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UPDATED. The UK Autumn Budget will take place on Wednesday 26 November 2025. By how much will taxes rise?
25 November 2025
The UK Autumn Budget will take place on Wednesday 26 November 2025. Taxes will rise, but by how much?
UPDATES Nov 2025:
The Chancellor, Rachel Reeves, has made it clear that taxes will rise in the Autumn 2025 Budget to fund increased government spending on welfare, defence, the NHS, and net zero projects, and to plug the growing fiscal black hole of as much as £50bn, despite sluggish economic growth to the extent that even the IMF may be asked for help. Could the UK economy also be heading for recession?
The UK's gross domestic product (GDP) rose by only 0.1% in the third quarter of 2025, down from the 0.3% growth in the previous three months, according to the Office for National Statistics (ONS).
This comes on top of the Office for Budget Responsibility (OBR) reportedly reducing its productivity predictions by about 0.3%. If, according to the IFS, every 0.1% reduction in the OBR’s medium-term forecast adds around £7bn-£9bn to the level of government borrowing over five years, the Chancellor's black hole could potentially be almost £30bn from this alone.
Just servicing the government's existing debt level is forecast to cost over £111bn this year in debt interest payments (comparable to the education budget) according to the IFS, £64bn higher than just three years ago.
And there doesn't appear to be any commitment over time to bring down that debt level relative to GDP (through spending cuts, for example), which means the government remains in hock to the guilt-buying markets and has to be careful what it announces, particularly on large spending commitments or changes in the Chancellor's fiscal constraints.
Her 4 November 2025 pre-Budget speech was probably an attempt to reassure the markets.
The Chancellor has to navigate the difficult task of stimulating the UK economy while paying for growing public spending, staying within her own loose borrowing rules and keeping promises on personal tax. None of these seem feasible at the moment.
Last year's Autumn Budget raised £40bn of tax from National Insurance, CGT, IHT and non-doms, and those rises are likely to be compounded this time with more taxes through stealth and also on wealth. The Chancellor also increased annual borrowing by £30bn.
On 10 November 2025 the House of Lords published a more detailed economic and tax background to the Budget for a Parliamentary debate. And a background briefing to the Budget was published by the House of Commons on 20 November 2025.
The Chancellor has previously said that she will not raise income tax, national insurance or VAT (which are the three major revenue earners for the Treasury), but that does not prevent her from widening the scope of those taxes, e.g. making older workers and landlords pay more tax and national insurance, or changing the VAT registration threshold.
However, with the government's growing fiscal deficit and sluggish economic growth there are calls from pressure groups to break manifesto promises and raise income tax by up to 2p to bring in the kind of money the Treasury really needs to balance the books. But, politically, it's a move that will lose votes and it looks like the Chancellor has taken note and will not proceed on that path.
The IFS has stated that raising the rates of income tax, National Insurance or VAT, the three largest taxes, could straightforwardly raise large sums for the Treasury. As could higher tax rates on income from capital, including rental income, dividends, interest and self-employment profits, but it warned that simply raising rates would discourage saving and investment.
Any such tax rises will take place against stubbornly high inflation (3.6%) and rising unemployment (5.0%), increasing business costs, and interest rates that remain high (held at 4% on 6 Nov 2025). New tax rises could boost inflation and delay cuts to interest rates. The OECD predicts that the UK will face an average rate of inflation of 3.5% by the end of this year, easing to 2.5% in 2026, which on top of possible new tax rises makes it tough for the living standards of households and the budgets of businesses.
Having previously told the CBI business group that: "I’m really clear: I’m not coming back with more borrowing or more taxes," that appears to be exactly what Rachel Reeves will have to do.
However, one factor to consider is the Prime Minister's recent reshuffle, where he brought in to 10 Downing Street a key figure from the Treasury (who had been the Chancellor's senior adviser) as well as an economist, presumably to second-guess the Chancellor. This is probably why the Budget is delayed until the end of November rather than being held in October as was expected.
The delay prolongs the uncertainty around where tax rises may hit, and it means people and businesses are putting off making decisions until the tax position becomes clear. Prolonged speculation is damaging the economy.
