The Chancellor has announced the November 2025 Budget, aimed at balancing the books and addressing the deficit highlighted by the Office for Budget Responsibility. While the Government had pledged not to raise VAT, Income Tax, or National Insurance, today’s announcements broke that pledge as VAT remains the only major tax untouched.
Here are some key points and observations from Richard Riley on the Budget and what it could mean for individuals and businesses:
Income Tax and National Insurance
The freezing of personal allowances until 2030 will mean more people are subject to higher rates of tax as incomes rise, so effectively an increase in Income Tax over time.
Small business owners face further pressures:
- Employers’ National Insurance contributions rose in the previous Budget.
- Today, dividend National Insurance contributions increase by 2%, affecting owners who take remuneration through dividends.
For employees using salary sacrifice for pensions, contributions above £2,000 are now subject to National Insurance:
- 8% up to around £50,000
- 2% on amounts above that
Additionally, pension funds are now included in Inheritance Tax calculations, reducing the incentive to save for retirement outside of rare defined benefit schemes such as those in the NHS or Civil Service.
Savings and Investments
Investors face several challenges following the Budget:
- Cash ISA limit has been reduced to £12,000 for those under 65. The aim is to encourage investment in Stocks & Shares ISAs, but these predominantly invest in international companies, so the argument for benefiting UK businesses is questionable.
- Venture Capital Trusts (VCTs) now offer 20% income tax relief, down from 30%, reducing incentives to invest in start-up and scale-up businesses.
- The Lifetime ISA, popular with under-40s saving for a property previously offering a 25% government bonus up to £4,000 per year, is set to be scrapped
The Budget also did not address the exodus of high-net-worth individuals. The scrapping of non-dom status, inheritance considerations and accumulated wealth over generations are discouraging residency in the UK, potentially diverting investment and job creation overseas.
Wealth Tax
The new Wealth Tax applies to homes over £2m, rising on properties worth up to £5m. This will impact those who are asset-rich but cash-poor, such as widows in the South East who may own valuable property but have limited liquid assets.
Electric Cars
While the Government encourages electric vehicles, infrastructure issues remain. Adding a 3p per mile charge for high-mileage electric or hybrid drivers may prompt some to return to petrol or diesel alternatives.
Buy-to-Let Landlords
Landlords face multiple pressures:
- Income Tax increase of 2%
- New obligations from the Renters’ Rights Bill
- Making Tax Digital rollout from April 2026, requiring quarterly reporting to HMRC
Combined, these changes may reduce the number of rental properties in an already competitive market.
Summary
Overall, this Budget presents challenges for:
- SMEs looking to grow
- Individuals saving for retirement
- Buy-to-let landlords
More details will emerge in the coming days, but it is clear that businesses and investors alike will need to carefully review their strategies to navigate the new measures.
At Richard Riley and Associates, we are here to help you understand the implications of the Budget, plan effectively, and ensure your finances remain on track. Get in touch if you need guidance as these changes come into force.