How the Autumn Budget is likely to affect high earners
If you’re someone earning at the higher end of the income scale, perhaps you’re a senior professional, a business owner, or a company director, then you might have watched this year’s Autumn Budget with apprehension. And you wouldn’t have been alone.
Budget 2025:What it means for you
... as a high earner
with Cheryl Warner
In the days leading up to the announcement, several newspapers hinted that higher earners could be asked to “shoulder more of the burden” this time around. The Guardian noted that ministers were reluctant to rule out tax rises for those on above-average incomes, while, The Financial Times suggested those earning above £100,000, sometimes known as “Henrys” (High Earners, Not Rich Yet), might face “a particularly tough Budget”.
And once the Budget landed, it became clear that much of that early speculation was justified. If your income comprises a mix of salary, bonuses, dividends, rental income or investment returns, there are several changes worth paying attention to.
To help make sense of what all this means in practice, we asked Cheryl Warner, Independent Financial Planner at Amber River SFIA in Maidenhead, about the measures she believes will affect high earners most. As she puts it in her Budget update, the announcement was “particularly impactful for higher-rate earners and those with significant assets.”
Freezing tax thresholds while wages rise pushes more people into higher bands over time, increasing tax receipts without changing the headline rates.
Who counts as a “high earner” in this Budget?
Many people don’t necessarily think of themselves as ‘high earners’, even when the tax system treats them as such. Threshold freezes and fiscal drag can catch people by surprise, especially when pay rises or bonuses push them into new bands.
In the context of this Budget, the people most likely to feel the effects are:
- Individuals earning £80,000+
At this level, frozen thresholds and fiscal drag begin to bite, gradually pulling more of your income into the higher-rate tax bracket even if your lifestyle or spending hasn’t changed. - And especially those earning £100,000+
This is where the 60% marginal tax rate appears. People earning between £100,000 and £125,140 face a steep tax jump because their Personal Allowance is withdrawn as their income rises.
And with thresholds frozen until 2030–31, the Office for Budget Responsibility (OBR) has warned that millions more people will drift into higher-rate and additional-rate tax bands, even without changing their working patterns.
1. Frozen Income Tax thresholds until 2031 - the stealth tax that keeps growing
The extension of the threshold freeze is one of the most significant measures in this year’s Budget.
As Cheryl explains, “This means as your income increases, more of that income will get pushed into the higher tax rate brackets.”
Freezing tax thresholds while wages rise pushes more people into higher bands over time, increasing tax receipts without changing the headline rates. You don’t see a new tax, but you feel its effects.
In real terms, it means:
- More of your income is taxed at 40% or 45%
- More people cross the £100,000 threshold and enter the 60% effective tax band
- The effect compounds year after year
How an Amber River financial planner can support you
- Review the timing and structure of your income
- Make full use of pension contributions to reduce taxable income
- Use both partners’ allowances where possible
- Explore whether certain bonuses or benefits could be taken more tax-efficiently
Small adjustments now can make a meaningful difference in the future.
2. Dividend Tax increases from 2026 - higher costs for directors and investors
The Budget confirmed a 2% rise in Dividend Tax from April 2026, part of a wider shift towards taxing non-salary income more heavily.
For company directors, shareholders and anyone who supplements salary with dividends, even a relatively small rise in tax can have a noticeable impact on take-home income over the course of a year.
What you might consider doing
- Review your remuneration strategy – the balance between salary, dividends and pension contributions
- Check whether bringing forward or delaying certain distributions makes sense
- Explore company-funded pension contributions as a tax-efficient planning tool
- Revisit the structure of profit extraction with your financial planner and accountant
3. Higher tax on rental and savings income (from 2027)
From 2027, tax on rental income, interest and savings income rises by 2%. For higher earners who hold investment properties, cash savings or fixed-rate accounts outside of tax wrappers, even a modest increase in tax can make a noticeable difference to annual income.
For anyone relying on these income sources alongside salary or business income, this change may prompt a review of how assets are held and structured.