It was not been helped by candidates for Labour's deputy leadership contest announcing their own radical tax and spend manifestos, particularly around wealth taxes. The winner, Lucy Powell, has already suggested increased welfare spending.
Media speculation is daily on the contents of the Budget, the state of the UK economy, and the future credibility of the Chancellor (and that of the Prime Minister). It is not helped with the constant tax U-turns There is a lot riding on this Autumn Budget.
Below, we outline the main areas where changes may occur. (A summary table is at the end of this article).
The freeze on personal and higher-rate income tax thresholds (currently until 2028) is likely to be extended further, potentially to 2030, generating around £8bn annually through “fiscal drag” as earnings are caught up in higher tax bands.
The freeze on tax thresholds continues to be a major revenue raiser for the Treasury. And even pensioners who are just on the state pension may soon have to pay tax as the triple lock pushes their pensions above the frozen personal allowance threshold of £12,570.
That personal allowance and the £50,270 higher-rate threshold haven’t changed since April 2021 when Rishi Sunak introduced the freeze. Without the freeze, the personal allowance would be around £17,000 by 2029, and the higher-rate threshold would be around £69,000 by then.
The IFS expects tax revenue as a share of national income to reach a UK record high of 37.4% in 2026, partly as a consequence of these frozen allowances and thresholds.
Another scenario touted in the media is that with Labour thinking working people are only those earning less than £46,000 a year, could the £50,270 higher-rate threshold be reduced to this figure, immediately bringing more people into the 40% tax bracket? That would be fiscal drag on steroids..
Once thought politically unthinkable, and even previously ruled out by the Chancellor herself, but then she changed her mind and planned to raise the rate of income tax by 2p to generate a large amount of tax revenue (around £10bn for every 1p rise). It would be the first such rise in the main rate since 1975 when Denis Healey was Chancellor and the basic rate of income tax became 35%. But she appears to have changed her mind yet again and it's now doubtful she will increase income tax.
If Income Tax increased by 2p and thresholds were frozen until 2030, that could generate around £30bn a year for the Treasury.
It was thought that a 2p rise could be combined with a similar cut to employee National Insurance for the lower paid (as suggested by the Resolution Foundation).
Both the Institute of Directors and the National Institute of Economic and Social Research have previously suggested an increase in the rate of Income Tax as being less harmful than, say, raising the rate of VAT, and far better than complicating the tax system even further with minor tax rises in more obscure areas.
For the Chancellor, a one-off rise would have the advantage of not needing to repeat the performance for the duration of this parliament.
Added weight to the suggestion of a rise was made by Shadow Chancellor, Mel Stride, who said that if he were currently the Chancellor he would raise Income Tax.
In her pre-Budget speech on 4 November 2025, the Chancellor indicated that one of her priorities is reducing inflation (even though her April 2025 employer NIC rise contributed to it). So one could interpret the Chancellor's words as meaning she wants to avoid raising taxes that increase inflation (such as business taxes or VAT) and instead opt for an income tax rate rise.
And, according to reports, she informed the OBR that she would raise Income Tax, but then told them she would not.
The Resolution Foundation had suggested that if the basic rate of Income Tax did rise from 20p to 22p, the rise could also apply to the higher rate (from 40p to 42p) and the additional rate (from 45p to 47p). It had also suggested that at the same time the rate of National Insurance fall from 8p to 6p for basic rate Income Tax payers, and from 2p to zero for higher and additional rate payers.
It was thought that the Chancellor would reduce National Insurance by 2p for those earning below £50,270, but if she is not raising Income Tax then it is unlikely she will cut National Insurance.
Irrespective of whether or not the rate of Income Tax is to rise, another proposal in the pipeline is to raise the rate of tax paid on dividends received by investors and business owners.
Basic rate taxpayers pay 8.75% on their dividends, with higher-rate taxpayers paying 33.75% and additional-rate paying 39.35%. The Resolution Foundation has called for the basic rate to be increased to 16.5%, which would be quite a hike.
This may be coupled with the abolition of the £500 tax-free allowance, which would impact on the smallest investors.
Inheritance tax is expected to feature prominently in the Budget, following on from last year's announcements that private pensions will become subject to IHT at 40% from April 2027, alongside drastic reductions in allowances for agricultural and business property.
