The Autumn Budget 2025

The 2025 Autumn Budget will be delivered on 26 November, and speculation is already mounting about what the Chancellor of the Exchequer, Rachel Reeves, will unveil.

A central influence will be the fiscal rules Reeves set out in 2024. She committed to ensuring debt falls as a share of GDP by the end of the Parliament, while also keeping day-to-day government spending under control. [1]  The Labour manifesto reinforced this by pledging not to raise taxes on working people, specifically ruling out increases to National Insurance, Income Tax rates or VAT. [2]

Last year’s Budget introduced £40 billion of tax rises, a scale Reeves has since said she does not intend to repeat, but weak growth, rising debt-servicing costs, and new spending commitments, have left the Chancellor with little room to manoeuvre.

Recent figures from the Office for National Statistics (ONS) show government borrowing surged to £20.2 billion in September 2025, the highest September figure in five years and the second highest first half borrowing total since records began.[3] Public sector net debt now sits at 95.3% of GDP, a level not seen in over six decades.[4] Meanwhile, borrowing for the first six months of the financial year reached £99.8 billion, overshooting the Office for Budget responsibility (OBR) forecasts and putting Reeves under renewed pressure to stabilise the public finances.[5]

At the same time, the Chancellor faces political pressure to protect public services, particularly in light of the Spring Spending Review which locked in higher spending on defence and the NHS.[6] These twin forces of rising expenditure and disappointing revenues have intensified calls for new sources of funding, even as Reeves seeks to maintain Labour’s core fiscal pledges.

In this context, the Chancellor has signalled that higher taxes on the wealthy will form part of the Autumn Budget package.[7] Although full details remain under discussion, officials have indicated that reforms to inheritance tax, capital gains tax, property taxation, and pension treatment may all be on the table.

It is important to stress that these points remain speculative. Nothing will be confirmed until 26 November. Making financial decisions based on rumour carries risk; if you are concerned, seek advice from a financial adviser who can help align your choices with your long term goals.

Inheritance Tax scrutiny

Inheritance Tax is once again under scrutiny. At present, gifts made more than seven years before death are fully exempt, while those made between three and seven years are subject to taper relief, with the rate falling from 32% to 8% the closer the gift is to the seven-year mark. Reports suggest the Treasury may tighten these rules, either by revising the taper or introducing a lifetime cap on how much can be given away free of IHT. [8]

Freezing allowances is another option. The main nil-rate band has been fixed at £325,000 since 2009 and, following last year’s extension, will remain frozen until 2030. Had it kept pace with inflation, it would be closer to £555,000 by the end of the decade. [9] Other reliefs, such as the £175,000 residence nil-rate band which has been unchanged since 2017, could also be scaled back. While major reform looks unlikely, incremental tightening remains a strong possibility.

Further pension reforms

Major pension changes were announced in last year’s Budget, including the decision to make pensions liable to inheritance tax from April 2027. [10] The Chancellor may, however, look to go further. Labour has pledged to maintain the triple lock, though the Office for Budget Responsibility has warned its cost could be three times higher than originally forecast. While no immediate changes are expected, the policy could come under scrutiny in the future.

Other potential reforms remain on the table. One option occasionally raised is reducing pension tax relief for higher- and additional-rate taxpayers, which could significantly impact the retirement savings landscape. The possibility of removing the 25% tax-free lump sum, currently capped at £268,757, was widely speculated last year and continues to be discussed. We don’t expect this to be introduced, given its potential unpopularity and impact on long term investment behaviour. It’s also always important to remember when discussing these types of changes, that taking out the tax-free lump sum without proper guidance can have serious consequences. If you don’t fully understand the implications, you may end up with unexpected tax liabilities or miss out on opportunities to maximise your retirement savings. To avoid these risks, consult with a financial adviser before making any decisions about withdrawing your lump sum or altering your pension strategy.

You can read more about the 2027 pension reforms announced in last year’s Autumn Budget here: Pension reforms proposed for 2027 : What you should know… | Saltus

Wealth tax

The idea of a wealth tax remains a contentious topic, both within Labour and more widely. Proposals have circulated for a 2% levy on individual assets above £10 million, which could raise an estimated £24 billion a year.[9] However, international experience is discouraging: eight countries have introduced such taxes in the past, only to later abandon them, and just four still maintain them today. Critics also argue such a move could drive wealthy individuals abroad or deter future investment in the UK.

