Autumn Statement 2025: Likely Changes to Income Tax, Pensions, CGT, IHT and Property Taxes
When two tribes go to war…
After months of rumours, leaks, counter-leaks and rebuttals, the 2025 Autumn Statement (aka. ‘The Budget’) is due to take place in less than a week’s time on 26th November.
Surely the timing isn’t a coincidence—just enough to let England clinch victory in the first Ashes Test and lift the nation’s mood before a tax-hiking budget is quietly bowled in. After five nights of sleep-deprived score-checking, we’ll be so bleary-eyed that even the stealthiest tax rises might sneak past us at short leg. As they say—it’s the hope that kills us.
Last year we wrote a budget preview blog summarising every rumour we’d come across. This year we’re loathed to repeat the exercise as the list is, quite frankly, too long. We live in a world where bad news sells, so there’s an element of clickbait at play—“the Chancellor is coming for your pensions” is bound to grab some reads. We also seemingly live in a world where politicians feed potential policy changes to the press to gauge public opinion before executing a dramatic U-turn at the last minute.
In this week’s blog, we preview what we consider to be the most likely changes to emerge from next week’s statement.
Please note that the Financial Conduct Authority does not regulate tax advice. Levels, bases, and reliefs from taxation may be subject to change, and their value depends on the individual circumstances of the investor.
Income Tax Thresholds
This seems nailed on—an extension of the income tax allowance freeze beyond its current end date of April 2028. In reality this is a tax increase in disguise, as more people are pushed into higher income tax brackets through fiscal drag. This is expected to raise in the region of £8 billion a year, and reports suggest the Chancellor needs to find around £30 billion in total.
Elsewhere, the latest reports suggest Rachel Reeves won’t push ahead with a direct income tax increase as was previously hinted at. The so-called “2 up, 2 down” approach—increasing income tax by 2% whilst cutting National Insurance by an equivalent 2%—also appears to have been shelved. Such a move would have shifted the tax burden squarely onto those with rental income or those in retirement who don’t pay National Insurance.
Pensions
According to various press articles, Treasury sources have confirmed they won’t reduce the tax-free cash entitlement on pensions, which is certainly a positive. The usual rumours remain around introducing a flat rate of tax relief on contributions, but that has been looked at before and was determined to be too complex and unlikely to raise much revenue.
There is growing speculation that future reforms could see National Insurance extended to employer pension contributions, including those made via salary sacrifice arrangements. Such a move would disproportionately impact smaller, highly profitable businesses, where pension contributions are often used as a highly tax-efficient method of profit extraction.
At the other end of the spectrum, the government may also consider applying some level of National Insurance to pension income in retirement – a significant departure from the current framework that could reduce the net income retirees receive.
Ultimately, though, we have consistently argued that the government needs an attractive and well-functioning pension system to reduce reliance on the state. We therefore take the view that the doom-mongering around future pension tax legislation tends to be somewhat overdone.
Capital Gains Tax (CGT)
Following last year’s increase in CGT rates, another immediate hike looks unlikely. That said, there’s growing speculation that the current “reset on death” provision could be scrapped.
As things stand, when someone dies, any unrealised capital gains on their assets are wiped clean for tax purposes. For example, if a parent buys shares for £100,000 and dies when they’re worth £200,000, the base cost for the person inheriting those shares is reset to £200,000 – meaning no CGT would be due on gains made during the parent’s lifetime.
The logic here is that the assets are already likely to be counted as part of the deceased’s estate for Inheritance Tax purposes. To charge both CGT and IHT on the same asset would arguably be a case of double taxation. So, scrapping the reset would be highly controversial – and likely to face significant resistance from tax professionals, businesses and investment managers alike.
Another rumour – albeit far less credible in our view – is that Principal Private Residence (PPR) Relief could be limited or even removed for higher-value homes. PPR currently exempts most homeowners from CGT when selling their main residence. Extending CGT to main homes would mark a major policy shift and seems, at this point, unlikely. But never say never.
Inheritance Tax (IHT)
There’s surprisingly little speculation here after last year’s major changes—bringing pensions inside the estate from April 2027 and limiting Business and Agricultural Relief from April 2026.
There is some speculation around a clampdown on gifting, including:
A lifetime cap on gifts (without an immediate tax charge) of, say, £1 million
An extension of the seven-year rule to ten years (the period before assets drop out of your estate for IHT purposes), though surely that would raise relatively little
The removal of taper relief, where the IHT bill on larger gifts starts to reduce after three years, and
A clampdown or outright removal of the Normal Expenditure out of Income exemption (enables you to gift up to 100% surplus income, as long as that is done on a regular basis, without any IHT charge or 7-year clawback), which is particularly valuable for those with substantial income surplus.
It’s difficult to see how such tinkering would raise significant sums, but the Chancellor is clearly eyeing up a smorgasbord budget—combining lots of smaller adjustments to reach her overall revenue target.
Property Taxes
This seems like the second most likely area for change (behind the freezing of income tax thresholds), with scope for an increase in Council Tax, the addition of higher Council Tax bands, or a complete overhaul of the Stamp Duty–Business Rates–Council Tax regime.
Who knows where the boundaries or thresholds will be drawn, but this appears to be an area of focus for the current government.
Other Potential Changes
The bank levy is rumoured to be heading upwards. Gambling taxes rising seems almost certain, although local readers will be pleased to hear that horse racing is rumoured to be excluded from any increase. The government is said to have climbed down on plans to restrict the use of LLPs (common in law firms) to avoid National Insurance, reportedly because the measure was deemed too expensive to implement and would likely be mitigated through other means anyway.
What Happens Next?
As always, we’ll have to wait and see what actually materialises. We’ll be tuning into the budget next week and will be publishing our thoughts on Thursday or Friday. As in previous years, we’ll be focussing on how the new legislation informs the way we approach planning and the strategies we employ, rather than simply reiterating the headlines…
Happy Thursday! And come on England!
Kind regards,
George
George Taylor, CFA
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