The Chancellor will deliver the Autumn Budget 2025 on 26 November 2025. The content of the Autumn Budget is anticipated to address significant fiscal challenges, including potential tax rises to address the public finance deficit.
Before turning to Autumn Budget 2025, we must note that some of the ramifications of Autumn Budget 2024 are still to come. These include:
- Capital Gains Tax (CGT) – in addition to the tax hikes that have already taken effect on 30 October 2024 and 6 April 2025, the rate of CGT where Business Asset Disposal Relief (BADR) applies is set to further increase from 14% to 18% from 6 April 2026.
- Inheritance Tax (IHT) – as initially announced in the last budget, IHT increases are already on the cards due to:
- Restrictions on 100% relief for business and agricultural property from 6 April 2026.
- The inclusion of unused pension funds and death benefits in estates from 6 April 2027.
Now let’s consider some of the potential announcements in Autumn Budget 2025.
What’s unlikely to change?
Labour’s 2024 manifesto pledged that there would be no increases to National Insurance, the basic, higher or additional rates of Income Tax, or VAT.
The Corporate Tax Roadmap of October 2024 also included commitments not to increase the 25% main rate of Corporation Tax and to retain the small profits rate and marginal relief. The £1 million annual investment allowance for plant and machinery capital allowances is also due to be preserved, as is the system of permanent full expensing.
Despite the government saying that extending frozen Income Tax thresholds any longer would hurt working people, thresholds may remain at their current levels, this could be until 5 April 2030, mirroring the time period for which IHT thresholds are frozen.
What could change?
- The scope of National Insurance Contributions (NICs) could be widened to include landlords.
- Depending on your level of income, pension contributions are currently afforded tax relief at the taxpayers marginal Income Tax rate (20%, 40% or 45%). The rate could be capped.
- Salary sacrifice for additional employer pension contributions is currently exempt from the Benefit In Kind rules. Removing the exemption would make the contributions subject to NICs and Income Tax.
- The rates of Capital Gains Tax (CGT) (currently 18% for basic rate taxpayers and 24% for higher/additional rate taxpayers) could be aligned with those for Income Tax, making the rate as high as 45%.
- There may be further restrictions to available IHT reliefs, possibly by introducing limits on exempt lifetime gifting.
- The VAT registration threshold, currently £90,000, may be lowered or abolished.
- The rate of VAT on domestic fuel is currently 5%. There are rumours that, in order to help with the cost of living crisis, such supplies will become zero-rated.
It isn’t possible to predict what the Chancellor will announce on 26 November, the above are possible announcements based on what has been released in the press. If you wish to discuss any of these issues in more detail, please get in touch.
