Budget 2025: Comprehensive Guide for Businesses and Individuals
posted 3rd December 2025
On 26th November 2025, Chancellor Rachel Reeves delivered the government's second Budget, introducing £26 billion in tax rises alongside measures to maintain economic investment and reduce inflation.
At GS Verde Group, we understand that navigating these changes requires expert insight and careful consideration. The decisions you make today, whether relating to pension contributions, capital investments, property holdings, or business structure will have lasting implications for your financial position and commercial success.
Professional advice is essential. Tax policy changes of this magnitude demand a strategic response tailored to your specific circumstances. Whether you're a business owner planning for growth, an individual managing investments, or a management team considering exit strategies, informed decision-making is crucial for both short-term efficiency and long-term prosperity.
This comprehensive guide outlines the key measures announced in Budget 2025. We encourage you to review these changes carefully and reach out to our team to discuss how they impact you. Our multi-discipline approach ensures you receive integrated advice across tax, accounting, legal, and corporate finance, helping you turn these challenges into opportunities.
Income Tax and National Insurance Changes
Property Income Tax Rates
From 6 April 2027, property income will be taxed at new, higher rates:
• Basic rate: 22%
• Higher rate: 42%
• Additional rate: 47%
Impact:Landlords and property investors face substantial rate increases. Review your portfolios now and consider restructuring options or alternative investment strategies.
Savings Income Tax Rates
From 6 April 2027:
• Basic rate: 22% (up from 20%)
• Higher rate: 42% (up from 40%)
• Additional rate: 47% (up from 45%)
Impact: Savers with substantial interest income should maximize ISA allowances to shelter income from these increased rates.
Dividend Tax Rates
From 6 April 2026:
- Dividend ordinary rate: 10.75% (up 2%)
- Dividend higher rate: 35.75% (up 2%)
- Dividend additional rate: 39.35% (unchanged)
Impact:Business owners extracting profits via dividends and investors with significant shareholdings will face higher tax bills.
Note:The way you report and pay tax remains unchanged, only the rates are changing. No immediate action required with HMRC.
Pension Contributions and Salary Sacrifice Reform
The Changes (Effective April 2029)
Salary-sacrificed pension contributions above £2,000 per year will be subject to both employer and employee NICs.
Key points:
• You can still contribute above £2,000 via salary sacrifice, but it will attract NICs
• Most employees making typical contributions will be unaffected
• All contributions remain exempt from Income Tax (subject to usual limits)
• Tax Free Childcare and Child Benefit salary sacrifice arrangements are unaffected
Action needed:
Employers: Review pension schemes and employee benefit structures
High earners: You have until April 2029 to maximize current tax advantages
National Insurance Contributions Changes
Voluntary NICs for Periods Abroad
From April 2026:
• Voluntary Class 2 NICs for periods abroad will be removed
• New Class 3 NICs applications for periods abroad will require 10 years continuous UK residency or NI contributions
• This doesn't affect purchasing NICs for tax years prior to 2026-27
• Veteran's Relief Extended
The NI relief for employers hiring veterans has been extended until the 2027-28 tax year (previously ending April 2026).
Capital Gains Tax Changes
Employee Ownership Trusts Relief Reduced
Capital Gains Tax relief on qualifying disposals to Employee Ownership Trusts drops from 100% to 50%, (an effective rate of 12% taxation on gains) - effective 26 November 2025.
Incorporation Relief Claims
From 6 April 2026, you must make a formal claim for incorporation relief in your Self Assessment return, no longer automatic.
Employment and Benefits Changes
Payments for Cancelled Shifts
Payments for cancelled, moved, or curtailed shifts are now confirmed as subject to Income Tax and National Insurance contributions.
Benefits in Kind: Real-Time Reporting
Mandatory real-time reporting of most benefits in kind and taxable expenses begins 6 April 2027.
Action needed: Employers should begin preparing systems now. HMRC has published draft guidance with worked examples.
Homeworking Expenses Exemptions
From 6 April 2026, new Income Tax and NI exemptions for:
• Homeworking equipment reimbursement
• Eye tests
• Flu vaccination provision and reimbursement
These simplifications reduce admin burdens and provide clarity on common workplace costs.
Employee Car Ownership Schemes (ECOS)
Vehicles provided through ECOS will become taxable benefits from 6 April 2030, with transitional arrangements until April 2031.
Tax Compliance and Enforcement
Enhanced Informants Reward Scheme
HMRC's new scheme targets serious non-compliance:
• Rewards of 15-30% of tax recovered for cases over £1.5 million
• Uncapped, taxable rewards paid after successful recovery
• Focus on large companies, wealthy individuals, offshore activities, and avoidance schemes
Message: HMRC is serious about pursuing tax non-compliance.
