Global Daily Tax News, UK Announces Numerous Tax Hikes In New Budget, (Dec 1, 2025)

The UK Government has announced numerous tax hikes in its newly released 2025 Budget.

The Budget announces that personal tax thresholds will be frozen beyond 2028 until 2031. Further, the Government has capped the amount that may be contributed to tax-privileged cash ISAs to GBP12,000 per year for under-65-year-old taxpayers.

Further, taxes on property, dividend, and savings income will rise by two percentage points, as follows:

• From April 2027, the property basic rate will be 22 percent, the property higher rate will be 42 percent, and the property additional rate will be 47 percent;

• The ordinary and upper rates of tax on dividend income will be raised by two percentage points from April 2026; and

• The two percent increase to the tax rate on savings will apply across all bands from April 2027.

The Budget also introduces a High Value Council Tax Surcharge on homes worth more than GBP2m. The levy will range from GBP2,500 per year, up to GBP7,500 for properties valued over GBP5m.

Further, from April 2029, the Government will charge employee and employer National Insurance on any pension contributions made via salary sacrifice above GBP2,000 a year and halve capital gains tax relief for business owners selling their businesses to Employee Ownership Trusts from 100 percent to 50 percent.

The Government will implement previously announced reforms to taxes on wealth and assets, including:

• From April 6, 2026, the CGT rate for Business Asset Disposal Relief and Investors' Relief will increase to match the main lower rate at 18 percent;

• From April 6, 2026, the Government will reform agricultural property relief and business property relief;

• From April 6, 2026, the Government will introduce a revised tax regime for carried interest that sits wholly within the income tax framework; and

• From April 6, 2027, the Government will remove the opportunity for individuals to use pensions as a vehicle for IHT planning by bringing unspent pots into the scope of IHT.

However, the Government has newly announced the GBP1m allowance for the 100 percent rate of agricultural property relief and business property relief will be transferable between spouses and civil partners.

The Government has also announced it will not be proceeding at this time with converging the two rates of Landfill Tax, as consulted on earlier this year.

Other announcements include:

• The introduction of a new, per-mile levy for electric and plug-in hybrid cars from 2028. This levy will amount to GBP0.03 and GBP0.015 per mile, respectively;

• The Government will increase online gambling duties, from 21 percent to 40 percent, except for in-person gambling for horseracing, and will waive duty on bingo games;

• upfront Venture Capital Trust (VCT) Income Tax relief will be reduced from 30 percent to 20 percent;

• The higher rate of air passenger duty (APD) will expanded to cover all private jets above 5.7 tonnes from April 2027; and

• The Government has pledged changes to the way internationally mobile individuals are taxed.

The Budget announces tax breaks in the form of business rates (commercial property tax) relief and an extension to the fuel duty cut of GBP0.05 per litre until the end of August 2026, alongside the cancellation of the planned inflation increase to fuel duty for 2026-27.