UK Autumn Budget 2025 – What It Means for UK Expats
The latest Autumn Budget brings a wave of tax rises and structural changes—particularly around property income, dividends and pensions—that will reshape how many British expats manage their UK finances. Understanding these shifts early is now essential for good planning.
Chancellor Rachel Reeves delivered the 2025 Autumn Budget on 26 November, announcing tax-raising measures worth an estimated £26 billion. Much of this comes from freezing tax thresholds for longer, increasing taxes on property, dividends and savings, and tightening rules around pensions and National Insurance. While the Budget applies primarily to UK residents, many changes affect British expats too—particularly those with UK assets, UK pensions, or UK-source income. This analysis is based on the official Autumn Budget summary document.
Income Tax: Threshold Freeze Extended to 2031
The basic rate band (£37,700), higher-rate threshold (£50,270) and additional-rate threshold (£125,140) remain frozen until April 2031. For UK earners, this means more income will drift into higher tax bands over time (“fiscal drag”). Expats with UK property rental income or partial UK earnings will feel this too. The personal allowance (£12,570) is also frozen to 2031 and still tapers away once income exceeds £100,000.
Property, Dividend and Savings Income: Rates Rising
Property Income (from April 2027): New rates apply—22% for basic-rate taxpayers, 42% for higher-rate taxpayers, and 47% for additional-rate taxpayers. A significant shift for landlords and expats retaining UK property.
Dividend Tax (from April 2026): Rates increase to 10.75% (basic), 35.75% (higher), with the additional-rate unchanged at 39.35%. The £500 allowance remains.
Savings Income (from April 2027): Tax on interest rises by 2% across all bands (22%, 42%, 47%).
Pensions: Major Changes Affecting Expats
Salary Sacrifice (from April 2029): Only the first £2,000 of employee pension contributions via salary sacrifice will be exempt from NICs. Amounts above this will attract both employer and employee NICs.
Pension Death Benefits (from April 2027): Unused pension funds will fall into the estate for Inheritance Tax. This reverses a longstanding advantage of UK pensions for wealth transfer. Death-in-service benefits remain excluded.
High-Value Property Surcharge
From April 2028, properties valued above £2 million will face an additional annual Council Tax surcharge: £2,500 for £2m–£2.5m, £3,500 for £2.5m–£3.5m, £5,000 for £3.5m–£5m, and £7,500 for £5m+.
National Insurance
Employee NICs remain at 8% and 2%, employer NICs at 15%. The Secondary Threshold stays frozen at £5,000 until 2031. Class 2 and Class 3 voluntary contributions increase from 2026/27—relevant for expats maintaining UK State Pension eligibility.
Business & Investment Reliefs
Corporation Tax stays at 19% below £50k profits and 25% above £250k. Writing Down Allowance falls from 18% to 14% from April 2026. EIS and VCT limits increase significantly from April 2026, doubling many company thresholds. VCT Income Tax relief, however, reduces from 30% to 20%.
Inheritance Tax Changes
Nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen until 2031. From April 2026, Agricultural and Business Property Reliefs are capped at £1 million per person, with excess receiving 50% relief. The allowance becomes transferable between spouses/civil partners.
Other Measures
A mileage-based Electric Vehicle tax begins in April 2028. Making Tax Digital will apply to individuals with income over £50k from 2026, £30k from 2027, and £20k from 2028. VAT registration threshold remains £90,000.
What This Means for Expats
Several measures directly affect British nationals living overseas: increased taxes on rental income, higher rates on UK dividends and savings, pension death benefits becoming taxable, frozen thresholds increasing effective tax, and higher voluntary NIC costs. Holding UK assets will generally become more expensive from a tax perspective over the coming years.
Our View at Proctor Wealth Associates
This Budget represents one of the most significant shifts in the UK tax landscape in over a decade. For expats—particularly those with pensions, property or investments in the UK—this is a crucial time to review financial plans. Key areas include pension withdrawal strategy, UK property viability, portfolio tax-efficiency, domicile considerations, and business succession planning. If you would like to discuss any of these points in more detail, feel free to schedule a call.
Will is an Independent Financial Adviser with over a decade of experience helping expats make the most of their international status.