Autumn Budget 2025: What Rachel Reeves Tax Rises Mean For UK Agencies

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.