On November 26, 2025, the Chancellor of the Exchequer, Rachel Reeves, presented the Autumn Statement before the UK Parliament. Earlier in the day, the independent watchdog, the Office for the Budgetary Responsibility (OBR), mistakenly released its report on the budget proposals half an hour before the time set for the budget speech, which revealed the downgrade in economic growth forecast as well as some of the proposals in the budget.
The following are the highlights of the proposals presented in the Autumn Statement.
The key proposals are as under::
Proposals relevant for individuals / employers
- National Minimum Wage (NMW)/National Living Wage (NLW) rates will increase by 4.1% from GBP 12.21 per hour to GBP 12.71 per hour for eligible workers aged 21 and above and the NMW rate for those aged between 18 to 20 will increase from GBP 10 per hour to GBP 10.85 per hour effective from April 1, 2026.
- The Autumn Statement proposes extending the freeze on income tax thresholds until the tax year 2030–31. This means income tax thresholds, along with the corresponding National Insurance contribution (NIC) primary threshold and upper earning limit for employees will stay at their current levels for an extra three years, from April 2028 to April 2031. Further secondary threshold for employers’ NIC would also remain unchanged for this period. This increases tax burden on individuals and brings more people in the tax net resulting in higher tax revenue. However, the lower earnings limit (LEL) for NIC will increase from GBP 6,500 per year to GBP 6,708 for the year 2026-27.
- The budget also proposes changes to salary sacrifice arrangements for pension contribution. It is proposed that the employee pension contribution as a salary sacrifice above GBP 2,000 will be subject to employee and employer NI contribution from April 2029. Under this arrangement, an employee is allowed to give up part of his salary for which the employer makes a higher contribution to the workplace pension plan without paying income tax and NI on it.
- No deduction will be available in respect of non-reimbursed expenses relating to working from home from April 6, 2026. However, employers can reimburse such expenses if eligible without deducting income tax and NIC.
- The Budget proposes a 2 percentage points increase in tax applicable to dividend income. From 2026-27, the ordinary rate for dividend income will be increased from 8.75% to 10.75% and the upper rate will be increased from 33.75% to 35.75%. The additional rate will remain unchanged at 39.35%. The tax credit for dividend income of non-UK residents with UK income will be abolished. A similar increase of 2 percentage points will apply for income from savings and property.
Proposals relevant for businesses and others:
- No changes are proposed in the corporate income tax rates.
- It is proposed to reduce the writing down allowance main rate from 18% to 14% per cent from April 2026. No changes are proposed regarding the full-expensing regime
- The Government proposes to introduce mandatory VAT e-invoicing from April 2029. The consultation would be conducted to develop the implementation roadmap.
- The government also proposes to bring an amendment to require certain multinational entities to submit an International Controlled Transaction Schedule (ICTS) which will report information annually on cross-border related party transactions. This measure is expected to take effect for accounting periods beginning on or after 1 January 2027. Technical consultation on its design will take place in spring 2026.
- The government also proposes to double the penalty for late filing of corporate tax returns from April 1, 2026.
Other proposals:
- It is proposed to maintain the rates of fuel duty at the current levels until the end of August 2026. Thus, the temporary 5 pence cut in fuel duty is extended for another 9 months cancelling the planned inflation-linked increase for 2026-27.
- The Budget introduces a new high-value council tax surcharge for expensive properties. From April 2028, owners of properties valued at more than GBP 2 million will have to pay a new annual charge on top of their existing Council Tax. There will be four property value bands resulting in annual surcharge of GBP 2,500 to 7,500 depending upon the value of the property.
- The proposals also include plans to introduce permanently lower business rates for more than 750,000 retail, hospitality, and leisure properties in England starting from the 2026/27 tax year. The cost of this relief will be covered by applying a higher business rates multiplier to properties valued at over GBP 500,000. Additionally, a support package worth over GBP 4.3 billion (over next 3 years) will be available for properties of any size that face a significant increase in business rates
Implications::
Employers should take note of proposals for changes to salary sacrifice arrangement for pension contributions. Companies should take note of proposals regarding VAT e-invoicing, increased penalty for late filing of corporate tax returns, and proposed changes in reporting of cross-border related party transactions.