Autumn Budget 2025: 7 Key UK Tax Changes

The Autumn Budget 2025 landed with a few surprises, some of which didn't even make it into the Chancellor's speech. If you're living abroad, working remotely, or planning to leave the UK, these changes could have a real impact on your tax position over the next few years.

Here's what you need to know, broken down into seven key areas.
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1. Temporary Non-Resident Rules: The Dividend Trap
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If you're planning to leave the UK temporarily and return within five years, the temporary non-resident rules have just become significantly stricter.

Previously, if you received dividends from a close company (typically a business you own or control) while living overseas, only dividends paid from profits that arose after your departure were taxable if you returned to the UK within five years. That exemption has now been removed.

From now on, all dividends you receive during your period of temporary non-residence will be taxable if you trigger the temporary non-resident rules by returning to the UK. It doesn't matter whether the dividends are paid from pre-departure or post-departure profits, they all come within the scope of UK taxation.

What this means in practice:
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• If you leave the UK and receive any dividend from your UK company while abroad, those distributions will be taxed on your return
• The five-year clock still applies, returning before five years of non-residence triggers the charge
• This affects business owners and shareholders far more than salaried employees
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If you're planning an exit strategy or considering returning to the UK after a period abroad, you'll need to factor this into your dividend planning carefully.
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2. Non-Resident Dividend Credit: Gone from April 2026
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For non-residents receiving UK dividend income, the government is removing the basic rate dividend tax credit from 6 April 2026.

For most of our clients, this won't have a major impact, especially if you're already using the disregarded income basis to limit tax withheld at source. However, if you have UK dividend income and haven't optimized your position, this change could result in a higher effective tax rate.

The key takeaway: if you're non-resident and receiving UK dividends, review your structure now to ensure you're not caught out when this change takes effect.
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3. Voluntary National Insurance: Higher Costs and a New 10-Year Rule
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This is a big one for expats who want to maintain their UK state pension entitlement while living abroad. From 6 April 2026, the government is making two significant changes to voluntary National Insurance contributions:
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a) Class 2 contributions are being removed for non-residents and individuals abroad

You'll now need to make the more expensive Class 3 contributions to maintain your qualifying years.
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b) A new 10-year eligibility requirement

To be eligible to make voluntary contributions at all, you must now demonstrate at least 10 years of qualifying contributions to the National Insurance system.
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What this means:

• If you've moved abroad relatively early in your career and don't yet have 10 years of NI contributions, you won't be able to top up your record voluntarily
• Class 3 contributions cost significantly more than Class 2, currently around £17.45 per week versus £3.45 per week
• Your state pension planning just got more expensive and more restrictive
  
  

If you're living abroad and relying on voluntary contributions to protect your UK pension, you need to act before April 2026. We recommend reviewing your NI record and understanding whether you meet the new 10-year threshold.
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4. Tax Rate Increases Across Property, Savings, and Dividends
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The government is raising tax rates on three major income streams, and the increases are being phased in over the next few years.

Property Income Tax Rates (effective from 2027/28)
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• Basic rate: 22% (up from 20%)
• Higher rate: 42% (up from 40%)
• Additional rate: 47% (up from 45%)
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Savings Income Tax Rates (effective from 2027/28)
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• Basic rate: 22% (up from 20%)
• Higher rate: 42% (up from 40%)
• Additional rate: 47% (up from 45%)
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Divideind Income Tax Rates (effective from 2026/27)
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• Basic rate: 10.75% (up from 8.75%)
• Higher rate: 35.75% (up from 33.75%)
• Additional rate: 39.35% (unchanged)
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If you own UK rental property or have significant savings or dividend income, these changes will reduce your after-tax returns. The dividend rate increases come into effect first, from April 2026, so that's your most immediate planning window.

For expats with UK property portfolios, the 2027/28 changes mean you'll be paying an extra 2% on all rental profits. That might not sound like much, but on a £50,000 rental income, that's an additional £1,000 in tax.
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5. Salary Sacrifice Pension Contributions: A New £2,000 Cap
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This one won't hit until April 2029, but it's worth flagging now if you're using salary sacrifice to boost your pension contributions tax-efficiently.

Currently, when you sacrifice salary into a pension, you save both income tax and National Insurance (employee and employer contributions). It's one of the most tax-efficient savings strategies available.

From 6 April 2029, the government is capping the amount of National Insurance relief you can receive through salary sacrifice pension contributions at £2,000 per year.

What this means:

• Contributions above £2,000 will attract National Insurance at both employee and employer level
• The income tax relief on pension contributions remains unchanged
• This is effectively a tax increase on higher earners who salary sacrifice large amounts
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If you're currently sacrificing significant amounts of salary into your pension (say, £10,000+ per year), this change will reduce the overall tax benefit. You'll still receive income tax relief, but the NI saving will be capped.
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6. Working From Home Expenses: No More Relief for Employees
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If you're employed and have been claiming tax relief for working from home expenses, that's coming to an end.

From 6 April 2026, the government will no longer allow tax relief to be claimed for working-from-home expenses if you're in employment.

This affects:

• Remote employees who have been claiming the flat-rate £6 per week deduction
• Employees who work from home part-time or full-time under flexible working arrangements
• Digital nomads working for UK companies who have been claiming relief

The relief wasn't huge to begin with (around £125 per year in tax savings for basic rate taxpayers), but it was a small acknowledgment of the costs of running a home office. That acknowledgment is now being withdrawn.
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7. High Value Council Tax Surcharge (HVCTS): A New Charge for £2m+ Properties
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This is a brand-new tax, and it applies to residential properties in England worth £2 million or more. The High Value Council Tax Surcharge (HVCTS) will be levied on owners of the property and comes into effect from the 2028/29 tax year. Here's how the charges break down:

Property Value: Annual HVCTS Charge

• £2.0m–£2.5m: £2,500
• £2.5m–£3.5m: £3,500
• £3.5m–£5.0m: £5,000
• £5m+: £7,500

What this means:

• If you own a high-value UK property: even if you're living abroad: you'll face an additional annual tax charge
• This is on top of your existing council tax bill
• The charge is based on ownership, not residence, so expats holding valuable UK homes will be caught

For non-residents with UK property portfolios, this adds another layer of cost to holding UK real estate. Combined with the higher property income tax rates coming in 2027/28, the math on keeping a UK property just got more complicated.