While unlikely to feature in this Budget, the concept has not disappeared entirely. If support builds within the party or pressure grows from outside, a wealth tax could yet return to the table in future debates.

Capital Gains Tax reforms

Capital Gains Tax is not front and centre of government discussion at the moment, but it was targeted in last year’s Budget and could be revisited as a relatively simple way of raising additional revenue. As we know, last year we saw CGT rates increase with immediate effect from 10% and 20% to 18% and 24% respectively, including hikes to the rates for higher-value and residential assets. The annual CGT exemption (known as the Annual Exempt Amount or AEA) has already been cut sharply: it was £12,300 in tax years up to 2022-23, dropped to £6,000 from April 2023, then to £3,000 from April 2024 where it currently remains.[11]

The Chancellor could raise CGT rates again, or reduce the AEA further, either move would increase tax on gains from property, shares or other assets where the gain exceeds the allowance. Even small tweaks here are significant given how far the allowance has already been cut.

Property wealth tax

There has also been speculation that the Chancellor may consider a form of property tax in this Budget. One proposal reported is the replacement of stamp duty and council tax with a levy on homes above a certain value. Such a measure would fall most heavily on higher value areas, particularly London and parts of the South East, and could risk slowing the property market further in those regions.[9]

Other possibilities being floated include introducing new council tax bands at the top end to capture more revenue from expensive homes or applying CGT to primary residences above a certain threshold – often referred to as a ‘mansion tax’. At present, gains on main homes are fully exempt, so any change here would mark a significant shift in policy.

National Insurance on landlords

It has been suggested the Chancellor may look to add National Insurance to rental income for landlords. Currently, rent is largely exempt from National Insurance. However, if this were to change it could raise around £2.3bn a year.[12]

ISA changes

There were strong indications earlier this year that the Chancellor was considering cutting the annual Cash ISA limit from £20,000 to £4,000. The proposal has since been put on hold, but its emergence suggests Reeves may revisit the idea.[13] The aim would be to encourage a greater flow of savings into the stock market, particularly London-listed companies, as part of the government’s broader push to shift the balance from cash holdings towards equities.

Income tax

The independent Resolution Foundation think tank, which has close ties to some senior Labour ministers, has suggested a ‘tax switch’. They have proposed cutting employee national insurance by 2p while raising all bands of income tax by 2p.[14] This move is suggested to yield around £6 billion annually by broadening the tax base to include pensioners, landlords and the self-employed.[15]

Such a shift would allow the government to technically maintain the headline pledge of not raising taxes for working‑pay packets while nonetheless boosting revenue. However, it runs straight into the political commitment that labour won’t increase income tax, employee NI or VAT for working people.

Beyond the headline 2p switch, a second lever could be implemented: threshold freezes. The current income tax freeze, introduced by Jeremy Hunt in 2022, is due to be lifted in 2028. By leaving income tax bands unmoved while wages and inflation rise, more earners gradually move into higher tax brackets.[16] Analysts estimate that the freeze on income tax could raise over £38 billion a year in 2029/30.[17]

Recently, speculation has grown that Rachel Reeves may remove the exemption on employer National Insurance (NI) contributions for partnerships.[18] At present, partners pay income tax on all profits but remain classified as self-employed, meaning they are not subject to employer NI contributions.

National Insurance is typically charged at 15% of income, although reports suggest that if the Chancellor introduces this change, the rate for partners could be lower than the full 15%.[19] The measure would primarily impact professionals such as doctors, lawyers, and accountants, as well as others working within partnership structures. If implemented, it’s estimated partnership NICs would raise around £1.9 billion in the 2026/27 tax year.

Stay informed, stay agile

It is worth keeping in mind that nothing is certain until the Chancellor delivers her speech. With the fiscal landscape under strain and pressure mounting to reduce public debt, the outcome may well involve a blend of tax rises and targeted policy shifts.

Navigating these changes will require both flexibility and foresight. Wealth planning strategies will need to stay responsive to the evolving tax environment, with close attention to November’s announcements. If you are concerned about the implications, consider speaking with a financial adviser to ensure your strategy remains on course.