Autumn Budget 2025: Practical Points for Family Lawyers (SJE awareness note)
Taxation » December 5, 2025
Budget date: 26 November 2025 (England, Northern Ireland & Wales unless stated)
Why we’re sharing this
We are often instructed as Single Joint Expert (SJE) to analyse income, affordability and the net effect of different settlement options. The Autumn Budget 2025 includes several personal tax changes that may affect parties’ post-tax position; particularly where income is dividend-led, savings-led or property-led, or where business restructuring or disposals are contemplated. This note is intended to provide awareness of the changes and the dates they take effect, so they can be kept in mind during negotiations, case strategy and when framing questions/instructions to an expert.
How these changes may show up in financial remedy cases
- Net income may reduce over time without any obvious change in gross income (threshold freezes/fiscal drag).
- Dividends, savings interest and rental income face higher rates in later years—relevant where proposals rely on investment returns or rental yields.
- Assumptions around business exits or restructuring (BADR, incorporation relief, EOT disposals) may need to reflect new effective dates and conditions.
- International clients may be affected by changes to voluntary NI options while abroad, which can alter longer-term pension planning assumptions.
1) Income Tax: threshold freezes (fiscal drag)
The personal allowance (£12,570) and the higher-rate threshold are frozen until 5 April 2031. In practical terms, this can pull more individuals into higher tax bands over time (“fiscal drag”), which may affect affordability and longer-term net income assumptions.
A note of context: the state pension is now only around £23 below the personal allowance.
2) Dividends: +2% to basic and higher rates (from 2026/27)
Dividend tax rates increase by 2 percentage points at the basic and higher rates from April 2026 (additional rate unchanged).
| 2025/26 | 2026/27 onwards | |
| Basic rate | 8.75% | 10.75% |
| Higher rate | 33.75% | 35.75% |
| Additional rate | 39.35% | 39.35% |
Potential case relevance: owner-managed business income and portfolio extraction may yield lower net income from 2026/27.
3) Savings and property income: +2% across all bands (from 2027/28)
From April 2027, tax on savings interest rises by 2 percentage points across all bands. Property income tax rates also rise by 2 percentage points across all bands from April 2027. These changes may affect the net yield on cash and rental property in longer-term projections.
| 2025/26 | 2027/28 onwards | |
| Basic rate | 20% | 22% |
| Higher rate | 40% | 42% |
| Additional rate | 45% | 47% |
Applies to England, Northern Ireland and Wales; devolved decisions may differ.
4) Investments / ISAs / VCT
- Cash ISA annual cash limit reduces to £12,000 for under-65s from 6 April 2027 (intended to encourage investment).
- The £20,000 annual limit continues for those aged 65 and over.
- Venture Capital Trust (VCT) income tax relief reduces to 20% (from 30%) from 6 April 2026.
Potential case relevance: parties who prefer to hold settlement proceeds in cash within ISAs may need to revisit assumptions from 2027/28, particularly where liquidity and risk tolerance are central to proposals.
5) CGT: business exits and restructuring (key Budget points)
CGT often becomes relevant where settlement options require asset realisations, portfolio reshaping, or business transactions. The Budget highlights three points worth keeping in mind:
- Employee Ownership Trust (“EOT”) disposals: holdover relief against trustees’ base cost reduced to 50% with effect from 26 November 2025.
- Incorporation relief: will need to be claimed (rather than applying automatically) for transfers on or after 6 April 2026.
- BADR: the BADR CGT rate increases to 18% from 6 April 2026.
6) Residency and National Insurance (international clients)
For internationally mobile clients, residence assumptions and timing around moves remain central to correct tax modelling. From a National Insurance perspective, the Budget confirms removal of the voluntary Class 2 NIC option for employees abroad from 6 April 2026, which may affect longer-term state pension planning for some clients.
Practical takeaways for solicitors
- When reviewing proposals that rely on investment income (dividends/interest/rent), consider whether the effective dates (April 2026 and April 2027) could change the net outcome.
- Where business exits or restructuring are in view, ask advisers/experts to confirm whether BADR, incorporation relief or EOT-related assumptions remain valid under the new rules and timing.
- For international clients, check whether any NI planning assumes voluntary Class 2 contributions abroad after 6 April 2026.
- If you anticipate expert evidence on affordability or tax, consider raising these points early in instructions/questions so they can be built into modelling from the outset.
This note is a general awareness update for family practitioners and is not tax advice. We would be happy to discuss case-specific assumptions where expert input is anticipated.
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| About Us At JAMK Services Limited, trading as Juno Family, we have been a market leader in tax on divorce for almost a decade. We understand the myriad of factors which are involved in the divorce process. Tax is just one element which needs to be considered, however we believe it’s an important consideration to be factored into proceedings at an early stage. We aim to provide straightforward advice on a range of complex UK tax issues whether that be through expert instruction or single joint expert instruction. |