Here we go again! This is a widely-anticipated Budget following weeks of media speculation.

I think we are all a bit fed up of the “leaks” and media briefings that are the hallmark of all Budgets in the past few years. It is also very unprofessional that The Office for Budget Responsibility (OBR) unexpectedly published its growth forecast ahead of the Chancellor’s statement. This contains market sensitive information so let’s hope there is an enquiry and action

The UK media frenzy and contact conjecture really helps no one.  A little more decorum all round might be nice.

Following every Budget or Statement, I write an article to give you a concise overview of some of the main points, with particular reference to any changes that have major relevance to those living outside of the UK, and especially in the GCC.

The UK press will cover many points in detail but much of it will not be directly relevant to expats, to people who are no longer tax resident in the UK, so my summaries focus on the points that will be most relevant to us.

The previous OBR forecast for growth was 1%. This has been increased to 1.5%. That is a positive move based on recent economic policy. It really isn’t all doom and gloom but the UK Government borrowing deficit is a shocking figure that has built up over many years.

The UK’s national debt stands at some £2.6 trillion (there are 12 zeros in a trillion by the way) with the cost being 10% of public sector spending.

This position is not unusual in comparison to other countries, although currently highest of the G7, but the problem is the cost of servicing the debt – the interest payable – let alone actually paying it down.

This needs to be reduced so free up money to provide services and people expect a lot in way of services in the modern world. The UK cannot afford to give anything way at this time.

This was quite a nerdy Budget with a lot of talk about fiscal rules and forecasts but that makes most people glaze over, understandably. Let’s now focus on the relevant announcements.

There are a few changes that will affect non-residents.

Voluntary National Insurance Contributions

Non-residents can make voluntary National Insurance contributions (VNICs) to build up entitlement to the UK’s Basic State Pension. There are different classes of contributions, with different costs, and Class 2 contributions will finally be abolished for people living abroad.

I say finally as this has been mooted before and I have previously said that it was only a matter of time until they were no longer permitted.

In the current tax year (2025/26) voluntary Class 2 contributions are just £3.50 a week. Class 3 is £17.75 per week.

The change will take place from April 2026. One to watch considering we know the relevant departments are severely understaffed right now and struggling to handle applications.

I will update my fact sheet on this shortly. (contact me for  copy)

Since 2016 it has been the case that a minium of 10 years’ of contributions are required in order to receive any State Pension. The Budget did not change this and it was simply reiterated that an individual needs to have paid in for 10 years, or lived in the UK for 10 years to be eligible as there are a few situations where people can receive NI credits without contributions.

The government is also launching a wider review of VNICs, with a call for evidence to be published in the new year.

Personal Taxes

There will be no changes to Income Tax, National Insurance or VAT. All rates will remain the same.

All tax thresholds will be frozen for a further three years so until 2031. That means the Personal Allowance will remain at £12,570 for some years to come.

No change to inheritance tax thresholds until at least April 2031.

When such allowances don’t keep pace with inflation, the overall tax burden increases as wages increase. We call this a stealth tax but it is something that is used by all governments.

Tax rates on non-earned income

A change in tax rates on property, dividend or savings income. Currently, there is no National Insurance to pay if income is from rental income, or savings..

From April 2027, the property basic rate of tax will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%.  (Income tax rates are 20/40/45%)

Many company owners take dividends from their company as tax rates are lower and no National Insurance is payable. Dividends are also payable on some investments.

The ordinary and upper rates of tax on dividend income will increase by 2% from April 2026.  There is no change to the dividend additional rate.

The tax rate on savings income will increase by 2% across all bands from April 2027. The savings rate allowances appear unchanged. (Expats – keep your cash savings offshore as tax is not payable. See link at end of article.)

The reality is that the majority of people in the UK will not be significantly affected by these tax changes.

As a non-resident, you may have to pay a little more in UK income tax if your property income is above the Personal Allowance but there are various expenses that can be offset.

For most people the increase in tax will not be large.

Note that the property tax changes apply in England, Wales and Northern Ireland and there will be a discussion with the Scottish government about property tax changes. The other tax changes are “reserved” and apply throughout the UK.

There is brief mention toward the end of a report of a change in respect of non-resident capital gains but it seems to refer to certain company structures, not relating to property. Information will be in the Finance Bill 2025/26 in due course.

“Mansion Tax”

From April 2028, there will be a council tax surcharge on properties worth over £2m.

This High Value Council Tax Surcharge means that properties worth more than £2m will be charged an additional £2,500 a year. Properties worth more than £5m will be charged an extra £7,500 each year

Now let’s put this into context. How many people in the UK live in houses worth over £2m?

Best estimates are that around 300,000–350,000 people or households own property valued at £2m or more in the UK. The vast majority are in London and the home counties.

That’s up to 350,000 out of a total of some 28 million properties across the whole of the UK. And out of that amount, just 25-30,000 properties are worth over £5m.

This will affect fewer than 1% of the population, a very small minority.

International Student Levy

Toward the end of the Budget report is a short section about a new levy on higher education providers’ income from international students. This is £925 per student per year of study, starting in August 2028, for the academic year 2028/29.

It states that all providers will be given an allowance for the first 220 international students per year, for whom they will not pay the charge.

Presumably the cost will be passed on to students and will be an extra cost for those who do not get home rates. This is all it says so one to watch.

