After months of headlines predicting big tax hikes and sweeping changes, Rachel Reeves’ second Budget turned out to be far calmer than expected. The biggest surprise came before the speech even began, when the Office for Budget Responsibility accidentally posted its forecasts online before the Chancellor spoke.
Still, don’t be fooled, there are plenty of changes that matter if you have offshore interests. Melanie Patterson, our Senior Manager – Tax, shares her insights on the latest Budget changes and what they mean for individuals, businesses, and trustees.
Personal tax
The biggest money-maker for the Government? Freezing income tax and NIC thresholds until 2030/31. It sounds harmless, but as wages rise, more people will creep into higher tax bands without rates changing.
From April 2027, tax on property, savings, and dividends goes up by 2%, pushing the top rate on property and savings income to 47%. Landlords will only get finance cost relief at a special property rate of 22%.
ISA limits change from April 2027: under-65s can put up to £12,000 into a cash ISA, but the overall ISA allowance remains £20,000, with the balance available for investments. Dividend tax rates climb by two points from April 2026. Salary sacrifice for pensions? From April 2029, only £2,000 a year will escape NIC – anything above that gets hit!
Inheritance tax thresholds stay frozen until 2031, but there’s one silver lining: the £1 million allowance for agricultural and business property relief per person can now be shared between spouses, giving up to £2 million combined. Above that, relief drops to 50%.
Residence-based tax
The residence-based regime introduced last year is now fully in force, and this Budget updates the legislation to tighten loopholes and clarify rules. Technical amendments have been confirmed in the Finance Bill, including changes to temporary non-residence rules to stop individuals avoiding UK tax on company distributions after departure.
Trustees should note – excluded property trusts that held assets before 30 October 2024 now face a transitional cap on relevant property charges: a maximum of £5 million per trust per 10-year period. Offshore agricultural property will lose its inheritance tax shelter from April 2026, and anti-avoidance rules will prevent trustees from moving assets in and out of the UK to sidestep charges.
Property & wealth
A new High Value Council Tax Surcharge hits properties worth £2 million or more from April 2028, starting at £2,500 per year and rising to £7,500 for homes over £5 million.
Business tax
Corporation tax stays at 25%, but capital allowances shift. Writing-down allowances on plant and machinery fall from 18% to 14%, and a new 40% first-year allowance replaces the old 100% version for many assets.
Late filing penalties double: £200 if you’re late, £400 if more than three months overdue, and up to £2,000 for repeat offenders. Plus, new reporting rules for cross-border related-party transactions kick in from 2027.
Employment and benefits
Why it matters for global employers? From April 2029, NIC relief on pension salary sacrifice is capped at £2,000 a year, adding costs for employers and employees. Electric vehicles and hybrids face mileage-based excise duty from April 2028. EMI share scheme limits rise, while Employee Ownership Trust relief drops from 100% to 50%.
Other taxes
Gambling taxes get a shake-up: online betting duty jumps to 40%, bingo duty disappears. Sugary drinks levy expands to milkshakes and lattes from 2028, so yes, your caramel latte might soon come with a side of tax guilt.
Conclusion
Budget 2025 may not have delivered the shock headlines many expected, but its quiet changes will ripple through tax planning for years to come. Freezing thresholds, tightening offshore rules, and introducing new levies mean individuals, businesses, and trustees can’t afford to stand still. The message is clear: review your structures, plan ahead, and act early to stay ahead of the curve.
Top 5 actions for offshore individuals
- Review personal tax exposure under frozen thresholds.
- Plan for inheritance tax changes and relief caps.
- Maximize ISA and pension contributions before new limits apply.
- Consider timing for relocation to benefit from four-year relief.
- Assess offshore trust distributions under new rules.
Top 5 actions for offshore businesses
- Ensure offshore structures comply with residence-based rules.
- Review trust distributions and repatriation plans.
- Prepare for cross-border reporting requirements.
- Factor in capital allowance changes for UK assets.
- Update employee benefit policies for NIC and EV duty changes.
Top 5 actions for offshore trustees
- Confirm settlor and beneficiary UK residence status.
- Review trust structure for new caps.
- Plan for loss of agricultural property relief.
- Strengthen anti-avoidance compliance.
- Prepare for enhanced compliance and cross-border reporting from 2027.