Budget 2025 Summary: Spring Statement and Autumn Budget Recap

UK Budget 2025 recap - Spring Statement OBR forecast, Autumn Budget November 2025 and the 2025/26 year of frozen thresholds and 15% employer NI.

2025/26 tax year

Income Tax & Allowances
Personal
Employee
UK-wide

Key figures at a glance

Employer NI secondary rate: 15% from 6 April 2025
Threshold freeze: to April 2031 extended at Autumn Budget 2025
Employee NI main rate: 8% unchanged

Salary calculator See take-home for the 2025/26 tax year.

2025 was a year of fiscal consolidation rather than headline tax cuts or rises. The Spring Statement on 26 March 2025 was a forecast-only event - no new tax measures - and the Autumn Budget on 26 November 2025 set the architecture for 2026/27 (covered in detail in our separate Budget 2026 summary page). This page recaps both events and the 2025/26 tax-year rules in force across the calendar year. Figures are anchored to the same TaxRuleset that powers our calculators, with gov.uk sources listed in the citations.

Headline: forecast update and consolidation

The Labour government had committed in 2024 to running only one tax-changing fiscal event per year, alongside a Spring Statement restricted to OBR forecast updates. 2025 was the first full calendar year on that timetable. The Spring Statement 2025 on 26 March was deliberately positioned as a no-tax-changes update: the OBR refreshed its economic and fiscal outlook, forecasting real GDP growth of 1.0% in 2025, slower than it had expected in October 2024, and the Chancellor announced welfare and spending measures that restored the forecast current budget surplus to £9.9 billion in 2029-30.

The Autumn Budget 2025 on 26 November was the set-piece tax event of the year. Its main personal-tax announcement was the extension of the Personal Allowance and income-tax threshold freeze from the previous April-2028 end date out to April 2031 - a further three-year continuation of the freeze policy that has run since 2021/22. The tax rises fell on income from assets: the dividend ordinary and upper rates rose by 2 points from 6 April 2026 (to 10.75% and 35.75%), and savings income rates and new separate property income rates rise from April 2027. It also cut the cash ISA limit to £12,000 from April 2027 for savers under 65, capped NI relief on salary-sacrificed pension contributions at £2,000 a year from 6 April 2029, and made any unused Business Property Relief and Agricultural Property Relief allowance transferable between spouses. Employee and employer NI rates, the £500 dividend allowance, the £20,000 ISA limit, the £60,000 pension Annual Allowance and the 18% / 24% CGT rates were left in place.

Personal Allowance and the frozen thresholds

The Personal Allowance for 2025/26 remained £12,570, the same cash figure as every tax year since 2021/22. The higher-rate threshold stayed at £50,270 and the additional-rate threshold at £125,140. The Autumn Budget 2025 extended the freeze of all three to April 2031, a further three-year extension on top of the original 2028 end date.

The PA taper was unchanged: the allowance reduces by £1 for every £2 of adjusted net income above £100,000, fully withdrawn by £125,140. That gives a 60% effective marginal rate on Income Tax alone (62% with the 2% employee NI upper rate) on the £25,140 slice between £100,000 and £125,140.

Income tax rates and bands (England, Wales, Northern Ireland)

The 2025/26 bands were identical to 2024/25 (and to every year since the additional-rate threshold was cut from £150,000 to £125,140 in April 2023). Neither the Spring Statement nor the Autumn Budget moved the band structure.

Band	Taxable income	Equivalent gross	Rate
Personal Allowance	-	£0 - £12,570	0%
Basic rate	£0 - £37,700	£12,570 - £50,270	20%
Higher rate	£37,700 - £125,140	£50,270 - £125,140	40%
Additional rate	£125,140 - above	£125,140 - above	45%

The 40% band continued to cover the £50,270 to £125,140 span, with the Personal Allowance taper lifting the marginal Income Tax rate to 60% from £100,000. The 45% additional rate continued to bite from £125,140, producing the now-familiar geometry where the marginal rate falls from 62% (PA-taper band with NI) to 47% above it.

National Insurance: 15% employer rate in force

2025/26 was the first full tax year on the new employer NI structure legislated at the Autumn Budget 2024. From 6 April 2025 the employer Class 1 secondary rate rose from 13.8% to 15%, and the Secondary Threshold fell from £9,100 to £5,000 - changes that took effect at the start of the year and continued throughout. Employee Class 1 stayed at the 8% main rate that had taken effect on 6 April 2024.

