The Autumn Budget - potential tax changes

Newsletter issue – October 2025

Chancellor Rachel Reeves has set the date for the Government's Autumn Budget. It will take place on the 26th of November. Speculation over tax reforms has begun to ramp up as Ms Reeves is under increasing pressure to grow the economy and fill the huge hole in the public finances. Here are eight potential proposals:

• Inheritance Tax (IHT) - A lifetime cap on tax-free gifts (e.g., £100k or £200k), which could result in significant IHT bills for heirs if exceeded.
• ISAs - Possible restrictions on the cash portion of the £20,000 annual ISA allowance to encourage investment over saving.
• Property Taxes -
  • Replacing stamp duty and council tax with an annual property tax.
  • Introducing higher council tax bands.
  • Applying Capital Gains Tax (CGT) to main residences sold above a certain threshold.
• Income Tax - Labour pledged not to raise income tax, NI, or VAT directly. However, extending the freeze on tax thresholds could act as a 'stealth tax,' pulling more people into higher tax brackets.
• Capital Gains Tax - Possible reduction in CGT allowances or increase in rates (currently 18% for basic rate taxpayers and 24% for higher rate taxpayers).
• Dividend Tax - Tax-free dividend allowance has dropped from £2,000 to £500. Further reductions possible, though dividends within ISAs remain tax-free.
• Wealth Tax - Some Labour members advocate for a new tax on individuals with assets above £5-10 million. Critics warn it could drive wealthy individuals out of the UK.
• Pensions - limiting salary sacrifice schemes and altering pension tax relief.