See our previous article: Major inheritance tax changes to go ahead despite lobbying
But this Budget could go even further on IHT with such possibilities as:
All these potential announcements directly impact wealth.
Various rumours have been published in the media of potential measures being considered:
A reform or complete replacement of council tax, such as with a property tax based on value, has been rumoured. Council tax is currently based on 1991 values. This would be a major change to property taxes and would require a considerable amount of work to implement, and thus lead time for consultation.
The IFS notes that council tax rates are already assumed to rise by 4.3% per year for the rest of the parliament; larger increases would be needed to bring in additional revenue. As an alternative to raising all rates further, the IFS suggests increasing rates on homes in higher value bands in order to make council tax less regressive. It is understood that the Chancellor is also considering doubling council tax on band G and H homes.
There has also been the re-emergence of discussions about a so-called Mansion Tax, possibly in the form of a CGT charge on homes worth over a certain value, thus limiting the existing main residence exemption.
Or this Mansion Tax may take the form of, say, a 1% levy on the portion of a property’s value exceeding £2m. So, for example, owners of a £3m property would have an annual tax bill of £10,000 (though, presumably, the size of any mortgage on the property would be taken into account).
According to the latest reports, with the Chancellor appearing to ditch her idea of an Income Tax rate rise, she will instead introduce a surcharge on expensive properties (worth £2m+). The Treasury will revalue around 2.4m properties in council tax bands F, G and H, and payment of the surcharge will be deferred until the property owner moves house or dies. Interest on the amount deferred may also be charged.
Stamp duty, or more properly, Stamp Duty Land Tax, could be abolished or reformed (something the Tory party has also now called for). This could take the form of making sellers liable for the tax rather than buyers, where the value of properties exceed a certain amount, e.g. £1m.
The IFS warns against increasing stamp duties because they lead to asset misallocation and lower labour mobility, dragging on growth in the process.
Another tax could be on land values rather than buildings, but the consequences of doing this are not clear other than perhaps attempting to encourage development.
The likelihood of any of these changes happening depends on how far the Chancellor is prepared to go in reforming the taxation of wealth and property in the longer term, rather than simply making a quick tax grab to fix the black hole.
The recent controversy over Angela Rayner's stamp duty arrangements will not have helped matters for reforming property taxes, and may delay announcements to another time.
As regards the introduction of an annual wealth tax, the Chancellor has again recently indicated that this is not currently being considered due to logistical challenges, and the thought that it would not raise very much anyway.
“We are not going to be introducing a wealth tax”, Reeves told the IMF . “We already have a number of taxes that do target wealthy people and some of those were increased in the budget last year.”
Such a wealth tax has been tried in a number of other countries before, but mainly without success in terms of raising the revenue expected. Any such measure would require substantial consultation and would adversely impact the kind of investment for growth the government wants to promote.
The IFS has also cautioned against introducing an annual wealth tax, which it says would face huge practical challenges.
The Chancellor has, it is understood, been considering an exit tax on wealthy people leaving the UK and losing their tax residence.
Reports in the media suggested that this "settling-up-charge" could be as much as 20% on business assets. It is thought that the tax would raise around £2bn. But such a move is thought to deter potential overseas investment in the UK and to hold to ransom wealthy people in the UK, so according to reports the Chancellor has abandoned the idea (for now).
In the previous Autumn Budget, the main rates of capital gains tax increased with immediate effect to 18% for non and basic rate taxpayers and 24% for higher and additional rate taxpayers. The rate for business asset disposal relief rose to 14% for 2025/26 and will rise again to 18% for tax year 2026/27.
Rumours persist of a possible alignment of these rates with those of income tax (currently 20%, 40%, 45%).
Although the Chancellor herself has previously said she did not want to discourage investors, increasing CGT rates to be in line with those of income tax would affect the behaviour of investors and likely lead to less revenue for the Treasury than expected.
Another measure the Chancellor might consider is removing CGT relief on death, so someone inheriting an asset may have to pay CGT on any increase in value of that asset that occurred during the deceased’s lifetime.
Last year's Budget significantly increased National Insurance for employers from April 2025, impacting jobs, recruitment and growth. Would the Chancellor seek to raise more this way, or perhaps she sees this as too risky?
For employers, not only have they had to contend with the rise in employers' National Insurance but will also face extra compliance costs once the Employment Rights Bill receives Royal Assent. This will give employees certain day one rights.
There are many rumours that National Insurance will be widened in its scope to possibly include landlords and working pensioners.
There have also been rumours that the self employed may have to pay more in National Insurance. The self employed currently pay Class 4 NICs.
The Resolution Foundation has called for the self-employed to be taxed more to equalise their treatment with employees. The Foundation argues that employees pay a higher rate of employee NICs than the self-employed.
However, the argument takes no account of the fact that it's the self-employed who take the risks, have no employment rights or paid holiday. The Foundation also takes no account of the fact that the self-employed pay employers' NICs on the wages they pay their employees, or the fact that state benefits for employed and self-employed are not equal.
Countering the Foundation's suggestion, an ex-Treasury consultant and self-employment expert argues that creating a form of parity on tax between employed and self-employed would cost the Treasury more than it receives as the benefits for the self-employed would have to increase to more than the tax take.
This could also impact those who use limited liability partnerships (LLPs) such as doctors, lawyers and accountants (who currently pay Class 4 NICs). A move that could impact around 200,000 partners.
Having to pay employer National Insurance on profit distributions might raise sizeable amounts for the Treasury ((£2bn?), but may also have long-term consequences as LLPs decide to incorporate to avoid the charge. Members of LLPs are not employees, so there is no 15% employers' NIC.
Following lobbying from legal and accounting bodies, it is reported that should NIC be imposed it would not be the full rate but a lower amount instead.
Rishi Sunak's proposed 1.25% health and social care levy from April 2022 was meant to help fund the NHS and adult social care. However, the levy was cancelled in Kwasi Kwarteng's mini-Budget in 2022 before it could be fully implemented.
Could Rachel Reeves revisit this measure as a way of generating revenue for the NHS?
One suggestion that has been put to the Chancellor by the Resolution Foundation is to tax pensioners. This could be done by making pensioners pay employee National Insurance on their employment income.
Alternatively, the Foundation suggests a 2p cut in National Insurance and adding 2p to income tax. This would allow the Treasury to tax those who do not currently pay employee NI, such as pensioners, landlords and even the self employed. But this would go against the Chancellor's pre-election promise to not increase income tax.
However, Torsten Bell, the Foundation's former chief executive, is now a minister in the Department for Work and Pensions and the Treasury and has been given a role in writing the next Budget. The Foundation's connections don't end there. Former Foundation employees Dan Tomlinson and Richard Hughes are now at the Treasury and the Office for Budget Responsibility respectively. The Foundation clearly has an influence on policy.
The state pension will increase from £11,973 to around £12,550 in April 2026 (to be confirmed in the Budget) due to 4.8% wage growth from May to July 2025 (used for the triple lock calculation). With the income tax personal allowance frozen at £12,570 (and probably extended to 2030), more pensioners are likely to face a tax bill.
According to HMRC, around 8.72m people over state pension age already pay tax.
Back in 2020, Torsten Bell called for the end of the triple lock for pensioners for calculating pension rises. Whilst the Chancellor may be unwilling to do this, particularly after the debacle over the winter fuel allowance, she could tax pensioners more via income tax to recoup money paid out in pensions.
Having said that, the ongoing existence of the triple lock is under review by all the major political parties due to its unaffordability in the long term.
As if landlords do not already feel unfairly targeted by numerous tax measures, plus the new Renters' Rights Act which from a date to be confirmed will make it more difficult to evict a tenant, there is now speculation that rental income could be subject to National Insurance.
How could this be applied? Would it be on rental profits, or possibly some form of alignment with employment income?
Whilst this widening of the scope of NI could bring in a couple of £bn revenue, there would also have to be measures to deal with landlords incorporating their property portfolios to avoid the NI charge.
As landlords will have to submit details of their rental income under Making Tax Digital for income tax from 2026/27, any national insurance could be ascertained that way by HMRC.
But a downside of imposing National Insurance on landlords will be the likely scenario of such costs being passed on to tenants in higher rents. How will the Chancellor seek to avoid that consequence?
