2025 Autumn Budget analysis Winners, losers and what's next...

Following last week’s measures, the Chancellor, Rachel Reeves, has doubled the fiscal headroom available under the government’s rules to around £22bn.[4] As a reminder, Rachel Reeves has two main fiscal rules:

• Not borrowing to fund day-to-day public spending by the end of this parliament.
• Getting government debt falling as a share of national income by the end of this parliament.

Pensions

Many people breathed a sigh of relief to see that pension allowances and tax treatments were largely left untouched. For the second year running, speculation was rife that the pension commencement lump sum (the tax-free cash) would be slashed or abolished. These same rumours circulated ahead of the 2024 Budget and contributed to a 62% surge in withdrawals during 2024–25, as many acted prematurely. [5] Yet, just as in 2024, the change did not materialise.

The lesson remains the same: whilst it can be easier said than done, pension decisions should never be driven by hearsay. Working with a financial adviser can help ensure choices are based on robust planning rather than reactive moves that may undermine your long term retirement position.

What was announced this year is that from April 2029, both employer and employee National Insurance Contributions (NIC) will apply to any salary-sacrificed pension contributions above £2,000 per year.[6] For individuals used to funnelling bonuses or significant portions of salary into pensions, this may increase the long term cost of this strategy. At present, it appears that self-employed individuals will not be affected, as this relates specifically to salary-sacrifice structures. We will continue to monitor for further details as guidance evolves.

It will be important to review the impact of these changes well ahead of 2029, particularly if you rely on salary sacrifice as a core part of your long term retirement planning. Whilst options such as General Investment Accounts or offshore bonds can offer additional flexibility and tax planning opportunities, they also come with their own risks and implications, including potential capital gains tax, varying levels of access, and different charging structures. The right approach will depend on whether you prioritise tax efficiency, investment growth, liquidity, or a combination of these factors.

Given the complexity of these decisions, and the upcoming changes, it may be pertinent to review your retirement strategy with a financial adviser.

In addition, whilst not announced in the Budget speech, supporting documentation confirmed further updates to the inheritance tax (IHT) rules on pensions, building on measures introduced in the 2024 Autumn Budget. From April 2027, personal representatives (PRs) will be able to instruct pension scheme administrators to withhold up to 50% of taxable benefits for up to 15 months to cover potential IHT. PRs will also be discharged from liability for any further IHT identified after receiving clearance from HMRC. These changes aim to provide greater clarity and flexibility, though they may introduce additional complexity and could potentially delay payments to beneficiaries. You can read more about the 2027 pension changes here: Pension reforms proposed for 2027 : What you should know… | Saltus.

Finally, no changes to the pension triple lock were announced. This means the increase will continue to match the highest of either inflation, wage increases or 2.5%. Practically, this means the State Pension will increase by 4.8% on 6 April 2026, reflecting the average wage increase.[7] This increase will push the state pension above the basic rate income tax threshold. However, Reeves has stated that pensioners affected by this will not be required to pay income tax before 2030.

This assurance does, however, raise further questions. Many pensioners already receive additional income during retirement which means they already pay tax. For these individuals, the interaction between the state pension uplift and their existing tax position could add further complexity.[8]

Enterprise Investment Schemes and Venture Capital Trusts

Rachel Reeves introduced significant reforms to the UK’s two flagship venture capital schemes: the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs). These vehicles were designed to encourage private investment into young, innovative companies that often struggle to access traditional funding.

Whilst similar, they do operate slightly differently. VCTs are publicly listed investment companies that raise money from investors and use it to back a portfolio of small, early-stage businesses. EIS investments, on the other hand, are made directly into qualifying companies or through EIS funds. Both are classified as high risk investments and offer generous tax incentives.

So, what’s changed? From April 2026, both schemes will be able to support larger and more developed businesses than before. Caps on how much EIS and VCT funds can invest, both per company and over a company’s lifetime, will rise significantly, in some cases doubling for the fastest-growing firms. Eligibility thresholds will also increase from next year, meaning more scale-up businesses (not just very early stage start-ups) will qualify for funding.[9]

The headline announcement, however, is the reduction of upfront VCT income tax relief from 30% to 20%.[10] This matters because the 30% relief has long been a core part of the risk-reward balance. VCTs invest in small, illiquid companies that carry a higher chance of failure, so the upfront tax benefit has historically helped offset this risk and encouraged long term participation.

