 2026.
Must do better next year.
Other key items to note:
- Mansion tax – properties over £2m – change applies from 2028, I was expecting a lower property value.
- Pension contributions to be taxed over £2k – Salary-sacrificed pension contributions above an annual £2k threshold will no longer be exempt.
- Remote gambling tax – due to rise in online gambling, no changes to in-person gambling.
- Mileage-based charge on electric vehicles from 2028, how will this be controlled?
- Minimum wage increases for 18-year-olds old + which is another cost for already struggling businesses.
- EOTs – CGT now applies to employee ownership trusts, previously this was 100% exempt from CGT, now 50% exempt – I’m presuming this will only apply to future EOT’s. Well done if anyone got an EOT organised before this budget.
The freeze on thresholds, new taxes, and changes to allowances have resulted in financial planning being ever more essential, especially important before company and fiscal year ends.
Households should also review their spending and saving plans.
As always, a review of the finer points is important; businesses and individuals will need to assess how each change will affect them over future months and years.
If you have any questions or concerns, do get in touch with me or a member of the team and we will be happy to help.
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.