Employee Class 1 main rate: 8% on weekly earnings between the Primary Threshold of £12,570 a year and the Upper Earnings Limit of £50,270 a year.
Employee Class 1 upper rate: 2% on earnings above the Upper Earnings Limit.
Employer Class 1 secondary rate: 15% on earnings above the £5,000 Secondary Threshold. New from 6 April 2025.
Self-employed Class 4 main rate: 6% on profits between the Lower Profits Limit of £12,570 and the Upper Profits Limit of £50,270.
Self-employed Class 4 upper rate: 2% on profits above the UPL.
Class 2: no longer compulsory; those with profits above the Small Profits Threshold of £6,845 are treated as having paid it, and those below it can pay voluntarily at £3.50 a week.

A £40,000 employee generated £5,250 in employer Class 1 NI in 2025/26 (15% on earnings above £5,000), versus £4,264 under the previous 13.8% / £9,100 structure - a 23% increase, before any Employment Allowance. The change also made salary-sacrifice arrangements more valuable to employers, since the employer NI saved on a sacrificed pound went from 13.8p to 15p. The salary sacrifice calculator models the full employer + employee effect.

Dividend allowance and rates

The Dividend Allowance for 2025/26 stayed at £500, the same level set on 6 April 2024 when it was cut from £1,000. The rates were unchanged:

Ordinary rate (basic-rate band): 8.75%
Upper rate (higher-rate band): 33.75%
Additional rate (additional-rate band): 39.35%

Dividends still did not attract National Insurance, so the employer NI rise widened the gap between paying an owner-manager in salary and paying them in dividends. That gap narrowed again from 6 April 2026, when the Autumn Budget 2025 raised the dividend ordinary and upper rates to 10.75% and 35.75%. See the contractor calculator for the full mix.

Capital Gains Tax: full year of 18% / 24%

2025/26 was the first full tax year on the post-30-October-2024 CGT schedule. The basic-rate CGT was 18% on gains falling within the basic-rate Income Tax band, and the higher / additional-rate 24% on gains above. The schedule applied to all assets including residential property. The Annual Exempt Amount stayed at £3,000.

Basic-rate CGT: 18% on gains within the basic-rate Income Tax band.
Higher / Additional-rate CGT: 24% on gains above the basic-rate band.
Annual Exempt Amount (AEA): £3,000 - unchanged from 2024/25.
Business Asset Disposal Relief (BADR): rose from 10% to 14% from 6 April 2025 on the first £1m of lifetime qualifying gains (and to 18% from 6 April 2026).
Investors' Relief lifetime limit: £1m, having been cut from £10m at the Autumn Budget 2024.

The 24% top rate was materially higher than the 20% that had applied to non-residential gains before 30 October 2024. The CGT calculator applies the same 18% / 24% schedule, which is unchanged for 2026/27.

Stamp Duty: 5% surcharge in force, thresholds reset 1 April 2025

SDLT bands in England and Northern Ireland reset on 1 April 2025 when the temporary nil-rate threshold lift introduced in September 2022 was unwound. The 5% additional-dwelling surcharge that came in on 31 October 2024 continued in force throughout 2025/26.

0% on the slice up to £125,000 (was £250,000 to 31 March 2025).
2% from £125,001 to £250,000.
5% from £250,001 to £925,000.
10% from £925,001 to £1.5 million.
12% above £1.5 million.
First-time buyers: 0% to £300,000 (was £425,000 to 31 March 2025), 5% from there to £500,000 (was £625,000). Relief withdrawn entirely above £500,000.
Additional-property surcharge: 5% on every band.
Non-UK-resident surcharge: 2% on every band, on a purchase of £40,000 or more (FA 2003 Sch 9A para 2).

The 1 April 2025 reset meant a first-time buyer on a £400,000 home paid £5,000 of SDLT in 2025/26 versus nothing on the same purchase completed by 31 March 2025 - a sizable cliff at the boundary date. The 5% additional-dwelling surcharge added a further 5% on top of every band for buy-to-let and second-home purchases. Scotland uses its own LBTT and Wales uses LTT, neither of which followed the rUK reset. The Stamp Duty calculator models the full set including the additional-dwelling and non-resident surcharges.

