Stealth Taxes, ISA Cuts & EV Charges: The Zyla Guide to the 2025 Budget
In an unusual turn of events, the details of Chancellor Rachel Reeves’ Autumn Budget appear to have been released a little earlier than planned.
Due to a reported ‘technical error’ with an Office for Budget Responsibility (OBR) report, we have a clear view of the financial landscape for the coming years before the official speech has even concluded.
At Zyla Accountants, we’ve combed through the data to separate the headlines from the fine print.
While there are some welcome freezes on day-to-day costs, there are also significant changes to savings, investments, and property taxation that will require careful planning.
Here is our breakdown of what these changes mean for your pocket and your business.
The "Stealth Tax" Continues
Perhaps the most significant announcement is the extension of the freeze on tax thresholds.
The Freeze: Income Tax and National Insurance thresholds are now set to remain frozen until April 2031.
The Impact: In economic terms, this is known as ‘fiscal drag’. As your wages rise with inflation or promotions, the point at which you pay tax stays the same. This inevitably pulls more people into paying tax for the first time, and pushes middle-earners into the higher tax brackets much faster than usual.
A Shake-Up for Savers and Investors
The Chancellor is making moves to encourage investment over cash savings, and this brings quite a radical change to the ISA landscape.
Cash ISA Limit Cut: From April 2027, if you are under 65, your Cash ISA allowance drops to £12,000 (down from £20,000).
The Silver Lining: Crucially, your total ISA allowance remains £20,000. The government is essentially nudging you to put the remaining £8,000 into Stocks & Shares ISAs.
Dividend Tax Rise: If you own a limited company or hold shares outside of an ISA, note that dividend tax rates will jump by 2% across the board from April 2026.
Landlords and Property Income
For our clients with property portfolios, the landscape is shifting. The government aims to separate property income from standard income, creating a distinct tax band.
New Rates: From April 2027, property income will be taxed at rates 2% higher than standard Income Tax (22% basic, 42% higher, 47% additional).
Planning Required: If you rely on rental yields, we need to sit down and review your forecasting to ensure your margins remain healthy.
The Road Ahead: Electric Vehicles
The long-discussed "pay-per-mile" scheme is becoming a reality.
The Date: Coming into force from April 2028.
The Cost: Pure electric vehicles (EVs) will pay roughly 3p per mile, while plug-in hybrids will pay 1.5p.
No Trackers: The government has assured drivers that this will be calculated via odometer checks at your MOT, rather than "spy in the car" GPS trackers.
Good News for Wages and Pensions
It isn't all tightening belts; there are boosts for workers and retirees.
State Pension: Under the Triple Lock, the State Pension will rise by 4.8% in April 2026.
Minimum Wage: The National Living Wage is rising by 4.1% to £12.71 an hour. While this is great news for employees, for our business clients, this means payroll costs will increase, so cash-flow planning for 2026 is essential.
Day-to-Day Costs
Finally, a few smaller measures designed to help with the cost of living:
Rail Fares: Regulated fares in England will be frozen for 2026.
Prescriptions: Costs in England will remain frozen at £9.90.
Help to Save: This popular scheme for low earners is being made permanent from 2028.
What should you do now?
While some of these changes, like the ISA cut and Pay-Per-Mile, are a few years away, the tax threshold freezes affect you immediately.
The landscape is changing, but you don't have to navigate it alone. If you are worried about the Dividend Tax hike or the new Property Income rates, get in touch with the team at Zyla.
We can help you adjust your strategy today to protect your tomorrow.