The Chancellor, Rachel Reeves, delivered the much anticipated Budget on 26th November 2025.
There were plenty of rumours and leaks in the run-up to the Budget, so there weren’t many surprises left for the day itself — especially after the OBR accidentally published the full Budget more than 30 minutes before Rachel even began her announcement!
Despite a rapid u-turn, rumours in the past few weeks that suggested Labour may go against it's manifesto's pledge that they wouldn't increase income tax meant we all watched and listened with anticipation.
Key measures (affecting our clients) announced by the Chancellor are summarised below but feel free to download our more detailed guide, with examples of how this impacts a "working person", a business owner, a landlord or a saver here.
Dividend Tax Increase (a hit for limited company owners)
From April 2026:-
The basic rate of tax applied to dividends will increase from 8.75% to 10.75% (an increase of 2%).
The higher rate of tax applied to dividends will increase from 33.75% to 35.75% (an increase of 2%).
As a limited company owner myself, I feel the hit on this too! It certainly feels like the government is unfairly targetting small businesses and in particular small limited company owners. They don't seem to consider us as "working people".
Property Tax
From April 2027:-
A 2% increase on property tax for individuals (not companies)
More information on this to follow as the detail hasn't been fully released.
Savings Tax
From April 2027:-
A 2% increase on property tax for individuals (not companies)
More information on this to follow as the detail hasn't been fully released.
Corporation Tax
No changes announced. Rates will remain as previously announced - see our previous blog here.
National Living/Minimum Wage
From April 2026:-
The National Living Wage (NLW) for age 21 and over will increase from £12.21 to £12.71 per hour (an increase of 4.1%).
The National Minimum Wage (NMW) for 18-20 year olds will increase from £10.00 to £10.85 per hour (an increase of 8.5%).
The National Minimum Wage (NMW) for 16-17 year olds and apprentices will increase from £7.55 to £8.00 per hour (an increase of 6%).
Another hit to businesses looking to grow and employ - this comes off the back of NMW increases and Employers' NI increases last year. This may seem like great news for employees but these increased costs will surely impact the number of employees businesses can take on and/or the price of their products and services.
Freeze on Income Tax and NI Thresholds
Fiscal drag will continue with a freeze on Income Tax and NI Thresholds to continue until April 2031. This simply means that the Personal Allowance (the point at which people begin paying tax), the Basic Rate threshold and Higher Rate threshold will not change - which over time means more people are pulled into tax and into higher rate.
A few other key announcements
This blog is by no means exhaustive. I aim to write the key points affecting our clients - small limited company owners. But here are a few of the other announcements of note:-
2 Child Benefit Cap removed (from April 2026)
Cash ISA Limited reduced to £12k (from April 2027)
Electric Car Duty - a new charge per mile will be introduced (from April 2028)
Summary
We know that this Budget will hit most of our clients, directly impacting the money in their pockets. It will also have an impact on the best way for directors to pay themselves and this is something we will be working with our clients on as we approach April 2026 as part of our annual tax planning.
If you have any questions on how the Budget impacts you, please get in touch!
Written by:
Nicola J Sorrell - Effective Accounting
Founder | Xero Champion | IR35 Expert
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