Following weeks of speculation (and the leaked documents by the OBR just an hour or so before she stood up!), Rachel Reeves delivered her budget speech, unveiling a "smorgasbord" of tax changes.

The Budget will demand more from all taxpayers but with a focus on those "with the broadest shoulders".

1. Income tax and National Insurance

In order to stick to their manifesto, no changes to headline rates were announced. However, thresholds remain frozen until April 2031 (extended by three years). Personal allowance stays at £12,570; higher-rate threshold at £50,270. This 'fiscal drag' will pull nearly 1 million more people into tax by 2030, raising £8bn annually.

The thresholds were originally frozen in 2021 (at which point, the new Chancellor criticized the freeze).

The basic income tax rate will remain at 20% (on income up to £50,270), with higher tax rate remaining at 40%.

The additional rate tax of 45% also remains on income in excess of £125,140.

As a reminder, the tax-free personal allowance is reduced by £1 for every £2 of income over £100,000. This results in an effective tax rate of 60% on earnings between £100,000 and £125,140.

National Insurance thresholds also frozen until 2031.

Salary sacrifice cap: From April 2029, only the first £2,000 of pension contributions via salary sacrifice will remain exempt from NI; above this, NI applies. This will result in a national insurance rise on both employees and employers, resulting in extra costs that businesses must bear.

2. Savings and Investment

Cash ISA allowance cut: From April 2027, annual limit falls from £20,000 to £12,000 for under-65s; over-65s retain £20,000.

The overall ISA annual limit of £20,000 remains unchanged.

Dividend and savings tax: Rates rise by 2 percentage points from April 2026. In a further blow to owner managed businesses, where often they receive small salaries and dividends, the extra 2% tax charge on dividends will be a further cost.

Property income tax: As from April 2027, profits from property income will be subject to a 2% tax surcharge, meaning a basic rate of 22%, higher rate of 42%, additional rate of 47%.

3. Property and Wealth Taxes

Mansion Tax: From April 2028, homes over £2m face a council tax surcharge: £2,500 for £2m–£2.5m properties, up to £7,500 for homes worth £5m+.

4. Business Tax Measures

Corporation Tax rates will remain unchanged. The headline rate will remain at 25%, however Companies with profits of below £50,000 will continue to pay tax at 19%.

Although these are the headline rates, the effective tax rate on profits between £50,000 and £250,000 is actually 26.5%.

The limits to investment in EIS and VCT schemes will be increased, however the income tax relief on the investment will be cut.

As from April 2026, a new 40% first year capital allowance will be available.

The writing down allowance will be reduced in April 2026.

As mentioned above, the Dividend tax hike impacts small business owners relying on profit distributions.

5. Welfare and Social Support

Two-child benefit cap scrapped from April 2026, costing £2.3bn but expected to cut child poverty significantly.

Youth Guarantee: £820m for paid work placements for young people out of work/education for 18 months.

Disability benefit assessments reintroduced face-to-face; Universal Credit reforms aim to return 15,000 people to work.

6. Fuel Duty and Motoring

Fuel duty freeze extended until September 2026; 5p cut remains. From April 2027, staged increases linked to RPI.

A new mileage tax will be placed on Electric and Hybrid Vehicles. From April 2028, EVs pay 3p per mile, PHEVs 1.5p per mile, plus the usual VED.

7. Minimum Wages

The minimum wage will again increase from 1 April 2026.

8. VAT

The government has used its 2025 Budget to announce the long-anticipated arrival of electronic invoicing (e-invoicing) to the UK.

In a short update hidden in the budget notes, the government stated that to "drive productivity further", it will require the use of e-invoicing for all VAT invoices for business-to-business and business-to-government transactions from 1 April 2029, with a roadmap to be published at Budget 2026.

9. Other Revenue Measures

Higher taxes on gambling and online gaming. Remote gaming duty will be increased to 40% (from 21%), with duty on online betting increased to 25% from 15%.

HMRC compliance drive to close tax gap, targeting £2.3bn extra by 2030.

Although further information will be released and as ever, the devil will be in the detail. Our initial response is that the Budget 2025 delivers welfare reforms and very limited targeted business incentives but relies heavily on stealth tax measures and new levies on wealth, property, and EVs to fund commitments.