Tax and property-related changes were announced on 26 November. The measures could impact homeowners, savers, the self-employed and those using salary sacrifice for pensions.
Chancellor Rachel Reeves has today announced plans to launch a new annual charge on homes above £2 million, effective from April 2028. Properties valued at over £2m will be liable for an annual recurring charge.
Under the scheme, there will be four price bands from £2,500 to £7,500. As follows:
• Properties valued at £2-2.5m will pay £2,500
• Properties valued at £2.5-3.5m will pay £3,500
• Properties valued at £3.5-5m will pay £5,000
• Properties valued at over £5m will pay £7,500
While described as a “mansion tax”, the scheme could also affect homes in more expensive areas, like London and some parts of the South East.
Tax thresholds on personal tax and employer National Insurance contributions will be frozen until 2031, so you could pay more tax. This means the amount of income at which you pay different rates of tax won’t be increased in line with rising prices. A pay rise could pull you into a higher tax bracket and see a higher proportion of your income taxed.
The dividend tax rate from April 2026 will increase by 2% to 10.75% for the basic rate and to 35.75% for the higher rates.
Changes to your ISA
Cash ISA savings will be restricted. The amount of money that can be saved tax-free per annum in a cash ISA will be reduced from £20,000 to £12,000 for those under 65.
Some people choose to boost their pension by giving up a small part of their salary, with their employer paying the same amount into their pension instead. This arrangement can benefit both sides, as it often results in National Insurance savings for the employee and the employer.
From April 2029, there will be a £2,000 annual limit on how much can be paid into a pension using this “salary sacrifice” method. You can contribute more if you wish, but anything above the £2,000 cap will be taxed.
New vehicle charges
A new mileage charge for electric and hybrid vehicles will take effect from April 2028. The cost will be 3p per mile for electric cars, 1.5p for plug-in vehicles. However, fuel duty will be frozen until September 2026, and train fares in England will be frozen until March 2027.
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