On 26 March 2025, Chancellor Rachel Reeves presented her first Spring Budget. While there were no unexpected tax hikes, the budget outlined several important updates that could affect your income, pensions, property investments, and business planning.

At MPA Financial Management Limited, we understand the importance of clear, straightforward financial advice. To help you navigate the budget announcements, our Adviser Eamonn Lynch DipPFS has summarised the key changes below.

Key Takeaways At a Glance

Income Tax & Allowances

• Personal allowance remains frozen at £12,570 until April 2028.
• Higher tax rate threshold stays at £50,270; the top rate (45%) applies from £125,140.
• No changes announced for savings or dividend tax rates.
• Scottish residents: Remember your distinct tax bands range from 19% to 48%.

National Insurance

• Employer NICs will rise from 13.8% to 15% starting April 2025.
• Self-employed NIC rates reduced to 6% and 2% from April 2025.
• Good news for small businesses: Employment Allowance doubles to £10,500.

Pensions

• Tax-free lump sum remains capped at £268,275.
• From 2027, unused pension funds and death benefits will become subject to Inheritance Tax.
• Furnished Holiday Let income no longer counts toward pension contribution limits.

Capital Gains Tax

• Rates on most gains increase to 18% (basic) and 24% (higher).
• Business Asset Disposal Relief rises to 14% from April 2025, increasing further to 18% from 2026.
• Annual exemption remains at £3,000.

Inheritance Tax

• Nil rate bands stay frozen until 2030.
• Agricultural and Business Property Reliefs capped at £1 million from 2026.

Making Tax Digital (MTD)

Mandatory implementation dates:

• Earnings above £50,000: from April 2026.
• Earnings above £30,000: from April 2027.
• Earnings above £20,000: from April 2028.
• Increased penalties for late payment—important to keep your records accurate and up-to-date.

For Business Owners

• Corporation Tax remains at 25%.
• Continuation of Full Expensing and 100% first-year allowances for most equipment and electric vehicle infrastructure.
• Furnished Holiday Let tax advantages will end in April 2025; please consult us if you’re affected.

Other Important Updates

• VAT of 20% will apply to private school fees from January 2025.
• National Living Wage increases significantly to £12.21 per hour for those aged 21 and above.

How This Affects You

Whether you’re managing personal finances, operating rental properties, leading a business, or planning your estate, these updates could significantly impact your financial decisions.

If you have questions or need tailored advice on pensions, property investments, tax strategies, or any other financial planning areas, please don’t hesitate to get in touch.