The Autumn Budget 2025: Key Areas to Watch

The 2025 Autumn Budget will bring changes to the UK’s financial landscape. Understanding the key areas of discussion, from pensions and property to inheritance tax and savings, is the first step in helping to ensure your financial plan remains on track. Here is our current view on what to look out for on 26^th November.

The Bigger Picture: Setting the Scene

Every budget comes with a period of intense speculation, and this year is no different. The government is navigating a challenging economic environment, with forecasts suggesting a fiscal shortfall of between £20 billion and £40 billion.

In Labour’s 2024 manifesto, the Government committed not to raise the headline rates of Income Tax, National Insurance, or VAT. However, in the recent weeks, there has been widespread speculation (following the Chancellors ‘scene setter’ speech on 4^th November) that the government might raise income tax to help fill a “fiscal black hole”. At the time of writing this article, after some political flip-flopping, this increase to income tax is now looking less likely. In other words, a political U-turn on a decision that is yet to be made!

We do know the UK Government has announced significant changes to both Business Property Relief (BPR) and the Inheritance Tax (IHT) treatment of pensions in the Autumn Budget 2024, with effective dates in April 2026 and April 2027, respectively.

All other potential changes discussed below remain speculation only until the Chancellor’s announcement on 26^th November 2025 at about 12.30pm.

Inheritance and Estate Planning

Inheritance Tax (IHT) remains one of the most debated areas of the UK tax system, with ongoing discussions about potential reforms. Under current rules, individuals can make unlimited lifetime gifts and provided they survive for seven years after making the gift, it is generally exempt from IHT. However, recent speculation suggests the possible introduction of a ‘lifetime gifting cap’, which would restrict the total value of tax-free gifts an individual can make.

There is also talk of changes to the exemption for gifts made from surplus income, which currently fall outside the scope of IHT. In addition, the taper relief rules (which reduce the tax payable on gifts if the donor survives at least three years) are believed to be under review.

Pensions and Retirement

towards a single “flat rate” of tax relief for all savers. This would be a significant change from the current system, where you receive relief at your marginal rate of income tax. Such a change would alter the calculations for higher-rate taxpayers on the benefits of contributing to their pension.

The ability to take 25% of your pension pot as a tax-free lump sum, up to a maximum of £268,275, is a popular feature. There is ongoing speculation that this allowance could be reduced in the future. There have also been suggestions that the current £60,000 annual pension contribution limit could be reduced, potentially back to £40,000.

Property and Capital Gains Tax (CGT)

For homeowners and property investors, particularly those in London and the South-East, there are a few potential changes to be aware of. There is speculation that CGT rates could be more closely aligned with income tax rates. This would primarily affect the sale of second homes and buy-to-let properties. There has even been discussion of a cap on Private Residence Relief, meaning a portion of the gain on the sale of a main home above a certain value (e.g., £1.5 million) could become subject to CGT.

Recent speculation suggests that new council tax bands for higher-value homes are being reviewed as a way to raise revenue without a full, nationwide revaluation.

Income tax

While the government has pledged not to raise income tax rates, the freeze on the personal allowance and tax thresholds is set to continue until 2028 and could be extended. As wages rise, this “fiscal drag” means more of an individual’s earnings can fall into a higher tax band over time. It is a subtle shift, but one that can have a meaningful impact on personal net income. In her last budget, the Chancellor has suggested that extending the freeze further would “hurt working people”. This stealth tax measure has long been seen by economists as among the most probable options at the upcoming budget.

Dividend Tax

A rise in dividend tax rates would impact investors directly. Dividend tax applies to income received from company shares and is added to other earnings, meaning the rate depends on the individual’s tax band. The tax-free dividend allowance has been steadily reduced over recent years. Reports suggest the Chancellor may cut it again to raise revenue.

Limited Liability Partnerships

As part of efforts to raise taxes on those with the “broadest shoulders,” the Chancellor is reportedly considering introducing a National Insurance charge on limited liability partnerships (LLPs), which are widely used by professionals such as doctors and lawyers. At present, partners are treated as self-employed, meaning employers’ NIC does not apply. Following strong lobbying from senior figures in law and accountancy, the Treasury has indicated that any potential changes will be less severe than initially feared.

Cash ISAs

Proposed changes to cash ISAs have been under discussion for many months but have gained renewed attention recently. Speculation suggests the Chancellor may cut the current £20,000 allowance for cash ISAs, potentially halving it. The aim is to encourage the £300bn currently held in cash ISAs to flow into the stock market, ideally supporting UK-listed companies.

Electric Vehicles

A pay-per-mile charge to help offset the decline in revenue from fuel duty as car owners switch from traditional combustion engines to electric vehicles. Current speculation suggests a 3p per mile for electric vehicle owners.

Gambling

The Chancellor has been actively reviewing measures to increase gambling taxes. In response to this possible tax increase, gambling companies have mounted a strong lobbying effort to try and influence the government’s decision.

Salary Sacrifice

Salary sacrifice schemes allow employees, typically higher earners, to reduce their stated salary in return for increased employer pension contributions. This arrangement means employers currently avoid paying National Insurance on those contributions. Applying full NIC charges to these schemes would generate meaningful tax revenues for the Government, though it raises concerns about whether this might discourage individuals from saving for retirement.

Council Tax

Many economists and Labour MPs argue that England’s council tax system is outdated and unfair, relying on property valuations from 1991. The Treasury has been considering higher charges for the most expensive homes, with one option being to double the rate for properties in bands G and H. Such a move would likely spark controversy, particularly around homeowners with valuable properties but modest incomes, meaning the Chancellor would need to present a strong case for the change.

Key Takeaway

Budget speculation is at its peak. It is important to emphasise that individuals should avoid making significant financial decisions based purely on budget speculation or media rumours. Acting on unconfirmed information can lead to poor outcomes, disrupt long-term financial plans, and result in unnecessary tax liabilities or losses. Instead of reacting to rumours, focus on your long-term financial goals and seek qualified advice once official budgetary announcements are confirmed.

Arvor Financial Planning will be analysing the Budget announcements in detail. We will provide a summary document shortly after the 2025 Budget on 26^th November.

All details are correct at the time of writing (16^th November 2025)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.