Introduction
Budget 2025 places extra focus on wealth and investment income – including:
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Dividends from shares and family companies
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Interest on savings and bonds
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Rental profits from property
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Profits when selling or passing on a business
For many people, this is where the long-term tax increases will be felt most.
For full official details, please see the Budget 2025 information on GOV.UK:
https://www.gov.uk/government/collections/budget-2025
1. Dividends – from April 2026
From 6 April 2026, dividend tax rates increase:
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Basic-rate band dividends: 10.75%
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Higher-rate band dividends: 35.75%
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Additional-rate band dividends: 39.35%
This affects:
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Individuals with share portfolios held outside ISAs and pensions
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Business owners and directors who take some or all of their income as dividends (see also Part 2)
Planning ideas:
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Make better use of ISA and pension allowances for long-term investments
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Consider which spouse or partner should hold which investments, especially where one is a basic-rate taxpayer and the other is higher-rate
2. Savings Interest – from April 2027
From 6 April 2027, tax on interest from savings (outside tax-free accounts) increases:
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22% for basic-rate taxpayers
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42% for higher-rate taxpayers
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47% for additional-rate taxpayers
At the same time, the cash ISA allowance for under-65s is expected to reduce from £20,000 to £12,000 per year from 2027, while over-65s keep the £20,000 limit.
Planning ideas:
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Make full use of the higher £20,000 ISA allowance in the years before 2027
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Review how much of your interest is covered by the personal savings allowance
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Look at whether some savings should be held by the lower-earning spouse, if appropriate
3. Property Income for Landlords – from April 2027
From April 2027, rental income will fall into separate “property income” tax bands:
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22% for income in what would usually be the basic-rate band
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42% for income in the higher-rate band
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47% for income in the additional-rate band
Combined with earlier changes (like restrictions on mortgage interest relief), this will:
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Reduce net yields for many landlords
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Make it more important to review your portfolio – including whether each property is genuinely profitable after tax
For owners of higher-value properties, there are also future plans for higher council tax on very expensive homes, which will affect a smaller number of people but is worth noting for long-term planning.
4. Business Sales, Pensions and Longer-Term Wealth
Several other measures from recent and upcoming changes are relevant to long-term wealth planning:
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Employee Ownership Trust (EOT) relief becoming less generous – disposals to EOTs will no longer enjoy full CGT relief on the entire gain.
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Business Asset Disposal Relief (BADR) moving to higher tax rates than in the past, affecting the tax you pay when selling a trading company or business.
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Future changes will bring some pension pots and large death-benefit schemes more clearly into the inheritance tax net and limit some of the National Insurance savings from salary-sacrifice pension contributions.
None of this stops people using pensions, EOTs or BADR – but it does mean:
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The tax cost of doing nothing is higher
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The advantage of proper planning is bigger
5. Questions Clients Are Likely to Ask
Here are the kinds of questions many clients will have:
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“Should I move more of my savings into ISAs before 2027?”
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“Is it still worth having buy-to-lets in my own name?”
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“Would it be better to hold property through a company?”
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“Is now a good time to sell my business, or should I wait?”
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“Does an Employee Ownership Trust still make sense for my succession plan?”
These questions don’t have one-size-fits-all answers – they depend on your income level, assets, age and goals.
6. How BB Accounting Solutions Can Help
We can help you:
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Review how your wealth is structured – looking at savings, investments, pensions, property and business interests together
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Plan for landlord tax changes – working through the after-tax return on each property and whether any should be sold, refinanced or moved into a different structure
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Coordinate with financial advisers and solicitors – so that tax, investment and legal advice all align rather than contradict each other
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Model business sale options – including EOTs, trade sales and management buy-outs, so you understand the tax picture before making a decision
Next step:
If you have investments, rental properties or are thinking about selling a business in the next few years, now is a good time to sit down with us and plan for these Budget 2025 changes.