UK Autumn Budget 2025 – Investment Funds

The main headline for investment managers is that the carried interest reforms have been confirmed, with the Finance Bill 2025-26 set to be published next week. While some changes have been made to the draft legislation published earlier this year, these are expected to be relatively minor.

While not all directly related to investment management, several other points which are worth noting that were included in the 2025 Budget announcements are detailed below.  

 

Real Estate Funds

Several measures that will impact the real estate sector were detailed:

• Capital allowances – from 1 April 2026, the main rate of writing-down allowances will be reduced from 18% to 14%. This applies to items qualifying as “fixtures” within buildings (and not eligible for “full expensing”), effectively reducing the annual tax relief for those assets by 4% per year.
  
  
• Tax transparency on real estate – the government intends to participate in a new international agreement to tackle tax evasion by providing for the automatic exchange of readily available information on real estate from 2029 or 2030. Whilst little further information has been released on this today, it is likely a reference to the OECD’s July 2024 report on the tax transparency of real estate, and perhaps represents an increased focus on the transparency and scrutiny of ownership of UK real estate assets.
  
  
• Non-resident capital gains tax – the government announced that it will amend the non-resident capital gains tax rules, aiming to close perceived loopholes for protected cell companies and providing clarifications for investors. While some changes will apply immediately with others to follow from 6 April 2026, no further details have been provided. We expect to hear more when the Finance Bill 2025-26 is published.
  
  
• Property income – from April 2027 a new, separate income tax rate for property income will be introduced: 22% (basic), 42% (higher), and 47% (additional). This continues successive government policy directions of reducing returns to private landlords.

 

Miscellaneous Changes

Other measures announced that may impact the investment management sector include the following:

• Stamp duty on shares – as part of an effort to boost the attractiveness of the UK as a destination for IPOs and capital-raising, with effect from 27 November transfers of a company’s securities will be subject to relief from the 0.5% stamp duty reserve tax charge for three years from the point the company lists on a UK regulated market. Separately, the government confirmed that it plans to legislate in the Finance Bill 2025-26 to enable testing of a digital service for the Securities Transfer Charge, which will replace stamp duty and stamp duty reserve tax as part of the previously announced modernisation of stamp taxes on shares.
  
  
• Dividends and savings tax rates – the Chancellor announced tax increases that will come into effect over the next two years:
• Dividends – from April 2026, the ordinary and upper rates for dividend income will increase by 2%, to 10.75% and 35.75% respectively. The additional rate remains at 39.35%.
• Savings income – from April 2027, income tax rates for savings income (interest) will rise by 2%, to 22%, 42%, and 47% for the basic, higher, and additional rate bands respectively.

• Crypto assets – the government has confirmed that UK reporting Cryptoasset Service Providers will be required to report on their UK tax resident customers under the previously announced Cryptoasset Reporting Framework. This is in addition to reporting on non-UK tax resident customers which is already required under the Framework. Information for first reports to HMRC will be collected from 1 January 2026 and reported to HMRC in 2027. The government has also published a summary of responses to the “taxation of decentralised finance (DeFi) involving the lending and staking of cryptoassets” consultation. In large part the summary simply confirms that HMRC’s work on this area is ongoing, but it does indicate that treating certain cryptoasset lending arrangements as “no gain, no loss” is the likely direction of travel.

 

Omissions from today’s announcements

With the exception of some slight changes regarding employee ownership trusts, the main capital gains tax regime has not been amended. This will be welcomed news for investment managers with co-investments. The rumoured introduction of national insurance contributions for LLP members has also not been included in today's announcements, a move that would have had a significant impact on the investment management sector.

Should you have any queries on the UK Autumn Budget, please reach out to your usual UK tax contact or one of the following: