The UK’s 2025 Autumn Budget, delivered on 26th November, marked a pivotal moment for internationally mobile professionals, expats, and non-doms navigating the complex intersection of domestic policy and cross-border wealth. While the headline figures suggest continuity and caution, the more profound implications – particularly for those with global lives and assets – demand attention.
Here’s what was announced, along with the often subtle but potentially substantial long-term implications.
The non-dom reforms: Damage control or missed opportunity?
In what many advisers have labelled “too little, too late,” Chancellor Rachel Reeves introduced a cap on the controversial trust-related inheritance tax (IHT) charges affecting former non-doms. Specifically, for trusts set up before the 2024 Budget, the once-unlimited 6% ten-yearly IHT charge will now be capped at £5 million.
This move, framed as a response to mounting pressure and a tool to entice wealthy individuals back to the UK, has met with scepticism from tax professionals. Many believe the reputational damage from last year’s abolition of the non-dom regime remains, with some families already having relocated or restructured assets offshore. One former non-dom put it bluntly:
“The damage is done.”
At Charlton House, we speak to a range of individuals, many of whom have trusts or global wealth structures. The key takeaway is this: the UK remains in flux regarding how it treats internationally held wealth. Planning must now include an even sharper focus on domicile, residency, trust creation dates, and IHT exposure.
Income tax: The quiet rise in liability
Though no tax rates changed, income tax thresholds will remain frozen until 2030/31. For higher earners, this is fiscal drag in action: inflation-linked pay rises are increasingly pushing salaries into higher bands.
Take someone earning £50,270. A 3% inflationary pay rise lifts them to £51,778. But because the higher-rate threshold is frozen, an extra £1,508 is taxed at 40% instead of 20%, adding over £300 to their tax bill. This erosion of net income, while subtle, is cumulative and significant over time.
People should revisit their remuneration strategies, bonus planning, and pension contributions to minimise exposure.
The new landscape for pensions
From 2029, a new cap will limit salary sacrifice pension contributions to £2,000 per year. Anything above this will attract National Insurance Contributions (NICs) for both employers and employees.
For globally mobile professionals used to maximising pension contributions across borders, this marks a meaningful shift. It reduces the tax efficiency of higher contributions and may require rethinking how retirement savings are structured, particularly for those with dual earnings in the UK and abroad.
Basic state Pension entitlements on the other hand will increase by 4.8% in April 2026, bringing the new State Pension to £12,547.60 per year. And critically, from April 2027, unused pensions and death benefits will be included in taxable estates for IHT, ending one of the few remaining estate planning advantages for UK pensions.
New rules on state pension top-up contributions for expats
Buried deep in the official Budget notes was a surprise for expats hoping to top up their UK state pension. From April 2026, the government will remove access to the cheaper Class 2 voluntary NICs for those living abroad, replacing them with the pricier Class 3 option, and only for individuals who meet a stricter 10-year (an increase from the current rule of just 3 years) UK residency/contributions test.
For those navigating dual jurisdictions or long-term relocations, this change underscores the importance of reviewing your pension strategy sooner rather than later.
ISA reform and investment taxation
While the £20,000 ISA allowance remains intact, new rules from 2027 will restrict the cash component to £12,000 (unless you’re over 65), with the remaining £8,000 earmarked for investments.
Dividend income will also be taxed more heavily from April 2026, with rates rising by two percentage points in two of the three income brackets:
- Basic rate: 10.75% (up from 8.75%)
- Higher rate: 35.75% (up from 33.75%)
- Additional rate: Unchanged at 39.35%
In addition, property and savings income will be taxed under a new structure from April 2027:
- Basic rate: 22% (previously 20%)
- Higher rate: 42% (previously 40%)
- Additional rate: 47% (previously 45%)
These measures reinforce a broader trend: the government is encouraging investment and long-term growth over cash holdings, but also seeking greater tax revenue from non-salary income sources.
Inheritance tax (IHT): Planning pressure mounts
While headline IHT rates haven’t changed, the freeze on the nil-rate band (£325,000), residence nil-rate band (£175,000), and the new combined Agricultural & Business Relief (APR/BPR) threshold (£1m) until 2031 means more estates will be caught in the IHT net as asset values rise.
In a welcome move, from 2026, spouses and civil partners will be able to transfer APR/BPR allowances, offering new flexibility – but only for qualifying assets. So, for people with international property, pensions, or business interests, strategic planning is essential.
Business owners & investors: Fewer perks, more complexity
Aside from the increase in dividend, savings, and property income tax rates, there were other changes in the business and investment sector. From April 2026, VCT income tax relief will fall from 30% to 20%, reducing the attractiveness of these once-popular tax-efficient vehicles. At the same time, EIS and VCT schemes will be able to invest in larger, more established businesses with higher fundraising caps.
Turning now to everyday business, new capital allowances will allow companies to deduct 40% of qualifying expenditure upfront from 2026. This will provide a boost to firms investing in plant, machinery, and other assets. However, this is tempered by a reduction in the ongoing writing-down allowance from 18% to 14%, which could lower long-term tax efficiency for some.
The 2025 Budget also introduced a three-year stamp duty holiday on shares in newly listed UK companies to encourage UK-based IPOs and boost market appeal. This reduces trading costs and may benefit investors and business owners eyeing UK equity or planning exits.
If you run a business or are a serial investor, this changing landscape requires more careful decision-making. It affects how you structure investments, the timing of asset purchases, your approach to exits, and the viability of using tax wrappers for intergenerational planning.
Final thought: Complexity requires clarity
For internationally mobile individuals and families, the 2025 Budget reinforces a long-standing trend: the UK is tightening its grip on global wealth while preserving headline stability. Behind every freeze or small tweak lies a strategic nudge – encouraging investment, clawing back revenue, or subtly shifting incentives.
As ever, the best defence is proactive planning. At Charlton House, we’re here to help you decode what’s changed, what it means for you, and how to stay one step ahead – wherever in the world life takes you.
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