South East law firm Thackray Williams reacts to the recently announced Autumn Budget, sharing insights from Elliot Lewis, partner and head of the Private Wealth team, Adrian Whichcord, partner and head of the Sevenoaks Conveyancing team, and Nick Gabay, partner and head of the Corporate & Commercial sector.
“The biggest takeaway from the Budget is the continued freeze on income tax allowances to 2031. While workers have escaped income tax and National Insurance rises, this ‘stealth tax’ means more people will be dragged into higher bands over time as their pay increases.
“The £2,000 cap on salary sacrifice contributions that are exempt from employer and employee national insurance contributions may exacerbate a trend that we are already seeing among our clients following the October 2024 budget.
“The Chancellor’s decision then to bring pension pots into account for Inheritance Tax purposes from April 2027 has already prompted many to scale back how much they pay in and impacted how they use their pension funds, often looking to draw the 25% tax free amount to the maximum so they can to gift that away, as well as making full use of gifts out of surplus income rules to further drain the value of their pension funds.
“The changes to savings – with the cash ISA element of annual allowances for under 65s reducing from £20,000 to £12,000 from 2027, with the ability to house the remaining £8,000 in a stocks and shares ISA, alongside a 2% increase in tax on savings income – may mean more cautious investors become hesitant about utilising their ISA allowances.
“Landlords face a parallel increase in tax on income from property, taking the rates to 22%, 42% and 47% – 2% higher than the comparable rates for income tax. With many landlords already fleeing the rental market following the introduction of the Renters’ Rights Act, this increased tax rate is likely to lead to even more landlords divesting their portfolios.
“Fewer rental properties could lead to even higher rents. More houses coming onto the market could further depress house price increases; while nationally there was a 3% rise in house prices in the 12 months up to August 2025, this was down from 3.2% in the 12 months up to July 2025. Significantly, the South East had the second lowest rise (1.8%), ahead of only London, which saw average prices fall by 0.3%.
“While the Chancellor made no changes to the Stamp Duty Land Tax regime and did not introduce the speculated ‘seller’s tax’, the anticipated ‘mansion tax’ has been realised as a council tax surcharge on properties above £2M; between £2-2.5M there is a £2,500 surcharge rising to £7,500 for properties over £5M from April 2028.
“There will clearly need to be a big revaluation exercise, with potential disputes over values at the margins of each band, and it will be interesting to see how they deal with people who are asset rich but cash poor. This change is seeking to raise about £400 million per tax year, but the costs of implementation and valuation disputes should be offset against this.
“From a business owner’s point of view, there is good and bad news. On the plus side, the £1M relief for business owners or farmers who benefit from agricultural relief is now transferrable between spouses. This means couples should get between them 2M of relief, which, when added to the normal and residential nil-rate bands, gives them potentially £3M of total allowances.
“750,000 retail and hospitality businesses will benefit from lower business rates. There are also other schemes to provide additional support to small businesses in relation to business rates, which we know will be welcome for many of our corporate clients.
“Also welcome is the increase in thresholds for eligibility limits for Enterprise Management Incentive (EMI) schemes, which many of our clients use to incentive their key employees by way of share options, while the assistance provided for fully funding apprentices under 25 years of age will make the apprenticeship scheme more attractive to many businesses.
“The less-good news for business owners is the 2% increase in tax on dividends, so the tax rates are now 10.75% or 35.75%. This may dilute one of the incentives to becoming a business owner and further stifle entrepreneurship.
“The narrowing of the difference between tax rates on dividends and salary income (noting that a company would already have paid corporation tax on profits) might also lead to some number-crunching on whether businesses should be structured as LLPs, rather than companies.
“The increase in the minimum wage rates was always likely, but it will mean an additional cost to many businesses, which will most likely lead to tightening of belts, increased redundancies and/or price increases to absorb the increase in wage bills.
“The reduction of Capital Gains Tax relief for sales of business to an employee ownership trust (EOT) from 100% to 50%, effective immediately, will be disappointing for many business owners who are currently considering a sale to an EOT and rows back from the recommendations to encourage employee ownership enshrined in the Nuttall review dating back to July 2012.
“We have acted on a number of sales to EOTs, so it will be interesting to see whether the reduction of relief has an impact on the number of such transactions.”
