Rachel Reeves delivered her Autumn Budget on 26 November 2025. It raises around £26bn a year by 2029/30 through frozen thresholds, higher taxes on investment income and new charges on wealth and driving. The first wave of changes takes effect in April 2026, just weeks away.
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
April 2026 is weeks away. Review your salary and dividend mix with your accountant now. You may still 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 April 2026 (Urgent)
- Review your salary and dividend mix for the current tax year
- Bring forward any planned dividend payments before the 2% rate rise in April
- Map your current pension contributions and salary sacrifice arrangements
- Use our salary calculator to model the optimal salary/dividend split under the new rates
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 income tax rates stay the same. The extra tax burden comes from freezing thresholds until 2030/31 and raising taxes on dividends, savings, property income and EVs. The personal allowance remains at £12,570 and the higher rate threshold at £50,270. This fiscal drag means more of your income gets taxed at higher rates each year, even without a pay rise.
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. For agency owners giving themselves annual pay increases, this means a growing portion of salary falls into the 40% band each year. Over five years, this could add thousands to your tax bill even with no rate change.
When does dividend tax rise?
April 2026. Basic rate goes from 8.75% to 10.75%, higher rate from 33.75% to 35.75%. The dividend allowance remains at £500. On £50,000 of dividends at higher rate, that is £1,000 extra tax per year. For a complete guide with calculations and planning advice, see our dedicated dividend tax article.
Should I bring forward dividend payments before April 2026?
If your company has retained profits and you were planning to take dividends in 2026/27, bringing them forward before 6 April 2026 saves 2% on every pound above the £500 allowance. On £80,000 of dividends at higher rate, that is £1,590 saved. Check with your accountant that your company can support the payment and it does not push you into a higher band.
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. If your agency runs electric company cars or reimburses staff mileage, factor this new cost into your fleet budget from 2028 onwards.
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. If you currently put large amounts into your pension through salary sacrifice, the NI saving on contributions above £2,000 disappears. You still get income tax relief, but the total tax efficiency drops.
How does this Budget affect UK agency owners specifically?
Agency owners are hit through four channels: higher dividend tax from April 2026 (2% rise), frozen income tax thresholds dragging more salary into higher bands, new property income tax rates from April 2027 if you have rental income, and the salary sacrifice pension cap from April 2029. Most agency directors take a mix of salary and dividends, so the dividend rise hits directly. Use our salary calculator to model the optimal split.
What are the new property income tax rates from April 2027?
From April 2027, property income gets its own tax rates separate from earned income: 22% basic, 42% higher, and 47% additional. Finance cost relief is fixed at 22% regardless of your tax band. If you own buy-to-let property alongside your agency, your rental profit will be taxed at these new rates rather than your marginal income tax rate.
Does Corporation Tax change in this Budget?
No. Corporation Tax stays at 25% for profits above £250,000 and 19% for profits under £50,000, with marginal relief between those thresholds. The main impact for limited company directors is the dividend tax rise, which affects how you extract profits personally.
How can I reduce my tax bill after these Budget changes?
Focus on three areas: optimise your salary/dividend mix using the new rates (our guide to paying yourself walks through this), maximise pension contributions before the 2029 salary sacrifice cap, and ensure you are claiming all available Corporation Tax deductions including R&D tax credits if you build custom software or tools.
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.