Last week, the Chancellor announced her Autumn Statement – salient points include the following:-

 

Increase in dividend tax

The rates of corporation tax remain unchanged at 19% or 25% but the Chancellor announced an increase of 2% on the ordinary and upper rates of dividend income tax from April 2026 as follows:-

· Ordinary 8.75% to 10.75%

· Upper 33.75% to 35.75%

· Additional rate of 39.35% remains unchanged

From April 2026, the notional dividend tax credit previously available to non-UK residents on UK dividend income will be abolished. Non-residents will now be treated identically to UK residents for dividend tax purposes, subject to the same rates as above.

 

Increase in property and savings tax

From April 2027, the rate of income tax applicable to rental income and savings will rise by two percentage points to 22% for basic rate taxpayers, 42% for the savings higher rate and 47% for the savings additional rate.

 

Electric Vehicles – pay per mile tax

With effect from April 2028, a new tax on electric vehicles will be introduced, based on the number of miles driven. For fully electric cars, 3p per mile will be charged; hybrid cars will be charged at 1.5p per mile.

 

Capping of pension salary sacrifice for NIC

From April 2029, there will be a cap of £2,000 annually on the amount of salary that can be sacrificed. Both the employer and employee contributions will be levied on any contributions above the threshold. Those with pensionable pay of £40,000 or less and paying the 5% minimum should not be affected.

National Living Wage (NLW) and National Minimum Wage (NMW)

From April 2026, the NLW for workers aged 21 and over will increase by 4.1%, from £12.21 to £12.71 an hour. Larger increases have been given to the NMW those aged 18- 20 (an 8.5% increase, from £10 to £10.85 an hour) and apprentices and under 18s (a 6% increase, from £7.55 to £8 an hour).

 

Making Tax Digital (MTD)

Making Tax Digital for Income Tax (filing draft accounts to HMRC every 3 months in a digital format) will continue as planned in April 2026.

 

Other announcements

· Personal tax thresholds – i.e., personal allowance, basic and higher-rate thresholds for income tax remain frozen until April 2031 at the current levels of £12,570 and £50,270.

· The main rate of writing down allowance will be cut to 14% (from 18%), and a 40% first-year allowance will be introduced from January 2026. The annual investment allowance is still in place for capital items up to £1 million.

· As previously announced, Business Asset Disposal Relief (BADR, formerly Entrepreneurs’ Relief) CGT rate increases from 14% to 18% on the first £1m of qualifying gains from 6 April 2026.

· From the tax year 2026/27 onwards, the option to pay voluntary Class 2 NICs for periods abroad will be removed.

· From April 2026, penalties for submitting Corporation Tax returns late will double.