The Tax Changes of 2025, The Taxman Cometh!
- Shaun Crozier
- Sep 6
- 2 min read
You may have noticed that your tax bill has been increasing, dividends return tighter, asset sales are more costly.
Tax rules may appear unchanged, but subtle shifts are accumulating, so lets review the tax changes of 2025.
The Tax Changes of 2025
So far over the past year, several personal tax rules have undergone changes. Here’s what to watch out for.
Fiscal Drag
The personal allowance (£12,570) and higher-rate threshold (£50,270) remain unchanged but rising wages are dragging more people than ever into paying higher tax, this is the dreaded fiscal drag in action! Learn more about fiscal drag here
Why it matters: You may be paying more tax on income that doesn’t feel like a real gain.
Capital Gains Tax Allowance Halved
The annual CGT exemption is now just £3,000, down from £6,000 last year, ouch! Selling shares, property, or a part of a business now results in an even higher tax bill.
Tip: Timing disposals and using available losses is now more critical than ever, as is utilising tax-free transfers to spouses/civil partners.
Dividend Allowance Cut to £500
The dividend allowance has shrunk from £2,000 to £500. If you draw dividends from a business or investments, more of that income is now taxed reducing your real rate of return.
Watch out: Even modest dividends can now create unexpected tax bills!
Lifetime Pension Allowance Removed
The lifetime cap on pension savings was removed in April 2024, but the £60,000 annual allowance remains. For high earners with threshold income over £200,000 and adjusted income over £260,000, it tapers down to £10,000.
Takeaway: You can build a larger pension pot, but strategic planning is even more essential to maximise tax relief.
National Insurance Adjustments
Employee NI rates have fallen from 12% to 10%, then to 8% on earnings between £12,570 and £50,270. That’s a meaningful saving, but with frozen income tax bands, higher earners may see less overall relief than it looks on paper.
Action: Reviewing both your NI and income tax impact together, especially if your earnings hover near key thresholds.
What’s Trending in Tax Right Now?
I was going to write a short piece here to close this article but have decided there has been so much leaked/spoken about in the press a more detailed piece is needed.
At the time of writing, I think something like 16 different tax changes/new taxes have been floated, so watch out for my next article in the coming week covering all of these!
Budget Announcement has now been set for 26th November, the taxman cometh again!
Some of our previous posts that maybe of interest.
