Rachel Reeves has delivered her Autumn Budget 2025 today, 26 November. It raises around £26bn a year by 2029/30 through frozen thresholds, higher taxes on investment income and new charges on wealth and driving.
If you run a UK marketing or creative agency, this article tells you exactly how you are affected and what to do about it.
At a Glance: The Five Big Changes
How This Affects You As An Agency Owner
The Budget hits agency owners and small business directors through four main channels. Here is what each one means in practice.
Your Dividends Cost More
From April 2026, dividend tax rises by 2 percentage points.
Example: £50,000 dividends at higher rate
Your Salary Gets Squeezed
Frozen thresholds mean more income taxed at higher rates as your pay rises.
The personal allowance stays at £12,570 until 2030/31.
Every pay rise pushes more of your income into the 40% band, even though rates have not changed.
Your Pension Strategy Changes
From April 2029, salary sacrifice for pensions is capped.
Only the first £2,000 of pension contributions via salary sacrifice are free of National Insurance. Above that, you and your company pay NI.
Your Property and Savings
New separate tax rates on rental and savings income from April 2027.
If you own rental property or hold large cash balances outside ISAs, your net returns fall. Homes over £2m also face a new council tax surcharge from 2028.
What To Do Now
Before April 2026, review your salary and dividend mix with your accountant. You may be able to bring forward dividend payments before the rate rises.
When Each Change Takes Effect
| Date | What Changes |
|---|---|
| April 2026 | Dividend tax rises 2%, National Living Wage to £12.71, two child benefit cap removed, energy bills cut £150 |
| Sept 2026 | 5p fuel duty cut starts to reverse |
| April 2027 | New property income tax rates (22%/42%/47%), savings tax up 2%, ISA rules tighten, fuel duty rises with RPI |
| April 2028 | EV mileage charge (3p/mile), council tax surcharge on homes over £2m |
| April 2029 | Salary sacrifice pension cap (£2,000 NI free limit) |
The Key Tax Numbers
Dividend Tax Rates
| Rate Band | Current | From April 2026 |
|---|---|---|
| Basic rate | 8.75% | 10.75% |
| Higher rate | 33.75% | 35.75% |
Property Income Tax Rates (from April 2027)
| Rate Band | New Property Rate |
|---|---|
| Basic rate | 22% |
| Higher rate | 42% |
| Additional rate | 47% |
Finance cost relief is fixed at 22% regardless of your tax band.
High Value Property Surcharge (from April 2028)
| Property Value | Annual Surcharge |
|---|---|
| £2m to £2.5m | ~£2,500 |
| £5m and above | £7,500+ |
This is on top of existing council tax.
What This Means For Your Team
For Employed Staff
- National Living Wage rises to £12.71 from April 2026
- Energy bills cut by ~£150 a year
- Rail fares frozen
- Frozen thresholds still drag more income into tax over time
For Freelancers
- Client budgets may tighten as their costs rise
- Dividend and savings tax rises hit you too if you trade via a company
- Some clients may prefer flexible resource as permanent hire costs rise
Your Budget 2025 Action Checklist
Before End of 2025
- Review your salary and dividend mix for this year and next
- Check if you can bring forward any dividend payments before April 2026
- Map your current pension contributions and salary sacrifice arrangements
Q1 2026
- Update pricing and fees to reflect higher wage and tax costs
- Refresh your 12 month cash flow forecast with new assumptions
- Talk to your accountant about a joined up plan for salary, dividends and pensions
Ongoing
- Monitor client and project margins monthly
- Keep an eye on property values if you are near the £2m threshold
- Review EV mileage costs annually as the new charge approaches
Quick Answers
Did income tax rates change?
No. Basic, higher and additional rates stay the same. The extra tax comes from freezing thresholds and raising taxes on dividends, savings, property income and EVs.
How long are thresholds frozen for?
Until 2030/31. The personal allowance stays at £12,570 and the higher rate threshold at £50,270 for the rest of the decade.
When does dividend tax rise?
April 2026. Basic rate goes to 10.75%, higher rate to 35.75%. For a complete guide with calculations and planning advice, see our dedicated dividend tax article.
What is the EV mileage charge?
From April 2028, electric vehicles pay 3p per mile and plug in hybrids pay 1.5p per mile. This replaces lost fuel duty as more drivers switch to EVs.
What happens to salary sacrifice for pensions?
From April 2029, only the first £2,000 of pension contributions via salary sacrifice are free of National Insurance. Above that, both employer and employee pay NI on the excess.
Get Help With Your Budget Planning
If you run a marketing or creative agency, you do not need another dense Budget summary. You need a clear plan for your numbers.
Alto Accounting specialises in UK agency accounting. We can map exactly how Autumn Budget 2025 hits your cash flow, margins and take home pay, and help you build a sensible plan for the changes ahead.
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