ISAs  (Individual Savings Accounts)

Note: A non-resident cannot contribute to an ISA but can retain existing ones.

With effect from April 2027, the total contribution amount will be unchanged, at £20,000 per adult per tax year, but under 65s will only be permitted to put £12,000 a year into cash ISAs.

Any investment above that must be into stocks and shares ISAs.

UK Pension Contributions

Some misleading headlines about this as the change in tax relief refers to salary sacrifice schemes, not standard pension contributions. This is a benefit used mainly by the higher paid and will come into effect in 2029.

There will be a cap of £2,000 on salary sacrifice contributions. Again, this will not affect the majority of pension contributions nor have any bearing on people paying directly into a personal or company scheme.

No other changes for contributions or how benefits are taken or paid.

Note that as a non-resident you are limited in terms of the level of pension contribution that you can pay to a personal pension. In most cases you are limited to gross payments of $3,600 a year, for a maximum of five years, to a plan that was already in place when you left the UK.

UK State Pensions

There was a reiteration of a commitment to the Triple Lock for the duration of this parliament.

In April 2026, the State Pension will be uprated by 4.8%, so pensioners will receive up to an additional £575 a year.

 Other points

• Rebalancing Universal Credit (UC) rates so that it doesn’t pay to be off sick rather than work.
• Scrapping the two child limit in Universal Credit (UC) which could positively affect as many as 450,000 children
• A one-year freeze on prescription charges, keeping fees at £9.90 for a single charge (where these apply)
• The 5p fuel duty cut will be extended until the end of August 2026 with rates then gradually returning to March 2022 levels by March 2027
• Increase in the National Living Wage for the lowest paid from £12.21 to £12.71 per hour in April 2026
• eVED, electric Vehicle Excise Duty. A new mileage charge for electric and plug-in hybrid cars
• Gambling tax rises will see remote gaming duty raised from 21% to 40%. Bingo duty will be abolished from April 2026.
• The higher rate of Air Passenger Duty (APD) will be extended to most private jets. *sound of tiny violins*
• Alcohol duty will be uprated with the Retail Pirce Index (RPI) on 1st February 2026

I think it needs to be borne in mind that the average income in the UK is between £35,000 (mean figure) and £44,000 (median). Remember mean, median and mode from your school days? Even in London where wages are higher than the rest for the UK, the median figure is around £52,000.

Higher rates earners, those with second properties, or renting out any property, and paying voluntary NI payments are going to be paying a bit more.

My thoughts

Today’s Budget speech was professionally delivered and was a little over an hour long. That’s a fair length but the longest ever was by William Gladstone in 1853 and lasted four hours and 45 minutes!

The personal tax burden may feel high to UK residents, and the press keeps telling people that, but it is still smaller than in many European countries.

It is larger than in the US but people there are paying an awful lot for medical insurance that is covered in standard taxation in the UK so not really a fair comparison.

The cost to the public purse has increased over the years as the population become sicker and older and extra money is required to foot a rising welfare bill, as well as servicing the high cost of the national debt.

This Budget was squarely aimed at increasing the tax take from the better off. That is actually a small minority of the population and most people will only see a small effect from the lack increases in the Personal Allowance.

The OBR is forecasting a fall in the rate of inflation which should be welcome as the cost of living increases have been painful over the past 10 years. For context, Consumer Price Inflation (CPI) peaked at over 11% on October 2022 and was officially at 3.6% on October of this year. The Bank of England is expecting inflation to fall to 2% by 2027.

From the Budget documents: “In everyday terms, food prices increased over 25% between the start of 2022 and May 2024, with the UK experiencing nearly 15 years of typical food inflation during that period.”

There is still progress to be made, and falling inflation doesn’t decrease prices, but increases are minimised.

The elephant in the room here is Brexit and the negative effect of that on the UK economy but let’s not go there now.

There was no wealth tax as the right-wing press kept shouting about. In reality, such a tax is very difficult to collect in practice and even if such a thing did come into play, again only a small minority would be affected, not the average person in the UK, and the popular press scaremongering should be roundly ignored

I am not unhappy about the changes although I will disclose that I will personally be paying more in tax and NI contributions. I am okay with that if the money is used to benefit children and to bring more out of poverty. It is shocking that so many children are living in poverty in a wealthy society. Children should not bear the brunt of poor parental decisions or unfortunate circumstances.  I think that giving children and young people opportunities bodes well for the future of the UK.

Nothing really dramatic, nothing although many non-residents will pay a little more as will those with very valuable properties.

I have read through the full Budget for November 2025 as issued by HM Treasury (a thrilling 156 pages this time!) and there is nothing else specifically related to taxing expats.

I write articles such as this one as part of the personal financial planning service and that I provide to UAE and GCC resident, and the general consumer, financial and legal information that I provide in The National newspaper, other UAE media, and on the Facebook group British Expats Dubai.

Sensible and ethical financial advice in plain English.

To arrange a meeting to discuss any aspect of your personal financial planning, please email me at keren@holbornassets.com or use the contact form at the end of this article.

Please take a look at the other useful articles on this website, including those mentioned below:

Save money on your currency transfers

UK Tax returns. A low-cost service

Offshore bank accounts. The benefits for expats

UK Spring Statement – March 2025. A summary