Q&A: What Rachel Reeves’ Autumn 2025 Budget means for you

The latest Budget introduces changes that will affect wealthy individuals, business owners, employers, and farming families. While not a major overhaul, the measures touch on property, pensions, investment income, and business rates — areas that can still influence financial planning and operating costs.

This blog highlights the key questions clients are asking and outlines practical steps to help navigate the new rules with confidence.

Q: What are the biggest tax changes affecting wealthy individuals and investors?

A: The Budget introduces a new council-tax surcharge (a so-called “mansion tax”) on homes valued over £2 million, underlining a shift in focus towards using property as a revenue base, which could significantly affect high-net-worth property owners. Also, taxes on capital income – including dividends, savings and property income – are rising by two percentage points. 

For those with high-value property portfolios or significant investment income, the impact could be material — making a review of estate planning, cash-flow management and investment structuring essential.

Q: How will the Budget affect pensions and salary-benefit planning — including for business owners or executives?

A: From 2029, tax-efficient pension salary-sacrifice schemes will be capped: only the first £2,000 of pension contributions will be exempt from National Insurance. Anything above that will be subject to NI (both employer and employee), reducing the attractiveness of such arrangements for higher earners.

This forms part of a wider shift away from tax-privileged benefits, and it may require employers and high-earners to reconsider remuneration structures, long-term retirement and pension strategies and executive compensation frameworks.

Q: What does the Budget mean for growth businesses when it comes to employment and remuneration strategy?

A: The changes to salary-sacrifice pension schemes, higher NI on excess pension contributions, and increased tax burdens on dividends and property income (common sources of return for entrepreneurs and business owners) may increase the cost of compensation and affect liquidity.

Businesses may need to re-evaluate how they reward staff, owners or directors, especially if they rely on pension schemes or dividends as part of compensation.

Additionally, higher taxes on dividends and capital income could reduce the after-tax yield of shareholdings, affecting exit planning, business sales or share-based remuneration strategies.

Q: Are there broader employment-related implications for employers?

A: Yes. Employers face a combination of pressures:

• The re-taxing of salary-sacrifice pension contributions
• Increased minimum wage for those aged 18+
• The freeze on income-tax thresholds

Together, these create a more costly employment environment, requiring employers to reassess benefits packages, total reward strategies and workforce planning to remain competitive and compliant. 

Q: What about business rates — will the Budget affect operating costs for those with commercial premises?

A: Yes. Changes to the business-rates system, including alterations to reliefs, revaluations and transitional arrangements, mean that some businesses may see increased fixed overheads, particularly those operating across multiple or high-value sites. Read more here. 
Businesses should review the financial impact on premises strategy and long-term cost planning.

Q: What should clients be doing now to respond to the Budget?

A: We recommend high-net-worth individuals and business owners undertake a prompt review of their estate planning, investment holding structure, pension arrangements, and remuneration strategies.

For business owners and growth businesses: now is a good time to revisit compensation packages (salaries, bonuses, shareholding, dividends, pensions) to account for increased tax and NI costs, ensuring both compliance and efficiency.

For employers: examine the cost of benefits, pension contributions and workforce planning to ensure competitiveness and compliance.

For all clients: seek legal and tax advice sooner rather than later – the landscape has shifted materially.

Q: What has actually changed on the “family farm tax” in this Budget?

A: The Budget confirms that the new family-farm inheritance tax regime will still start in April 2026, but with one important tweak: the £1 million IHT allowance for qualifying farming and business assets can now be transferred between spouses or civil partners. 

If one spouse dies without using their full £1 million allowance, the survivor will be able to use both allowances when passing assets to the next generation, giving up to £2 million of protected farm/business assets per couple. 

Q: How will inheritance tax on farm and business assets work from April 2026?

A: From April 2026, the first £1 million (per person) of combined agricultural and business assets can still pass free of IHT. Above that level, relief is cut back to 50%, meaning an effective 20% IHT charge on the value over £1 million (rather than full relief as many farms previously enjoyed under APR/BPR). Industry estimates suggest this could bring a large proportion of family farms into scope for significant tax bills on death. 

Q: What does the new spousal transfer rule mean in practice for farming families?

A: Crucially, a farmer no longer has to leave £1 million of agricultural assets directly to the children on first death just to “use” the allowance. They can leave everything to their spouse, and the survivor can then use their late partner’s £1 million allowance plus their own £1 million when passing the farm on. The rule also applies where the first death occurs before 6 April 2026, with the allowance treated as fully transferable to the surviving spouse or civil partner. 

Q: What should farmers and landowners be doing now?

A: Farmers and landowners could : 

• Model future IHT exposure
• Review ownership and succession structures (who owns the land, buildings and trading entity, and in what proportions).
• Plan for liquidity so that any future tax bill does not force the sale of key land or assets.
• Update wills and partnership agreements to make best use of the transferable £1 million allowances between spouses.

At SE-Solicitors, we work closely with clients to navigate these shifts — whether that means reviewing estate plans,  preparing succession strategies for family businesses and farms or advising on corporate, commercial or employment matters. Our team can help you assess the impact of the Budget on your circumstances and put in place practical, tailored solutions to protect your wealth and support your long-term goals.

If you’d like to explore how the Budget could affect you or your business, please email hello@se-solicitors.co.uk or call 01295 204000.