When do the recent budget changes come into effect?

Income tax rates for dividend income will increase from 8.75% to 10.75% for basic rate taxpayers and from 33.75% to 35.75% for higher rate taxpayers. Additional rate taxpayers and discretionary trusts will continue to be taxed at 39.35%.

Income tax rates for non-savings and savings income remain at 20%, 40% and 45% for basic, higher and additional rate taxpayers (for non-savings income these rates will apply until 5 April 2031). 

Income tax relief for Venture Capital Trusts reduces to 20%. 

Capital gains which qualify for business asset disposal relief will be taxed at 18%.

A £2.5 million threshold for 100% relief on business and agricultural relief takes effect.

Plan 2 Student Loans repayment threshold frozen at £29,385 for three years until April 2030.

Unused pension funds will be liable to inheritance tax.

Tax on savings income and property rental profits increases by 2%, to 22%, 42% and 47% for basic, higher and additional rate taxpayers and to 47% for discretionary trusts.

The cash ISA limit for those age 65 and under will reduce to £12,000 (those over age 65 will continue to be able to save up to £20,000).

High value council tax surcharge will apply to properties valued over £2 million – the charge will start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million. These charges will be increased in line with CPI inflation each year, starting from 2029/30.

Changes to pension salary sacrifice rules apply with employee and employer National Insurance payable on contributions via salary sacrifice in excess of £2,000.

The following ‘freezes’ potentially come to an end:

• Income tax basic and higher rate thresholds

• National Insurance thresholds

• Inheritance tax (IHT) nil rate band and residence nil rate band, and £2.5 million threshold for 100% relief on business and agricultural relief

• ISA, Junior ISA and Lifetime ISA* investment limits

* The Government is set to publish a consultation in early 2026 on the implementation of a new, simpler ISA product to support first time buyers to buy a home. Once available, this new product will be offered in place of the Lifetime ISA.