Budget 2025: higher taxes, limited growth – what does it mean for private clients?

For private clients and advisers, several points stand out:

• Frozen thresholds extended
  Income tax and National Insurance thresholds will remain frozen for a further three years from 2028. As the Chancellor acknowledged, this “will affect working people” and continues the fiscal drag already evident for employees, professionals and owner-managers.
• Unearned income in the crosshairs
  The basic and higher rates on property, savings and dividend income will rise by 2 percentage points from April 2026, with the additional rate on property and savings income also increasing. A landlord earning £25,000 will face a tax profile increasingly close to that of their tenant.
• High-value property surcharge (“mansion tax”)
  From 2028 a new high-value council tax surcharge will apply to a small proportion of properties above £2m, raising over £400m by 2031 and explicitly shifting the burden towards wealth concentrated in residential real estate.
• Pensions and salary sacrifice
  Core pension tax reliefs remain intact, but from 2029 a £2,000 cap will restrict the NIC advantages of salary-sacrificed contributions. Amounts above this threshold will be treated as ordinary employee contributions—material for higher earners and bonus-driven sectors.

• Additional burden on employers
  Employers face rising employment costs:

  • the National Living Wage and minimum wage rates increase again; and
  • from 2029, employer NIC will apply to salary-sacrificed pension contributions above £2,000.

• HMRC powers and avoidance
  The Chancellor is relying on close to £10bn a year by 2030 from expanded HMRC powers, promoter rack-downs and enhanced compliance activity.

  The publication of the Ray McCann report on the loan charge, and the accompanying settlement opportunity, will be important for those with historic disguised remuneration exposure.

• Welfare reforms
  The removal of the two-child benefit cap represents a major policy shift and is funded in part by higher taxation of assets, gambling activity and EV road use.

Kemi Badenoch’s response captured unease across business and financial sectors: future growth “revised down in every year of the scorecard”; tax rises on savings and dividends; a property surcharge that “clobbers family homes”; and a welfare bill that continues to rise. Her remark that the most efficient way to save taxpayers’ money would be to sack the Chancellor reflects the political tension underpinning this Budget.

There are also more symbolic measures: a national licensing framework intended to help councils keep pubs and late-night venues open longer. While potentially popular, it sits oddly alongside a fiscal strategy delivered against rising tax burdens, stressed public finances and weak investment incentives.

Our initial assessment

From our perspective, this Budget remains unconvincing as a growth strategy:

• The narrative of “fairness” is clear, and the burden has been decisively shifted towards wealth, property and unearned income.
• Beyond maintaining full expensing and some targeted incentives, there is limited tax-driven encouragement for entrepreneurship, investment or longer-term business planning.

As always, the detail sits in the HM Treasury and HMRC publications, which we are reviewing now.

Early (very high-level) planning considerations

Subject to the legislation, there may be merit in reviewing:

• the timing of dividends ahead of April 2026,

  • the timing of pension contributions ahead of April 2029, and

• structures for holding property given the relative increase in personal tax.

We will address these fully in our follow-up technical notes once the detail is digested.

Over the coming days we will publish targeted commentary for entrepreneurs, property owners, and private clients with investment income, pensions and cross-border considerations.

If you or your clients would like to discuss the impact of these reforms—on income, property, pensions or historic planning—please get in touch. We would be pleased to talk through the implications once the dust begins to settle.