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United Kingdom Autumn Budget 2025: Key Updates and Implications


This summary outlines the principal announcements from the UK Autumn Budget 2025, with an emphasis on tax reforms affecting internationally mobile individuals and their employers.


Pension Salary Sacrifice


Beginning 6 April 2029, the National Insurance (NI) exemption for salary-sacrificed pension contributions will be capped at £2,000 per tax year. Contributions exceeding this threshold will incur both employer and employee NI charges; however, income tax relief remains unaffected.


Impact: The cap will primarily affect higher earners and those making substantial contributions. Employers are advised to review remuneration packages and communicate these changes proactively.


High-Value Council Tax Surcharge


Starting from April 2028, a High-Value Council Tax Surcharge (HVCTS) will be imposed on residential properties in England valued at £2 million or above (based on 2026 valuations). Annual surcharges will begin at £2,500 for properties valued between £2 million and £2.5 million, increasing to £7,500 for properties over £5 million, with adjustments indexed to CPI. Owners will be liable for the surcharge, and revaluations will occur every five years.


Impact: This change will elevate costs for assignees occupying high-value properties, thereby increasing assignment expenses.


Voluntary National Insurance Contributions


Effective 6 April 2026, individuals residing or working abroad will no longer have the option to pay Class 2 NICs for overseas periods. Only Class 3 contributions—at a significantly higher rate—will be available. This adjustment raises the cost of retaining eligibility for the UK State Pension among expatriates.


Impact: Affected individuals include those working overseas who are not subject to Class 1 NICs. Class 3 contributions remain an alternative, albeit at greater expense.


Personal Income Tax Rates and Thresholds


  • Tax rates remain unchanged:

    • 20% (basic rate: £0 – £37,700)

    • 40% (higher rate: £37,701 – £125,140)

    • 45% (additional rate: over £125,140)

  • Tax thresholds frozen until April 2031: Personal Allowance at £12,570 and basic rate band at £37,700.

  • Dividend tax rates increase from April 2026: Basic 10.75%, Higher 35.75%, Additional 39.35%.

  • Interest and property income tax rates rise by 2 percentage points across all bands starting April 2027 (basic 22%, higher 42%, additional 47%).


National Insurance Contributions


NIC rates remain unchanged; however, thresholds will be frozen until April 2031. Employees are liable for 8% on earnings between £12,570 and £50,270, and 2% on amounts above that. Employers will contribute 15% on earnings exceeding £5,000.


Capital Gains Tax and Other Measures


There are no changes to Capital Gains Tax (CGT) rates or annual exemptions. The Individual Savings Account (ISA) cash limit will be reduced to £12,000 for individuals under 65, effective April 2027.


Conclusion


The Autumn Budget 2025 introduces measures that increase expenses for assignees and employers, notably through frozen thresholds, changes to NI, and higher taxation on investment and property income. The restriction of voluntary NICs will make pension planning more costly for expatriates. Additional surcharges and adjustments to investment taxes will impact internationally mobile individuals owning UK assets. Employers should reassess assignment budgets, update global mobility policies, and ensure clear communication regarding these changes to mitigate unforeseen liabilities and maintain compliance.


How Trowbridge Can Help


At Trowbridge Professional Corporation, our team of UK expatriate tax specialists is committed to optimising your tax planning and compliance in accordance with UK tax legislation for inbound and outbound UK expatriates, as well as UK residents working abroad.


Contact us today to explore how we can support your tax strategy. Our dedicated professionals are prepared to guide you through the process and address any queries you may have.


Article written by:


ISHALI PATEL

Regional Head- Europe

TEL: +44(0)204-583-5761

 
 
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