The government has just delivered the 2025 Budget, and there are several changes that could affect small businesses, landlords and anyone receiving rental, dividend, saving or other non-salary income.
At Fresh Clarity, our priority is helping you maintain clarity, control and confidence. So here’s a plain-English summary of the most important changes, what they mean in practice, and what you might want to consider doing now.
Key Changes
- Rental/property income tax rises by 2% from April 2027
- Dividends taxed by additional 2% from April 2026
- Savings taxed by additional 2% from April 2027
- Personal allowance thresholds frozen for further 3 years until 2030/31
- New mileage supplement for electric (3p) and hybrid (1.5p) vehicles from April 2028
- Employers can reimburse employees for eye tests, flu vaccines and home working equipment with same tax & NI relief as if providing these directly.
What this could mean for you (common scenarios)
- If you rent out a property (buy-to-let) From April 2027 expect higher tax on rental income. That will reduce net yield after tax and margins could be squeezed. Especially important if you rely on rental income for cashflow.
- If you draw income from dividends, savings or investments (rather than salary) Those income streams will now be taxed more heavily. Your take-home from dividends or interest will fall, which may affect personal disposable income or investment strategy.
- If you run a business with employees or pay yourself a salary While the budget didn’t raise national insurance or income tax rates, the threshold freeze means over time more people will drift into higher tax bands.
What you should do now
1. Cashflow ‘stress test’
Run your numbers for the next 12-24 months assuming the higher tax rates for property, savings, dividends, plus possible surcharge if you own high value properties. Work out your net after-tax income under those scenarios.
2. Review yields on property investments/buy-to-lets
If you have rental properties recalculate rental yield after tax under new rules. Consider whether rents, charges or property hold decisions need revisiting.
3. Review personal income mix
If part of your income comes from dividends, savings interest or rentals, think about whether that mix still makes sense. You might want to re-evaluate whether to pay more via salary, restructure holdings, or explore tax-efficient savings/pension options.
4. Consider pricing/margin adjustments in trading businesses
If you run a business employing people build in higher cost pressures when projecting budgets/plans to protect margins before inflation and threshold creep erodes them.
5. Estate and succession planning
If you have assets that might pass on to beneficiaries (e.g. business, property, shares) run a quick check to understand how the new BPR/relief changes affect you.
The above information is based on the announcements made 26th November 2025 and supporting HMRC policy papers. Specific details may change as draft legislation progresses through parliament.
If you need help understanding the impact the changes will have on you, please get in touch. http://www.freshclarity.co.uk/.