Things you may want to think about
- Reviewing whether rental properties or savings sit in the most tax-efficient place
- Making fuller use of ISA and pension allowances
- Checking whether transferring assets between partners could reduce the tax burden
- Exploring investment options that align with your goals while remaining tax-efficient
4. Salary sacrifice National Insurance (NI) cap (from 2029)
Salary sacrifice has long been a cornerstone of tax-efficient pension funding for higher earners. But from 2029, NI relief will apply only to the first £2,000 of income sacrificed each year.
That means larger pension contributions through salary sacrifice will cost more than they do today. It’s a shift that makes advance planning more important, particularly for those who want to maximise pension funding before the new rules take effect.
An Amber River financial planner can help you explore options such as:
- Bringing forward larger pension contributions while current reliefs remain
- Reviewing how bonuses or profit shares could be directed into pensions
- Checking whether employer-funded contributions can be structured more efficiently
- Re-evaluating long-term pension funding plans with your adviser
5. The ‘mansion tax’ high-value property surcharge
From 2028, properties valued over £2 million will attract an annual charge of £2,500–£7,500. For many high earners, particularly in London and the South East, this will be a noticeable new expense.
People asking if the surcharge can be avoided, the answer is “not really”. Because it’s tied directly to the property’s value, traditional planning tools or ownership structures won’t reduce it. The only way to avoid the charge would be to own a property valued below £2 million.
For some households, this may also raise wider questions about how property fits into their financial plans, particularly for those approaching retirement or thinking about gifting to children.
Planning steps that could be useful
- Reviewing whether your current property fits your long-term plans
- Considering future downsizing or gifting as part of estate planning
- Discussing how property sits within your overall financial strategy
“If you were planning on using VCTs in the near future, now would be a good time to make your applications.”
6. Reduced tax relief on VCTs (from 30% to 20%)
From April 2026, Income Tax relief on new Venture Capital Trust (VCT) investments will fall from 30% to 20%.
For many people with a high income, particularly those who have already used their full pension and ISA allowances, VCTs have been a useful way to invest tax-efficiently while supporting early-stage companies. The reduction in relief doesn’t remove this benefit entirely, but it does make the incentive smaller than before.
As Cheryl makes clear, “If you were planning on using VCTs in the near future, now would be a good time to make your applications.”
It’s also worth remembering that VCTs carry a higher level of risk than mainstream investments such as pensions or Stocks & Shares ISAs.
Options to explore with your adviser
- Reviewing whether VCTs still align with your investment strategy and risk appetite
- Checking the timing of any planned VCT contributions before the rule change
- Exploring alternative tax-efficient investment options
- Ensuring you have maximised lower-risk wrappers (like pensions and ISAs) before turning to higher-risk vehicles
7. New EV taxes (from 2028)
The move to per-mile charging for electric vehicles (EVs) from 2028 will increase running costs for EV owners. YouGov research shows that 41% of high-income households (earning £60,000+ per year) own or regularly use an electric vehicle, meaning higher earners are more likely to feel this change.
Things you may want to think about
- Reviewing the total cost of EV ownership for multiple-car households
- Factoring EV running costs into future budgets
- Considering the timing of buying or replacing an EV
8. ISA allowance reform for under-65s
From 2027, individuals under 65 will be able to place only £12,000 of their annual ISA allowance into Cash ISAs.
For higher earners who prefer to hold a meaningful amount of liquid cash inside tax wrappers, this reduction in the Cash ISA limit may require a rethink. Many people use the years before retirement or major financial decisions to build up a tax-free cash buffer, and this change makes that harder to do within an ISA.
Practical steps you can take
- Reviewing how much cash you genuinely need for short-term planning
- Considering whether a Stocks & Shares ISA or pension might be more suitable
- Exploring alternative low-risk investment options such as money market funds or Premium Bonds
What this all means, and what you can do now
Taken individually, none of these measures are unmanageable. But together, they reshape how higher earners take income, save and invest, manage tax and plan for the future.
The key is not to panic but to plan. Seeing all these changes laid out can feel daunting, but that’s exactly where structured financial planning can make a real difference. Understanding how each measure affects your income and long-term goals can help you stay in control and make informed decisions.
Want clear guidance on what the Autumn Budget means for you?
Visit our Budget Hub for expert insights, predictions and analysis to help you understand how potential changes could affect your financial plans.
Or speak directly with an Amber River adviser for personalised guidance.