Non-dom abolition: the FIG regime takes effect

6 April 2025 was the operative date for the abolition of the remittance basis of taxation for UK-resident non-doms. The previous regime - in which UK residents who claimed non-domicile status could elect to be taxed on UK income and gains but not on unremitted foreign income or gains - was replaced by a residence-based four-year Foreign Income and Gains (FIG) regime for new UK arrivals.

Under the FIG regime, an individual who has not been UK-resident in any of the immediately preceding ten tax years is taxed only on UK-source income and gains in their first four UK-resident years. After four years they fall fully into UK arising-basis taxation - the same regime as any other UK resident. The protected non-resident trust structures for long-term non-doms were phased out by the same legislation.

The Temporary Repatriation Facility (TRF) was opened for the 2025/26, 2026/27 and 2027/28 tax years, allowing individuals with pre-April 2025 foreign income and gains stuck offshore on the old regime to remit them at preferential flat rates of 12% in 2025/26 and 2026/27, rising to 15% in 2027/28 (Finance Act 2025 Schedule 10).

Inheritance Tax on non-doms also moved to a residence-based regime from 6 April 2025: individuals who have been UK-resident for at least 10 of the previous 20 tax years (a "long-term resident") fall fully into UK IHT, including on their worldwide assets (IHTA 1984 s.6A). The previous "deemed domicile" rules were retired.

VAT on private school fees: first full year

The VAT exemption for private school fees was removed from 1 January 2025. The Spring Statement 2025 and Autumn Budget 2025 both left the change in place; 2025/26 was the first full academic year of the new regime running through to August 2026. Schools were registered for VAT, charged 20% on tuition fees and reclaimed input VAT on related expenditure. Charitable business rates relief for private schools in England was also removed from April 2025.

ISA and pension allowances

All the headline allowances stayed at their 2024/25 levels through 2025/26:

ISA allowance: £20,000 (unchanged since 2017/18).
Junior ISA: £9,000 per child per year.
Lifetime ISA: £4,000 (counts toward the £20,000 total), 25% government bonus.
Pension Annual Allowance (standard): £60,000.
Tapered Annual Allowance: where threshold income exceeds £200,000, reduces by £1 for every £2 of adjusted income above £260,000, down to a £10,000 floor.
Money Purchase Annual Allowance (MPAA): £10,000.
Lump-sum allowance (LSA): £268,275.
Lump-sum and death benefit allowance (LSDBA): £1,073,100.

The Autumn Budget 2025 announced that from 6 April 2027 the annual cash ISA limit will be £12,000 within the £20,000 overall limit, with savers over 65 still able to save £20,000 a year in cash, and that the ISA, Lifetime ISA and Junior ISA limits stay at their current levels until 5 April 2031. It also said a consultation in early 2026 would set out a new first-time-buyer ISA product to replace the Lifetime ISA. The ISA allowance explainer tracks the current schedule.

Inheritance Tax: frozen and pension change confirmed

Inheritance Tax thresholds remained frozen through 2025/26, with the Autumn Budget 2025 extending the freeze of the Nil-Rate Band and Residence Nil-Rate Band to April 2031.

Nil-Rate Band (NRB): £325,000 - the same level since 6 April 2009. Frozen to April 2031.
Residence Nil-Rate Band (RNRB): £175,000 where a main residence passes to direct descendants. Frozen to April 2031.
RNRB taper: reduces by £1 for every £2 the estate exceeds £2,000,000.
Spousal transfer: 100% of any unused NRB and RNRB transfers to the surviving spouse / civil partner.
Headline rate: 40% on the taxable estate. Reduced to 36% where 10% or more of the net estate is left to charity.

The bigger structural change for IHT was confirmed at the Autumn Budget 2025: unused pension funds and pension death benefits will be brought into the IHT estate from 6 April 2027 (a change first announced at the Autumn Budget 2024), now enacted in Finance Act 2026 sections 66 to 71. Business Property Relief and Agricultural Property Relief restructuring from 6 April 2026 was also confirmed by the Autumn Budget 2025, which additionally announced that any unused allowance would be transferable between spouses and civil partners. The allowance stood at £1m at that point; it was raised to £2.5m on 23 December 2025. The Inheritance Tax calculator models the combined NRB / RNRB / spousal-transfer arithmetic.