• High Street Compliance Initiatives
• Increased enforcement activity including:
• 350 newly recruited criminal investigators
• Focus on illicit tobacco, vaping products, and small business fraud
• £10 million additional funding for border enforcement
• 2026 consultation on software standards to tackle electronic sales suppression
Tax Administration Changes
Corporation Tax Late Filing Penalties Doubled
From 1 April 2026, late filing penalties will double.
Action needed: Review your filing processes to ensure consistent on-time submission.
Digital Communications by Default
From spring 2026, HMRC will send digital letters by default to customers using digital services. You can opt out if needed; digitally excluded customers will still receive paper communications.
Business Systems Integration
Call for evidence coming in early 2026 on increasing uptake of business systems integration for automatic transfer of sales and purchase data into accounting software.
Investment and Growth Opportunities in Wales
Budget 2025 includes significant investment in Wales, creating substantial opportunities for businesses and communities across the region.
Major Infrastructure and Energy Projects
Small Modular Reactors in Anglesey: The UK's first small modular reactors will be pioneered at Anglesey in North Wales, backed by over £2.5 billion funding, the most significant industrial investment in North Wales in a generation. This project is expected to support up to 3,000 jobs at peak construction and power the equivalent of around three million homes.
Cardiff Parkway Development: The government will work with the Welsh Government and private sector to develop plans for delivery and funding of a station to serve the area as soon as possible.
Infrastructure Connectivity:At least £445 million of funding has been allocated to upgrade the Core Valley Lines, enhance Cardiff Central Station, and increase connectivity across Wales.
AI and Technology Investment
AI Growth Zones: North Wales and South Wales are each receiving £5 million investment in AI adoption and skills:
North Wales: 3,450 jobs poised to come online as a direct result
South Wales: More than 5,000 new jobs expected over the next decade
Semiconductor Investment: £10 million is being invested in semiconductor activity in South Wales, focusing on technologies critical to AI and data centres.
Freeports and Investment Zones
Anglesey Freeport: The full business case has been approved, releasing £25 million of seed capital funding. The Freeport is now fully open for business, focusing on renewable energy and digital technology sectors.
Celtic Freeport: £4.2 million has been announced for brownfield land remediation in Port Talbot, supporting the Harbourside Innovation District aligned to the Celtic Freeport.
Flintshire and Wrexham Investment Zone: Backed by £160 million over 10 years, this zone focuses on advanced manufacturing and is expected to leverage over £1 billion in private sector investment, creating over 6,000 new high-quality jobs.
Clean Energy and Manufacturing
Carbon Capture Technology: The UK's first carbon capture-enabled cement plant at Padeswood in Flintshire has achieved final investment decision and will begin construction, delivering world-leading technology and highly skilled jobs.
Clean Energy Jobs: Wales will benefit from up to 20,000 clean energy jobs by 2030, with Pembrokeshire benefiting from a skills pilot scheme.
Business Support and Innovation
Research and Development: Welsh firms will be supported to scale cutting-edge technologies, and universities will benefit from £4 million per year in new fellowship funding for academic entrepreneurs.
Automotive Sector: £1.5 million of funding for three Welsh automotive companies from the latest DRIVE35 programme.
Local Innovation: £30 million direct award for Cardiff City Region as part of the Local Innovation Partnership Fund.
Defence Growth Deal: A new Defence Growth Deal is being developed for Wales, adding to the 3,900 jobs already directly supported by defence spending.
Brand Wales: £2.4 million in funding to launch a new Brand Wales Programme, promoting Welsh investment opportunities and exports globally.
Welsh Government Funding
The Welsh Government receives an additional £320 million resource funding and £185 million capital funding through the Barnett formula. The Welsh Government continues to receive at least 20% more per person than equivalent spending in the rest of the UK.
From 2026-27, the Welsh Government's borrowing and reserve limits will increase by 10%, with annual inflation-linked increases from 2027-28.
What this means for Welsh businesses: Budget 2025 creates a significant opportunity landscape across energy, technology, manufacturing, and innovation sectors. Businesses should explore how these investments align with their growth plans and consider opportunities in Freeports, Investment Zones, and funded programmes.
How GS Verde Group Can Help
Budget 2025 creates both challenges and opportunities. Our integrated team of tax, accounting, legal, and corporate finance specialists can help you assess how these changes affect your position, optimize your tax strategy across pensions, investments and property income, and plan timing for major decisions like exits or restructuring. With many changes taking effect in 2026-27 or beyond, now is the time to plan strategically, while some opportunities, like the Employee Ownership Trust relief, have imminent deadlines requiring urgent action.
Get in Touch
Speak to us about your obligations to Budget 2025 and how affects you or your business. Our 'One Team' approach ensures comprehensive, coordinated advice that maximizes opportunities and ensures full compliance. We manage your obligations to HMRC and support you through every stage of your business journey.
