With the Chancellor's 2025 Autumn Budget set for 26 November, and an increasingly challenging economic outlook, we consider what tax changes might be announced when Rachel Reeves stands at the Dispatch Box next month.
Fiscal rules and economic landscape
In October 2024, the current Government set its new fiscal rules. Under these, it intends:
- That day-to-day public spending, such as on welfare and public services, will be met by revenue by 2029-30.
- Net financial debt to fall as a share of UK economic output in 2029-30.
Since then, the UK's economic outlook has changed.
- The Government now faces higher long-term borrowing costs, with the rate on 30-year bonds reaching their highest level since 1998, in August 2025.
- The Office for Budget Responsibility's growth forecast is widely expected to be downgraded, with reports of a fiscal shortfall of at least £20 billion.
Government spending was examined earlier this year, at the Spending Review in June 2025.
With a need to balance the UK's books, raising additional tax revenue seems likely to be high on the Chancellor's wish-list in the Autumn Budget, in an attempt to stay within the Government's fiscal rules.
Manifesto pledges
In recent weeks, attention has turned to Labour's manifesto. When questioned on the upcoming Budget, senior ministers are often quoted as stating 'the manifesto stands', but what commitments were made?
Several tax policy changes, based on manifesto pledges, have already been announced. These include:
- The Abolition of the non-domicile regime.
- Applying VAT and business rates to private schools.
- Closing the Carried interest tax 'loophole'.
But the manifesto did not just outline what a Labour Government would change. Perhaps more interestingly, it indicated what would not, with the Government committing to:
- Cap Corporation Tax at the current level of 25% for the entire parliament.
- Not increase National Insurance, the basic, higher, or additional rates of Income Tax or VAT.
The second of these pledges formed part of the commitment to 'not increase taxes on working people'.
These commitments, when balanced with the need to raise revenue, may give little room for manoeuvre.
It is worth noting that, between them, Income Tax, Corporation Tax, National Insurance and VAT account for Over 80% of tax revenues. Potentially being unable to make even minor changes to Current tax rates may significantly restrict revenue-raising options for the Chancellor.
So, what might we see in the 2025 Autumn Budget?
Areas tipped for change
Speculation on what announcements will be made on 26 November 2025 is rife. Common suggestions include:
Income Tax/National Insurance (NI)
- An extension to the freeze of the Personal allowance and tax thresholds beyond 5 April 2028.
- Removal of tax and NI advantages associated with Salary sacrifice arrangements.
- Introduction of Employer's NI to Limited Liability Partnership (LLP) profits.
Pensions
- A restriction on higher and additional rate Income Tax relief for Pension contributions.
- Abolition or restriction of the 25% tax-free lump sum on pension withdrawals.
- Reduction to the Annual Allowance, Tapered Annual Allowance and/or Money Purchase Annual Allowance.
- Restrict the Annual Allowance carry-forward rules.
- Bring pension receipts within the scope of NI.
Capital Gains Tax (CGT)
- A restriction on Private Residence Relief (PRR) for high-value properties.
- Alignment of the CGT rates with Income Tax rates.
Inheritance Tax (IHT)
- Introduction of restrictions on Lifetime giving, such as a lifetime cap, or extension of the seven-year cumulation period.
- Removal of the IHT exemption for Normal expenditure out of income.
- Abolition of Taper Relief.
- An extension to the freeze of the Nil Rate Band (NRB) and Residence Nil Rate Band (RNRB) beyond 5 April 2030.
Property taxes
- Bringing property income within the scope of compulsory NI contributions.
- Reform of Stamp Duty Land Tax (SDLT).
- Introduction of new Council Tax bands or a general revaluation.
- An Update on Business Rates reform is expected.
New taxes
- Introduction of a wealth tax, or more targeted 'mansion tax'.
VAT
- Decrease in the VAT registration threshold.
- Introduction of a higher rate of VAT for luxury items.
Other
- Remove or reduce the £135 threshold for Customs Duty.
The outcomes of several recent consultations are yet to be published; some or all of these may also result in tax policy announcements. These include:
- Consultation on tax certainty for major projects
- VAT treatment of business donations to charity
- Expanding conditionality to animal welfare, transport and waste sectors
- Reform of behavioural penalties
- VAT treatment of private hire vehicles
Our Finance Acts 2025-26: tax update and Rolling Tax Planner tracks consultations. It is a useful point of reference in monitoring the development of tax legislation.
Conclusion
All we know for certain is that many eyes will be on Rachel Reeves come 26 November, and it would seem highly likely that tax rises will be announced.
Full Budget coverage will be available on rossmartin.co.uk following the Chancellor's announcements.
In addition, our Autumn Budget Analysis 2025 is a concise, clear summary, branded and ready for you to send directly to your clients. Compiled by our technical team of Chartered Tax Advisers and accounting specialists, it distils the Budget into:
- Persona-based client scenarios.
- Expert technical commentary with worked examples and compliance angles.
Secure your copy today from £260 to ensure your Autumn Budget 2025 client comms are first-rate, timely, and backed by expert analysis.
Useful guides on this topic
Finance Acts 2025-26: tax update and Rolling Tax Planner
This rolling planner tracks the key tax announcements that impact the 2025-26 tax year and beyond. This planner is updated on an ongoing basis.
Just how are our taxes raised and spent?
How does the UK raise its taxes? How does the UK spend its tax revenue? Which taxes raise the most revenue?