Reducing this relief appears to contradict the government’s stated ambition to drive growth. Lowering the relief could impact investor’s appetite.[11] In fact, we saw this happen in 2006/07 when the relief was reduced from 40% to 30%. During this period, funds raised by VCTs dropped by 65% year on year and took years to recover.[12] Whether the same pattern will repeat remains uncertain, but it is reasonable to expect a significant impact over the coming years.

Whilst the ability for VCTs to deploy larger amounts into more mature companies and the continuation of tax-free dividends remain positives, the reduction in income tax relief may prompt some investors to reconsider their strategy. If you might be affected by these changes, we strongly recommend speaking with a financial adviser to review your options.

Mansion tax

One of the more hotly debated proposals ahead of the 2025 Autumn Budget was the introduction of a so-called ‘mansion tax’. Labour has delivered on this, although not to the extremes some commentators feared. From April 2028, qualifying properties in England will attract an additional charge on top of normal council tax. These charges are listed below[13]:

These amounts will rise annually in line with CPI inflation and homeowners, rather than occupiers, will be liable. Importantly, the valuation used for the threshold will be determined not by sale or asking prices, but by the government’s Valuation Office Agency that will occur in 2026. How this will be undertaken in practice has yet to be announced.[14]

There are a wide range of measures the government will be looking into further, such as a potential support scheme for people who may find it difficult to pay the charge upfront. Another idea on the table is allowing the charge to be deferred and settled only upon the transfer of the property, such as through inheritance, gifting, or sale.

The consultation will also look at possible reliefs and exemptions, along with how the rules should apply to more complex ownership arrangements involving companies, funds, trusts, and partnerships. It will further consider how to handle situations where someone is required to live in a property as part of their job, often referred to as “tied property.” [13]

As the surcharge applies annually and is subject to periodic revaluations, it introduces a meaningful ongoing cost, one that will accumulate over time. For some, they may find the additional cost manageable and choose simply to absorb it. Others may want to reassess whether holding a high value property still aligns with their goals. This might be particularly relevant for properties that produce little income or carries other costs, such as mortgage interest, maintenance obligations, or restrictions on short term letting. If this affects you and you’re wondering how you might adapt there are a couple of things worth exploring:

• Review the overall cost of ownership: Understanding the long term cash impact of the surcharge, especially with inflation-linked increases, can help clarify whether the property remains sustainable or desirable.
• Evaluate rental options: If the property is not occupied full time, generating rental income could help offset the additional council tax burden, though this should be weighed against regulatory and tax considerations.
• Assess portfolio balance: Some owners may decide to diversify away from low-yield residential property and towards other assets.
• Explore relocation or downsizing: For individuals who no longer need or wish to maintain a £2m+ home, reducing property value or moving to a lower-band property may help manage ongoing costs.

Stealth taxes

Whilst the anticipated wave of large scale tax hikes didn’t materialise, Rachel Reeves has still managed to double the government’s fiscal headroom to approximately £22 billion. So, how did Reeves achieve this? One of the most significant contributors is the extension of so-called “stealth taxes”.

Income tax and National Insurance thresholds will remain frozen for an additional three years, from April 2028 to April 2031. This measure is forecast to raise around £8 billion in 2029–30, making it the single largest revenue-raising initiative announced in the Autumn Budget.[15]

As wages rise over time, more individuals will be drawn into higher tax bands, increasing the government’s tax take without altering headline rates. By 2031, almost one in four taxpayers is expected to fall into the higher-rate band, and an estimated 600,000 more people will enter the additional-rate band.[16]

Critics argue that this approach contradicts Labour’s manifesto pledge not to raise taxes on working people, framing it as a subtle workaround. For those affected, options are limited. The most effective response is to understand the implications early and work with a financial adviser to plan accordingly. Strategic tax planning, including the use of allowances and tax-efficient investment wrappers, may help mitigate the long term impact of fiscal drag on your wealth.

Next steps

If there’s one clear takeaway from this Budget, it’s that the biggest win might simply be the absence of sweeping changes. Despite weeks of speculation and headlines predicting dramatic tax hikes, most of those fears proved unfounded. Whether you see that as a public relations success or disaster is up for debate, but what matters now is how you respond.

For most people, the measures announced can be managed with careful planning and sound advice. The lesson here is timeless, don’t let rumours dictate your financial decisions. Acting on hearsay can often lead to costly mistakes, whereas waiting for the facts, and working with a trusted adviser, can often keep you in control.

Of course, some areas of the 2025 Autumn Budget still need clarification, and consultations for certain aspects are on the horizon. We’ll continue to monitor developments and share updates as soon as they’re available.