Tax Planning
Budget 2025’s Tax Rate Shifts and Reliefs: Practical Strategy for Businesses and Investors
Budget 2025 introduces major shifts in corporation tax, capital allowances, inheritance tax, and enterprise schemes — here’s how businesses and investors can adjust to benefit and stay compliant.
By NomadicTax Research Team • 5-8 min read • March 29, 2026
## Key Tax Changes from Budget 2025
- **40% first-year allowance** for capital expenditure incurred **on or after 1 January 2026**; the main rate writing-down allowance drops to **14%** for Corporation Tax from **1 April 2026**, and for Income Tax from **6 April 2026**. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **Inheritance Tax (IHT)** thresholds are fixed at their current levels until **April 2030**, and the combined allowance for 100% Agricultural & Business Property Relief stays at £1 million until 5 April 2031, then drops to 50% on amounts above £1 million. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **Savings income Tax rates** will **rise by 2 percentage points**: the basic, higher and additional rates for Savings income will be 22%, 42%, and 47% respectively from **6 April 2027**. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **National Insurance Upper Earnings & Profits Limits (UEL/UPL)** will be held at £50,270 from **April 2028 to April 2031**. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
## Strategies for Businesses & Investors
1. **Accelerate qualifying capital expenditure**: If you're buying assets or investing in plant & machinery, making the purchase by 31 December 2025 secures the new 40% first-year write-off.
2. **Review IHT planning**: As thresholds are fixed, tax planning appliances such as gifting, trusts or Agricultural/Business Property Relief become more critical for estates near in value to threshold uplifts or for high value assets.
3. **Optimize savings income**: With savings rates increasing, structure savings portfolios to mitigate tax exposure — for example ISAs, or shifting savings sources to family-members with lower marginal rates.
4. **Plan for changes to allowances & thresholds**: The freezing of UEL/UPL and personal allowance thresholds means inflation erodes real benefits — factor this into salary vs dividends mix.
## Compliance & Timing Checklist
- For businesses: be ready for the new main rate writing-down allowance from 1 April 2026; ensure accounting periods align to gain benefit.
- For individuals with property or agricultural assets: assess eligibility for reliefs before Budget implementation dates.
- For shareholders & members of EMI (Enterprise Management Incentives): new limits (company options, gross assets, employee count) take effect 6 April 2026; existing contracts may see retrospective changes. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
## Real-Life Examples
- **Manufacturer planning asset investment**: purchase plant in Q4 2025 to get 40% write-off forCorp Tax, versus slower write-downs at 14% if purchased 1 January 2026 or later.
- **Landowner with assets above £1 million**: only first £1 million in combined agricultural + business property relief retains 100% relief; amounts above get 50%. Plan acquiring or transferring assets before 6 April 2026 if relief matters.
- **Saver choosing between savings accounts**: a basic rate taxpayer with £10,000 savings interest outside ISAs will pay interest tax at 22% from April 2027 — consider ISA shelters.
Budget 2025’s rate & relief changes force a rethinking of medium-term investment, capital expenditure, estate planning, and how savings are held. Early readiness is the key.