The UK Chancellor of the Exchequer, Rachel Reeves, has delivered the Autumn Budget 2025.
In her much-anticipated second Budget, the Chancellor announced a broad spectrum of tax measures which she said were designed both to secure public finances and make the UK tax system fairer. After much press speculation, rumours and reported U-turns, there is now some welcome clarity on how the government intends to balance the books, with the largest revenue raising measure being a stealth tax increase through the freezing of income tax thresholds.
Outside of the headline grabbing measures, the government has published details on new and ongoing business tax reform measures, a number of which will be included in the upcoming Finance Bill.
In our latest podcast, Josh Critchlow speaks to May Smith, Emily Szasz and Sam Withnall from our London tax team about the smorgasbord of business tax measures they found most noteworthy in the Autumn Budget 2025. Highlights from the podcast discussion are summarised in this blog post.
For a summary of the key Autumn Budget 2025 measures from an employment, pensions and incentives perspective, see this blog post by our London People & Rewards team.
Headline Budget announcements
As trailed above, a key headline-grabbing announcement in the Budget was confirmation that the income tax and NICs thresholds will remain frozen for a further three years until April 2031. This measure alone is expected to raise £23 billion. A further significant revenue raising measure was the announcement of a 2% increase in the income tax rate on dividends, savings and property income.
Changes to the capital allowances regime also contribute to raising revenue. The rate of writing down allowances on main pool plant and machinery will reduce from 18% to 14% from April 2026, estimated to accelerate approximately £7 billion of revenue, although this is introduced alongside the introduction of a new 40% first year allowance for new investment in certain assets, including assets bought for leasing.
As had been heavily trailed in press speculation, it was confirmed that a new High Value Council Tax Surcharge (aka the ‘mansion tax’) is to be introduced in England for residential properties. This takes the form of an annual charge of £2,500 for owners of homes worth between £2m to £5m, and £7,500 for owners of homes worth in excess of £5m. This new charge will have effect from April 2028 and is predicted to raise around £400 million annually.
New SDRT UK listing relief
As part of a raft of measures designed to make the UK ‘the best place in the world’ for early-stage enterprises, the Chancellor announced a new UK listing relief from stamp duty reserve tax (SDRT). This is a new exemption from the standard 0.5% charge to SDRT on agreements to transfer securities in a company within a three-year period from when the company first lists its shares on a UK regulated market. The exemption is available from 27 November 2025 where the shares of the relevant company are newly listed on or after that date.
This new relief is subject to various restrictions which are discussed in more detail in the podcast, including confirmation that the exemption is not available in respect of the 1.5% SDRT ‘season ticket charge’ in cases where shares in the newly listed company are put into a clearance service or depositary receipt system.
The team also discuss the latest updates on the proposed new ‘single tax on securities’, seemingly now referred to as the ‘securities transfer charge’ (STC), including the introduction of a new power to enable the testing of a new digital service for the STC.
Private capital and funds
It was confirmed that the carried interest tax reforms will come into effect from April 2026 as expected, with the final legislation expected to be included in the Finance Bill which is anticipated to be published shortly.
While the rumoured introduction of ‘partnership NICs', changes to the salaried members rules and imposition of a new exit charge for individuals leaving the UK did not materialise, the Budget included a number of measures that are relevant to the private capital and funds sector. There was good news in the raising of limits for the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) from April 2026, albeit the income tax relief rate for VCTs is set to decrease.
The team note that an upcoming consultation promising a review of the qualifying asset holding company (or QAHC) rules to ensure the regime operates effectively may be relevant to this sector. Similarly, a consultation to explore introducing new requirements to report transactions between close companies and their shareholders to HMRC will also be of interest.
Confirmation that the Advance Tax Certainty Service for major investment projects in the UK is to launch in July 2026 will be of interest to infrastructure investors. The remit of this new facility is discussed by the team in the podcast.
Changes to anti-avoidance rule for share exchanges and reorganisations
The Budget included an unexpected announcement in the form of rewriting and broadening an anti-avoidance rule applying to UK capital gains rollover relief on share exchanges and company reconstructions (set out in s 137 of the Taxation of Chargeable Gains Act 1992). The measure broadly has immediate effect, subject to some transitional rules.
In the podcast, the team discuss the detail of the changes to this anti-avoidance rule, noting that the changes appear to have been made (at least in part) in response to the Court of Appeal decision in Delinian Ltd (formerly Euromoney Institutional Investor PLC) v HMRC.
Tax avoidance and behavioural penalties
In addition to the measures previously announced around promoters of marketed tax avoidance and mandatory tax adviser registration - both of which appear to be proceeding (albeit with changes following consultation) - the intention to introduce a new criminal offence was also announced in the Budget for ‘reckless’ behaviour in fraudulently evading direct taxes. It was also announced that a consultation will be published early next year on reducing non-compliance with the existing notification regime for uncertain tax treatments.
In the podcast, the team also discuss the government’s response to a consultation on the reform of behavioural penalties, including proposals to reduce or remove penalties where penalties act as a disincentive to disclosure, when a disclosure should count as ‘prompted’ and possible changes to the approach on suspension of penalties.
Other key tax takeaways
In the podcast, the team also flag other key tax takeaways from the Budget, including:
- confirmation that a permanent revenue-based oil and gas price mechanism will take effect on expiry of the existing Energy Profits Levy
- HMRC’s revised position on the VAT treatment of intra-entity services involving establishments located in an EU Member State that are part of a UK VAT group (broadly undoing rules put in place in 2015 to address the CJEU decision in Skandia);
- welcome administrative changes to the corporate interest restriction rules regarding the appointment of a reporting company; and
- various announcements on business rates, including confirmation of changes to the valuations and multipliers used in calculation of business rates from 1 April 2026 and a new call for evidence.
Our Autumn Budget 2025 podcast is available here.
