What the Autumn Budget 2025 means for the Healthcare Sector

“It could have been worse” is probably a decent summary of Budget 2025 from the perspective of Healthcare professionals.

With tight public finances and mounting speculation over recent months, this was always expected to be a tax-raising Budget.  Reported plans to increase National Insurance on partnership profits as well as to restrict higher rate tax relief on pension contributions did not materialise … so what were the main changes announced that affect the Healthcare sector?

NHS spending 

There was an announcement of a £300 million investment in technology to improve patient services. Neighbourhoods made the Chancellor’s speech, with 250 new neighbourhood health centres announced, and over 100 of those to be delivered by 2030.

Increase in the dividend tax rates from 6 April 2026

Healthcare professionals operating through limited companies will see the tax they pay on dividends taken from the company increase from next April.

Dividends are taxed at different tax rates than other forms of income, the rates currently being 8.75%, 33.75% and 39.35%.

From the start of the next tax year, 6 April 2026, the basic rate tax applied to dividends will increase to 10.75% and the higher rate to 35.75%.  There will be no increase in the additional rate which will remain at 39.35%.

There is also no change to the dividend allowance, which remains at £500.

Increase in the property income and savings tax rates from 6 April 2027

Currently, rental profits and savings income are taxed at the same income tax rate as other forms of income, such as salaries, pensions and self-employed profits.

From 6 April 2027, property and savings income will be taxed at a different rate with an extra 2% added for these income sources – so this will mean that, from 2027/28 onwards, rental profits and savings income will be taxed at 22%, 42% and 47%.

Tax relief for finance costs funding residential property will be calculated at the new property basic tax rate of 22%.

The savings allowance will remain unchanged at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, nil for additional rate taxpayers.

Freezing of income tax thresholds until 2031

The personal allowance of £12,570 and tax rate bands were to be frozen at their current levels until April 2028. This freeze has now been extended three years to April 2031.

This means that the higher rate threshold will remain at £50,270 and the additional rate threshold at £125,140 until April 2031.  The personal allowance starts to be withdrawn where total income exceeds £100,000.

National Minimum Wage increases

From next April, the minimum wage for workers over 21 will increase by 4.1%, taking it from £12.21 to £12.71 an hour. Workers aged between 18 and 20 will see an 8.5% rise from £10 to £10.85 an hour

Electric Cars

From April 2028, electric car drivers will pay a road charge of 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile, with the rates going up each year with inflation.

National Insurance contributions – restriction of ability to pay whilst overseas

From 6 April 2026, non-resident individuals will no longer be able to pay voluntary Class 2 NIC contributions in order to build up a State Pension entitlement and instead will have to pay Class 3 contributions.

In order to pay Class 3 contributions, they will need to have lived in the UK for 10 years.

For those still able to pay voluntarily, this will see their payments increase from £3.50 per week to £17.75 per week at today’s rates.

Changes to ISA allowances

The annual limit for savings in a cash ISA will be reduced for the under-65s from 6 April 2027.

Whilst the overall ISA limit will remain at £20,000, the maximum that under-65s can save into a cash ISA will reduce to £12,000, the remainder having to be invested in stocks and shares ISAs.