Pension contributions and pension pots are increasingly seen as low-hanging fruit for a revenue-hungry Treasury. Whilst fundamental reforms may not be any time soon, there are changes that could result in more immediate revenue.
We already know from last year's Budget that unused pension pots will become subject to IHT from 2027., although the details of how this will work in practise are yet to be finalised.
The amount that a saver can take from their pension pot tax free have been under review. Currently, most savers can take 25% of their pension pot tax-free once they reach the age of 55, up to a maximum of £268,275. However, the Fabian Society, of which the Chancellor is a member, has suggested cutting the allowance by two-thirds (to around £100,000) in an attempt to raise £2bn.
Reducing or removing altogether the current 25% tax-free lump sum on pension withdrawals is under review (which has already triggered savers to withdraw millions from their pensions ahead of the Budget).
However, it is understood that Reeves has decided against this due to the impact on pensioners, and lobbying from pension companies concerned about large withdrawals by savers ahead of the Budget. Instead she will target salary sacrifice schemes (see below).
Any limit on withdrawals tax free may be coupled with the removal of higher-rate tax relief on pension contributions, or even a flat rate of relief.
Before Rachel Reeves became Chancellor she advocated for a flat rate relief of 33%. However, the Resolution Foundation has suggested the flat rate should be as low as 25%. A flat rate above 20% would provide a tax boost for basic rate taxpayers, although higher-rate taxpayers would lose out.
The previous government also considered this a number of times, but never took any action. This could be the moment when such reforms are introduced.
The IFS states that restricting income tax relief on pension contributions would raise large sums, but should be avoided. But it does suggest the Chancellor could look at reviewing the NIC treatment of salary sacrifice pensions.
It is understood that the Chancellor is looking to restrict salary sacrifice arrangements for pension contributions.
Currently, both employers and employees save NIC by sacrificing a portion of pay into a pension scheme. NIC is then only levied on the net pay after contributions have been made.
It is understood that Reeves will cap the amount of someone’s salary that can be sacrificed without incurring national insurance payments at £2,000 a year, so any pension contributions over that amount would result in the employee paying the full rate of national insurance of 8% on a salary of less than £50,000, and 2% on income above that.
If this is the case, it will impact those trying to save for their retirement and on company pension schemes.
As an aside, salary sacrifice schemes generally may be restricted in future, including cycle-to-work arrangements.
There is speculation that the cash ISA allowance could be cut from £20,000 to £12,000 to drive more investment into UK-listed shares.
Back in July 2025 the Chancellor dismissed plans to reduce the ISA allowance, but is being reviewed due to pressure from banks who want to see more investment in stocks and shares ISAs. If the Chancellor does reduce the cash ISA allowance, could she increase the stocks and shares ISA limit by a similar amount?
However, there is also speculation that the Chancellor may tamper with stocks and shares ISAs to stipulate a certain percentage holding of UK shares in the ISA to retain its tax-free status (similar to the previous government's proposal of a British ISA). Various figures have been suggested, such as 25% or even 50% UK shares held in the ISA.
But if this were so, stocks and shares ISAs could lose their savings appeal as any tax saving may be wiped out by lower returns on investment. It is also not clear how one would define what a UK share is when so many listed companies have substantial overseas operations.
Since the publication of the Corporate Tax Roadmap in October 2024 which focussed on stability, not much has since been heard about any possible changes to corporation tax, other than perhaps more anti-avoidance rules.
In the roadmap the Chancellor said the main rate of corporation tax will remain at 25% for the lifetime of this parliament for companies with annual profits above £250,000.
There is also a lower rate of 19% payable by companies with annual profits below £50,000. Could this lower rate be at risk if the Treasury wants to raise more corporate revenue? Increasing the rate for smaller companies would put at risk jobs and investment.
The roadmap confirmed that the current regime for capital allowances and R&D tax relief would be maintained.
As R&D tax relief compliance enquiries by HMRC have increased, we can expect perhaps more measures to assess claims, although what is needed is greater awareness by companies of the R&D tax regime and what could be claimed for.
Fuel duty has now been frozen for over a decade, with a temporary 5p per litre cut still in place (which is likely to end). The current freeze is meant to end in March 2026.