Scotland: Starter and Basic widened

The Scottish Budget 2025-26 (published December 2024) widened the Starter rate band to £2,827 and the Basic rate band to £14,921 of taxable income, keeping the six-band structure intact. The Top rate of 48% above £125,140 (introduced for 2024/25) was unchanged.

Band	Taxable income	Rate
Starter rate	£0 - £2,827	19%
Scottish basic rate	£2,827 - £14,921	20%
Intermediate rate	£14,921 - £31,092	21%
Higher rate	£31,092 - £62,430	42%
Advanced rate	£62,430 - £125,140	45%
Top rate	£125,140 - above	48%

In cash terms, a £45,000 salary in 2025/26 produced take-home of around £35,920 in rUK and about £35,492 in Scotland - a gap of around £428 a year. The gap widens further up the income scale as the Scottish higher (42%), advanced (45%) and top (48%) rates kick in. National Insurance and the Personal Allowance remained UK-wide. See the Scottish income tax guide for the full set of comparisons across income bands.

Worked example: a £45,000 worker across the cycle

To anchor the page in a concrete payslip, consider a worker earning £45,000 gross in England across the 2024/25, 2025/26 and 2026/27 tax years. The salary engine returns the following figures (reproducible via the on-site calculator with the tax-year selector):

Line	2024/25	2025/26	2026/27
Gross salary	£45,000	£45,000	£45,000
Personal Allowance	£12,570	£12,570	£12,570
Income Tax	£6,486	£6,486	£6,486
Employee Class 1 NI	£2,594	£2,594	£2,594
Total deductions	£9,080	£9,080	£9,080
Take-home (annual)	£35,920	£35,920	£35,920
Take-home (monthly)	£2,993	£2,993	£2,993
Employer NIC	£4,954	£6,000	£6,000

The 2024/25 to 2025/26 change at the £45,000 income level was small (about £0 a year) because both years sat on the same 8% employee NI, the same £12,570 Personal Allowance and the same band structure. The 2025/26 to 2026/27 step is similarly small (about £0) because the freeze and rate structure all continued. The headline employer-side change is the Employer NIC line, which jumped from £4,954 in 2024/25 (13.8% above £9,100) to £6,000 in 2025/26 (15% above £5,000) - a roughly 21% rise.

Run any other gross through the salary calculator and switch the tax-year selector across the three years to see the same trajectory on your own figures. Every number on this page traces to the same TaxRuleset that powers the on-site calculator, which in turn cites the gov.uk sources listed in the citations and on our methodology page.

Next year and previous coverage

Salary calculator See take-home for the 2025/26 tax year.

Frequently asked questions

What were the two UK fiscal events in 2025?

There were two: the Spring Statement on 26 March 2025 (Rachel Reeves' first Spring Statement, a forecast update rather than a Budget) and the Autumn Budget on 26 November 2025 (the second Budget of the Labour government). The Spring Statement left tax rates and thresholds alone - it updated the OBR forecast and announced welfare and spending changes, with smaller tax administration measures such as the next stage of Making Tax Digital. The Autumn Budget added the 2026/27 personal-tax architecture, which is covered in detail in our separate Budget 2026 summary page.

Did Spring Statement 2025 change any tax rates?

No tax rates or thresholds changed - the Spring Statement 2025 was positioned as a fiscal update rather than a tax event. The Chancellor had committed to one major fiscal event per year, and the personal-tax architecture for 2025/26 was already legislated through the Autumn Budget 2024 (employer NI 15% and £5,000 Secondary Threshold, CGT 18% / 24%, 5% SDLT additional-dwelling surcharge, non-dom abolition, VAT on private school fees). It did confirm that sole traders and landlords with qualifying income over £20,000 join Making Tax Digital for Income Tax from April 2028.

What was the OBR forecast at Spring Statement 2025?

The OBR forecast real GDP growth of 1.0% in 2025, slower than it had expected in October 2024, rising to 1.9% in 2026. CPI inflation was forecast to peak at 3.8% in July 2025 before falling close to the 2% target from the second quarter of 2026. Before policy changes the current budget had deteriorated by £14.0 billion in 2029-30, about three quarters of it from higher debt interest; a package of welfare and spending measures improved it by £10.9 billion, and the forecast surplus was restored to £9.9 billion.

What did the Autumn Budget 2025 announce?

