Budget 2025 – key takeaways from our Trusts & Estates Team

The Chancellor’s 2025 Budget introduces several significant changes that will impact individuals, families, and businesses over the coming years. Our Trusts & Estates Team has summarised the key points you need to know.

Income tax

• Thresholds frozen – Current income tax thresholds will remain unchanged until 2031.
• Property income rates – From April 2027, income from property will be taxed at 22%, 42%, and 47%, introducing a separate rate structure.
• Savings income – Tax rates on savings income will rise by 2% to 22% and 42% from April 2027.
• Dividend income – From April 2026, dividend tax rates will increase by 2%, moving to 10.75% and 35.7%.

ISAs

• The £20,000 annual ISA allowance remains in place.
• However, from the next tax year, £8,000 must be invested in qualifying investments (those aged 65 and over are exempt from this requirement).

Pensions

• From April 2029, salary sacrifice on pension contributions above £2,000 will attract National Insurance contributions.

Inheritance tax

• The Nil Rate Band, Residence Nil Rate Band, and 100% Agricultural Property Relief / Business Property Relief (APR/BPR) bands will remain unchanged until April 2031.
• The £1 million relief for APR and BPR will now be transferable between spouses.
• Payments from inherited blood compensation will be exempt from inheritance tax.

Property tax

• A new high-value property surcharge will apply from 2028:
  • Properties valued £2m–£2.5m: £2,500 per year
  • Properties over £5m: £7,500 per year

What this means for you

These changes could have a significant impact on estate planning, investment strategies, and tax efficiency. If you hold property, investments, or operate a family business, now is the time to review your plans.

Our Trusts & Estates Team is here to help you navigate these changes. Contact us today for tailored advice.