The IFS states that current forecasts assume the rate of fuel duty will in future keep pace with inflation and that the current ‘temporary’ 5p per litre cut will come to an end, creating a combined revenue increase for the Treasury of more than 20% by 2029 on current forecasts. Anything less than that would lose the government revenue relative to current forecasts.
So, the Chancellor could decide not to renew the freeze. It is also an option to raise fuel duty, but that was last done when Alistair Darling was Chancellor 15 years ago.
Removing the freeze or increasing fuel duty would push up costs for households and businesses and impact inflation.
With the gradual move from the internal combustion engine to electric vehicles (EVs), the Treasury is losing money on excise duty and VAT on fuel. Could the Chancellor consider charging more on electricity use, but in a way that does not impact those who do not drive?
Or more likely road pricing. The Resolution Foundation has called for a pay-per-mile tax on drivers. And it is understood that the Treasury is looking at introducing such a charge for electric vehicles from 2028, after consultation.
Reports in the media suggest EV drivers will be charged 3p per mile. It will work by asking EV drivers to estimate their mileage for the year ahead and pay a fee of 3p per mile. If the actual mileage is below that estimate, the amount paid will rolled over to the next year, but any greater mileage than the estimate and the driver would top up their payment. It is not clear how this would be enforced, or how drivers would prove their mileage.
Drivers of hybrid cars will also be affected, it is understood, but they are likely to pay a lower rate.
The president of the AA has called this pay-per-mile proposal as “a poll tax on wheels”.
There has been speculation in the media about VAT threshold changes, mainly in the context of addressing the suppression of growth in turnover for small businesses that currently take steps to limit income to stay below the £90k VAT registration threshold.
Some have speculated on a higher threshold, but there are problems with doing this as Northern Ireland remains bound by some EU VAT rules and the maximum VAT Threshold allowed in the EU is EUR100k (GBP90k), and the threshold would need to be increased significantly to make a real difference to growth.
Potentially a more likely scenario is for the chancellor to lower it down to a figure catching all but small hobby businesses, perhaps £30k (a Resolution Foundation proposal). This both permanently removes the growth barrier at £90k (or a higher figure) and would bring around a million small businesses, mostly B2C, into the scope of VAT, raising significant new tax revenues, without changing “the rate of VAT”.
However, this would not be without a cost as owners of businesses with a turnover below the current VAT threshold may decide to give up as they don't want to deal with VAT, or they decide instead to hike their prices to accommodate the extra 20% (thus fuelling inflation).
It is also not clear how HMRC would actually deal with a sudden influx of tens of thousands of new registrations for VAT as the department already has problems dealing with the current number.
Could the 20% rate of VAT be increased by the Chancellor? It has been 20% since 2011. An increase of say 1p would have an inflationary impact and would also disproportionately affect those on lower earnings, so this seems less likely.
However, she could instead remove reduced and zero rates of VAT on some items such as books, food and children's clothing. We saw an example of this earlier this year with the imposition of VAT on private education.
Having said that, there is also a possibility that the Chancellor may temporarily remove VAT from domestic fuel bills to help households facing a rise in the energy cap.
The government is open to reforming business rates, having launched a review in last year's Budget.
This year's Autumn Budget will likely confirm permanently lower tax rates for retail, hospitality and leisure properties with rateable values below £500,000 from April 2026.
The Chancellor has indicated that she wants to go further and reform business rates to help small businesses expand into new premises. We await details of what those reforms might look like.
The Chancellor is expected to announce another major rise in the National Minimum / Living Wage from 1 April 2026. The Low Pay Commission has suggested that the National Living Wage (NLW), payable to those aged 21 and over, should rise from £12.21 to £12.71.
The Chancellor has previously stated that she would like over time to extend the NLW to those under the age of 21 - to as low as 18 year olds. This forthcoming Budget could see some movement in that direction.
However, the Resolution Foundation has warned that applying the NLW to those as young as 18 instead of the current age 21 would make the employment situation for young people go from “bad” to “worse”, adding that a growing number of young people are not even looking for work.
The April 2025 increases in employer National Insurance and the NLW have already made it more costly to employ young people in certain sectors. On top of that, there will be new costs for employers in the Employment Rights Bill making its way through Parliament (although the Bill may be watered down to reduce its impact).