It extended the freeze on the Personal Allowance, the higher-rate threshold and the additional-rate threshold for three more years to April 2031, and the Inheritance Tax thresholds by a year to April 2031. It raised the dividend ordinary and upper rates by 2 points from 6 April 2026 (to 10.75% and 35.75%), announced 2-point rises on savings income and separate property income rates from April 2027, cut the cash ISA limit to £12,000 within the £20,000 overall limit from April 2027 for savers under 65, and capped NI relief on salary-sacrificed pension contributions at £2,000 a year from 6 April 2029. Employee and employer NI rates and CGT rates were unchanged.

What employer NI rate took effect in 2025/26?

The Autumn Budget 2024 had legislated an increase to the employer Class 1 secondary rate from 13.8% to 15%, and a cut to the Secondary Threshold from £9,100 to £5,000, both effective 6 April 2025. The 2025/26 tax year was therefore the first full year on the new structure. On a £40,000 employee that meant £5,250 of employer NI, compared with £4,264 under the previous structure - a 23% increase, before any Employment Allowance.

Did the Personal Allowance change in 2025/26?

No - the Personal Allowance for 2025/26 stayed at £12,570, the same level it had held since 2021/22. The higher-rate threshold stayed at £50,270 and the additional-rate threshold at £125,140. The freeze was originally legislated to end in April 2028, and the Autumn Budget 2025 extended it to April 2031.

How did Capital Gains Tax apply in 2025/26?

CGT in 2025/26 was at the post-30-October-2024 schedule for the full tax year: 18% basic-rate and 24% higher / additional-rate on gains for all assets including residential property. The Annual Exempt Amount stayed at £3,000. Business Asset Disposal Relief rose from 10% to 14% from 6 April 2025 (the first step; it rose again to 18% from 6 April 2026), still on the first £1m of lifetime qualifying gains.

Was the non-dom regime fully abolished?

Yes - the abolition of the remittance basis for UK-resident non-doms took effect on 6 April 2025, replacing the previous regime with a four-year Foreign Income and Gains (FIG) regime for new UK arrivals who have not been UK-resident in the previous ten tax years. After four years they fall fully into UK arising-basis taxation. The Temporary Repatriation Facility (TRF) for pre-April 2025 foreign income and gains runs for 2025/26, 2026/27 and 2027/28 at 12% / 12% / 15% respectively (Finance Act 2025 Schedule 10).

Did the dividend allowance change in 2025/26?

Not in 2025/26: the Dividend Allowance stayed at £500, the level set on 6 April 2024, and the rates stayed at 8.75% (ordinary), 33.75% (upper) and 39.35% (additional). The Autumn Budget 2025 then raised the ordinary and upper rates by 2 points from 6 April 2026, to 10.75% and 35.75%; the additional rate and the allowance were unchanged.

Did ISA or pension allowances change?

Not for 2025/26 - the headline allowances stayed at their 2024/25 levels: ISA £20,000, Junior ISA £9,000, Lifetime ISA £4,000, pension Annual Allowance £60,000, Money Purchase Annual Allowance £10,000. The Autumn Budget 2025 announced that from 6 April 2027 the annual cash ISA limit will be £12,000 within the £20,000 overall limit, with savers over 65 still able to put £20,000 in cash, and that the ISA limits stay at their current levels until 5 April 2031.

What changed for inheritance tax around the 2025 events?

The Nil-Rate Band (£325,000) and Residence Nil-Rate Band (£175,000) stayed frozen. The Autumn Budget 2025 extended the freeze to April 2031. The Autumn Budget 2024 change to bring unused pension funds and pension death benefits into the IHT estate from 6 April 2027 went ahead and is now in Finance Act 2026. Business Property Relief and Agricultural Property Relief were also confirmed for restructuring from 6 April 2026, with the 100% rate limited to a £2.5m allowance per individual (announced at £1m, raised on 23 December 2025) and 50% relief above it.

How did £45k take-home evolve across the 2024/25 to 2026/27 cycle?

On £45,000 of gross salary in England, the engine returns take-home of £35,920 for 2024/25, £35,920 for 2025/26 and £35,920 for 2026/27. The 2024/25 to 2025/26 change was small in cash terms (about £0 a year) because both years sat on the same 8% employee NI and frozen Personal Allowance. The 2025/26 to 2026/27 step is similarly small because the freeze continued, isolating fiscal drag from any policy change. Most movement at the £45k income level since the start of the cycle has come from the January and April 2024 NI cuts, not from subsequent Budgets.