Summary
The lead-up to the 2025 Budget was unusually turbulent, marked by the premature release of the OBR report before the Chancellor had begun her statement. As a result, Budget Day delivered few surprises, with many measures already well trailed.
- The most notable change was a further amendment to the threshold rules for agricultural and business property relief, with the amount initially set at £1million. The Budget announced that any unused portion will now be able to be transferred between spouses or civil partners on death. Further, following continued lobbying of this measure, in December the Government announced the threshold was to be increased to £2.5m providing an early Christmas present for farmers and entrepreneurs.
- There were no amendments to Capital Gains Tax (CGT) rates. However, advisers should note changes to Income Tax from April 2027 and revised dividend tax rates for basic and higher rate taxpayers from April 2026. A new ordering rule will require the personal allowance to be set against non-savings income first. Rental income will now follow non-savings income in the tax hierarchy.
- The Government also confirmed a High Value Council Tax Surcharge from April 2028 for properties valued above £2million.
- For international clients, overseas insurance bonds remain attractive. Previous abolishment of the remittance basis of taxation enhances their appeal for those who cannot benefit from the Foreign Income and Gains (‘FIG’) regime, or who intend to remain in the UK beyond the FIG eligibility window.