Under pressure from Labour backbenchers, the chancellor is likely to lift the two-child benefit cap which stops parents from claiming benefits for any children after their first two. This will add a significant cost to the welfare budget.
According to the DWP, there are around 18,000 households that will get more than £14,000 a year extra in benefits if the two-child cap is lifted.
It is understood that the cap may not be scrapped entirely, but tapered so benefits reduce the larger the family.
Another spending commitment the Chancellor might fund is compensation to women born in the 1950s who were not told about the state pension age change. The Waspi (Women Against State Pension Inequality) campaign represents women born in the 1950s who were forced to wait up to six years longer for their state pension after their retirement age was equalised with men.
In 1995 when the government decided to equalise pension ages the only way to have found out was to read Hansard, but the first letters were only sent out in 2009, 14 years later. It was too late then for affected women to take action.
The government previously rejected an ombudsman recommendation to issue payments of up to £2,950 per woman affected (costing around £10bn - 3.6m women affected). It is understood that the government is now reviewing its decision, so the Budget may announce this compensation. If it does, the payment would exceed a 1p rise in Income Tax, but if Income Tax rates are not rising it is difficult to see how compensation will be afforded by the Treasury.
There is expected to be a new nightly levy for hotel stays and Airbnb rentals. Local mayors will have the power to impose the levy under the English Devolution and Community Empowerment Bill, currently making its way through parliament.
A modest rise in corporation tax for banks or targeted sectors could be on the cards, although the Chancellor has indicated that banks are already taxed enough when compared to regimes in other European countries.
We also know that the former Deputy Prime Minister, Angela Rayner, has previously suggested where tax rises on businesses and individuals could bring in an extra £4bn a year. How many of her ideas, if any, will the Chancellor take on board?
Those ideas included:
Maybe these will form part of a "Smorgasbord" of tax rises in lieu of an increase in the rate of Income Tax?
In view of the above, there are some actions you could take before the Budget, including:
Using your annual allowances, such as your ISA allowance, your Capital Gains Tax allowance and your annual pension contribution allowance. You could also consider gifting assets to save Inheritance Tax, setting up trusts and taking out whole of life insurance.
However, before deciding what actions to take, you should seek advice to ensure you maximise any opportunities in the best way possible before they disappear.
Area | Possible change | Impact |
| Income Tax / National Insurance | A rise in Income Tax and maybe a cut in NICs, but this now seems to have been ruled out | Higher tax bills for pensioners, landlords and the self-employed |
| National Insurance & salary sacrifice | Removal or restriction of National Insurance advantages of salary sacrifice arrangements | Higher tax bill for employees |
| Inheritance Tax | Lifetime gifting cap; taper relief review; removal of residence nil-rate band | Higher IHT bills for families passing on wealth |
| Property taxes | Council tax reform; mansion tax; stamp duty on sellers; land value tax | Increased tax burden on property owners |
| Capital Gains Tax | Restriction of Private Residence relief; alignment of CGT rates with those of income tax | Higher tax bills for home owners and investors |
| Landlords | NICs on rental profits or new tax band for rental income | Higher costs for landlords; possible rent impact |
| Pensions | Review of tax-free lump sum; flat rate tax relief to restrict higher and additional rate relief for contributions | Reduced relief for higher earners. Disincentivises pension savers |
| ISAs | Cash ISA allowance cut (from £20k to £12k) | Less tax-free saving in cash, more push to equities |
| Income Tax | Extended freeze on thresholds beyond 2028 | More taxpayers dragged into higher bands |
| Corporation Tax | Possible equalisation of rates | Smaller businesses would pay more tax on their profits, impacting jobs and investment |
| Fuel Duty | Possible end of freeze and 5p cut | Increased fuel costs; inflation risk |
| Electric Vehicles | New new pay-per-mile charge | Greatest impact on rural drivers. Will also make electric vehicles less attractive. |
| Wealth Tax | Currently unlikely | Low probability of introduction |
The Autumn Budget could usher in new taxes on top of those announced last year, affecting income and wealth.
If you would like to discuss how these forthcoming changes could impact you and your business, please contact your usual Bishop Fleming advisor, or a member of our Tax Team.
[Gary Mackley-Smith]
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