Where to start…
It’s not a Budget of nothings, but it’s definitely had me scratching my head. There are so many ‘bits’ and ‘pieces’ around the edges which have been tweaked. So, what do I share with you….
The things we ‘sort of’ knew
- Tax thresholds have been frozen until 2031
- Pension salary sacrifice tax relief targeted
- Council tax surcharge on high-value properties
- Cash ISAs for under 65s are restricted to £12,000
The surprises
- 2% on rental income and savings; and
- 2% dividend income at basic and higher rates
- Working from Home relief removed from 2026
- CGT relief restricted to 50% on Employee Ownership Trusts
The silver linings
- £1m APR/BPR allowance will be transferable on death
- Pensioners whose only income is the basic or new state pension will not be required to pay tax. Currently, tax is due on amounts exceeding the personal allowance.
Future plans
- Making PAYE taxpayers liable for payments on account
Non-residents
- Dividends will remain liable to UK tax, where an individual is only temporarily non-resident – the same as for the current capital gains tax rules.
- National insurance contributions have been restricted to only the more expensive class 3 contributions. No longer will voluntary class 2 payments be accepted.
Where does this leave us? It hasn’t significantly changed much of the advice that we have already been giving clients. Inheritance Tax is still a big issue, and planning ahead is always worthwhile. If you are thinking of leaving the country, there are now more pre-departure considerations.
If you need guidance on how the measures announced in the Budget 2025 may affect your tax position, both now and down the line, our team at Lambert Chapman are here to help. With specialist expertise across personal taxation, we can provide tailored advice to support your planning and ensure you are well-prepared for the changes to come. Please get in touch with us to discuss your circumstances and explore the options available to you.
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.