The Autumn Budget 2025 Predictions and possibilities

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. [3]

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. [4] Other reliefs, such as the 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. [5] 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.[4]

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.

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.⁴ 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.[6]

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 West, and could risk slowing the property market further in those regions.

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.[7]

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.[8] 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.

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.