Budget 2025

Scroll down for CIOT/LITRG Budget reactions

Some of the key tax announcements are:

Personal taxes and duties:

• Tax thresholds for personal tax and employer National Insurance contributions will be frozen for three years from 2028–29.
• Salary sacrifice into pensions will be capped at £2,000 per year.
• Tax rates on dividends, property, and savings income will increase by 2 percentage points.
• A new mileage-based charge will be introduced on battery electric and plug-in hybrid cars from 2028.
• ‘Mansion tax’: A council tax surcharge will apply to properties valued over £2 million.
• Fuel duty will rise from September 2026.
• Compensation payments for the Infected Blood Scheme will be exempt from inheritance tax.
• Voluntary National Insurance contributions for people living outside Britain will be abolished.
• Green levies will be removed from energy bills.

Business taxes:

• Capital gains tax relief will be reduced on disposals to employee ownership trusts.
• The main rate of the writing down allowance in corporation tax will be reduced.
• Taxes on remote gaming and online betting will be increased.
• Journeys taken on ride-hailing apps such as Uber and Bolt will be subject to tax.
• A new visitor levy on overnight stays.
• Soft drinks levy extended to high-sugar drinks, including milk-based drinks.
• A stamp duty holiday for companies newly listing on the London Stock Exchange will be in place for three years.

Tax administration, compliance and simplification:

• Rewards for informants of high-value tax fraud: The government is increasing the rewards paid to informants who provide HMRC with high-value information.
• Closing in on promoters of marketed tax avoidance: The government will introduce new powers to close in on promoters of marketed tax avoidance.
• Enhancing HMRC’s powers and sanctions against tax advisers facilitated non-compliance : The government will introduce enhanced powers and sanctions to tackle tax advisers who facilitate non-compliance from 1 April 2026.
• Raising standards in the tax advice market : Following consultation, the government will not regulate tax advisers and will work in partnership with the sector to raise standards in the tax advice market.
• Tackling non-compliance on the high street : The government will establish a new dedicated small business evasion and enforcement team and deploy 350 HMRC criminal investigators to carry out more targeted criminal interventions, tackling the most serious fraud and evasion by small businesses.
• Recklessness offence for direct tax : The government will publish a consultation in early 2026 on the introduction of a new ‘recklessness’ criminal offence for fraudulently evading direct taxes, to align with existing indirect tax offences.
• More timely payment for Self Assessment : The government will require income tax Self Assessment taxpayers with Pay As You Earn (PAYE) income to pay more of their Self Assessment liabilities in-year via PAYE from April 2029
• E-invoicing: The government will require all VAT invoices to be issued in a specified electronic format from April 2029
• Penalty reform (upates to the penalty regime for Self Assessment and VAT): The government will not apply late submission penalties for quarterly updates during the 2026-27 tax year for Income Tax Self Assessment (ITSA) taxpayers required to join Making Tax Digital (MTD)
• Targeted research and development (R&D) advance assurance service : The government will pilot a targeted advance assurance service from spring 2026, enabling small and medium-sized enterprises to gain clarity on key aspects of their R&D tax relief claims before submitting to HMRC.
• MTD administrative changes – The government will introduce new powers from 1 April 2026 to ensure MTD and the new penalty reform legislation works as intended.
• VAT and Deposit Return Schemes (DRS) : The government will simplify administration of the DRS by removing the requirement for individual producers to account for VAT on unreturned deposits. Instead, this will be done by the Deposit Management Organisation.
• Annual Tax on Enveloped Dwellings (ATED): Out-of-time claims to relief – The ATED legislation will be updated to reflect the policy intent that relief from ATED is available to companies holding property for qualifying commercial purposes.
• Plastic Packaging Tax: Mass balance approach – The government will legislate in Finance Bill 2025-26 to allow for a mass balance approach to be used to attribute chemically recycled plastic for the purposes of the Plastic Packaging Tax from 1 April 2027.
• Local Government Pension Scheme Reform: Stamp Duty Land Tax relief – The government will amend Stamp Duty Land Tax rules, so property transferred within Local Government Pension Schemes are subject to an SDLT relief

To read the official documents relevant to the Budget, please click here. You can find Budget’s Tax information and impact notes here. Policy costing document can also be found here.

CIOT/LITRG Budget reactions

CIOT: Institute welcomes announcement that the government will not regulate the tax services market

The CIOT has welcomed the clarity provided to the tax services market by the government’s decision that it will not regulate tax advisers and its commitment to working in partnership with the sector to tackle bad actors. More

CIOT: Salary sacrifice cap could lead to “unfair” outcomes  

The CIOT has highlighted potential issues over fairness following the Chancellor’s announcement to levy NICs on pension contributions made through salary sacrifice arrangements. More

CIOT: New surcharge will add more complexity to property tax system

Commenting on today’s announcement of a high value council tax surcharge in England, Leigh Sayliss, chair of the Chartered Institute of Taxation’s Property Taxes Committee, said: “This measure adds further complication to the current complex system of property taxation. There are already nine main taxes1 that you have to consider if you own property”. More

CIOT: CIOT Scottish response to UK Budget

The CIOT notes that today’s UK Budget will give the Scottish Parliament the powers to set new rates of income tax on property income from 2027. More

CIOT: Tax complexity: Budget smorgasbord could be hard to digest 

Today’s Budget adds complexity to the tax system and increases the workload for both HMRC and taxpayers, says the CIOT. More

CIOT: E-invoicing announcement is big news for VAT registered businesses

The announcement today that e-invoicing will be mandatory for VAT registered businesses selling to UK business customers from April 2029 is a big step in the digitalisation of the tax system comparable to the introduction of Making Tax Digital, says the CIOT. More

CIOT: Institute welcomes promoters rethink

The CIOT has welcomed the government’s decision not to introduce a criminal offence of failing to notify a scheme under the Disclosure of Tax Avoidance Scheme (DOTAS) rules. More

LITRG: Penalty changes announced today are good news for both Making Tax Digital and Self Assessment taxpayers, says LITRG 

The CIOT's LITRG welcomes today’s announcement that taxpayers who are required to take part in Making Tax Digital (MTD) for Income Tax from next April will not be charged penalty points if they fail to submit any of their compulsory quarterly updates of income and expenses late during the first 12 months. More

LITRG: Extension of personal allowance freeze: unwelcome for many, but not unexpected 

The CIOT's LITRG has commented on the decision to freeze the personal allowance for a further three tax years from April 2028 to April 2031. More