What to expect from the Autumn Budget 2025

Rachel Reeves will deliver her second budget on 26th November 2025, and with speculation mounting regarding the potential changes, it can be hard to cut through the noise and make good decisions about what action to take, and importantly, not to take. 

What is likely to be in the Autumn Budget?

Speculation has been rife about potential changes in a number of areas, so what might these changes look like?

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Pensions

As has been the case in previous years, a reduction in individuals’ tax free cash entitlements is rumoured once again to be in the Autumn 2025 budget.  These rumours have been fuelled by reports that Pensions Minister Torsten Bell, who in 2019 had stated that the tax free lump sum should be limited to £40,000, had been appointed as a key aid for the Chancellor ahead of the budget.  However, while a change is of course possible, it is important to note that:

• When tax free cash has been reduced before (by reductions to the then Lifetime Allowance), protections (such as Fixed Protection 2012, 2014 and 2016) were put in place to ensure individuals who had already built up pension savings were not disadvantaged.
• The current Labour government previously tried to reinstate the Lifetime Allowance, which the previous Conservative government had scrapped.  However, the government abandoned these plans when they realised it was unworkable to exclude Doctors (who had been retiring due to the high tax rates they were subjected to through a combination of the lifetime allowance and the annual allowance) from the Lifetime Allowance tax charge.  Having now finalised legislation around the Lump Sum Allowance, a further change affecting Doctors’ pensions could prove very unpopular.
• Pension legislation notoriously takes months or years to finalise, as was the case with the recent Lump Sum Allowance (LSA) changes and as is currently the case with the legislation which will bring pensions into scope for inheritance tax from April 2027.  This could indicate any reduction may come into force at a given date in future, rather than with immediate effect.

To make a change ‘overnight’ would be administratively difficult for pension providers.

Capital Gains Tax (CGT) 

Despite the administrative issues associated with implementing an overnight change as outlined above, one change that was brought in with immediate effect in last year’s budget was an increase in the main rate of capital gains tax from 10% to 18% for basic rate tax payers and 20% to 24% for higher rate tax payers.  These increases weren’t as substantial as some thought they would be, so there is the possibility of further increases.  However, there are question marks over how much revenue such an increase would actually raise given individuals can simply choose to stop selling their assets.

Inheritance Tax (IHT)

This is the area that saw arguably the biggest changes in the 2024 budget with:

• Pensions brought into scope for inheritance tax purposes from April 2027
• Business Relief and Agricultural Relief limited to £1m per person and 50% of the full rate thereafter
• AIM shares Inheritance Tax Relief limited to 50% of the full rate   

The government may see the estimated £5.5 trillion of wealth that is expected to be passed down from ‘Baby Boomers’ over the next two decades (known as the ‘Great Wealth Transfer’) as a target for additional taxation. This could include a tax on gifting (currently gifting to individuals is unlimited if the donor lives 7 years from the date of the gift) or a reduction in the tax free allowances available on death (for example the removal of the Residence Nil Rate Band – RNRB).  For this reason, those considering making a gift in the not too distant future could consider making the gift before the budget, though only if the implications of this on their overall financial situation are fully understood.   

ISAs 

There are rumours that there will be a reduction to the Cash ISA allowance. However, a cut to the Stocks and Shares ISA allowance is perhaps less likely given Reeves spoke positively about Stocks and Shares ISAs in her Mansion House speech in July.

Salary Sacrifice

This is the ability for employees’ pension contributions to be paid directly into their workplace pensions, reducing both employer and employee national insurance contributions.  Limiting or removing the ability to do this could raise significant revenue for the government without them needing to renege on their manifesto commitment not to increase tax on working people (income tax, national insurance or VAT).

Other rumours 

Other recent rumours include: 

• An increase in tax with a corresponding reduction in National Insurance.  This could in theory raise revenue without raising tax on ‘working people’, with landlords and pensioners instead footing the bill.
• A further freezing of income tax bandings.  Though this is described by many as a stealth tax as it means more and more individuals will move into higher tax bandings over time, these have been frozen since 2021/22 until 2028 and an extension of this freeze to 2029/30 could raise an estimated £7bn p.a.
• A tax on Limited Liability Partnerships (LLPs) favoured by Solicitors, Accountants and Doctors, as such arrangements allow individuals to be self-employed and not subject to employer’s national insurance contributions.
• A windfall tax on banks, though the Chief Executive of Lloyds Banking Group Chalie Nunn argued this would impact banks’ ability to lend.

An increase in gambling taxes, though the Chairman of Betfred Fred Done has stated all its shops on UK high streets could close if the rumoured changes were implemented. 

When does the Autumn budget take effect? 

Though the budget will take place on 26th November 2025, most changes are expecting to come into effect from the next tax year on 6 April 2026 and beyond.

What can you do to protect your wealth?

In an environment where taxes are increasing, it is becoming more and more important to:

Utilise the various tax allowances that are available to you and your family, for example:

• Your ISA allowances
• Your pension contribution allowances
• Your capital gains tax, savings and dividend allowances
• Your personal income tax allowance.

Have a plan in place with diversified sources of income and investments.  This way you can adapt your plan as a result of any changes in the budget.

In summary, it is clear that the state of public finances mean taxes will need to increase in the upcoming budget and Labour’s manifesto commitment not to increase tax on ‘people working’ has led to mounting speculation that changes will be made to a number of different areas. These headlines are usually followed by a quote from a leader within the industry in question stating how the tax increase would be devastating for that industry and how the government should look elsewhere. As Private Eye’s headline from September rightly stated: ‘Raise taxes for other people’, agrees everyone, so some difficult decisions will need to be made.

To consider the potential impact of the budget on your overall financial situation, please get in touch or contact your TPO Adviser. 

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning or tax advice. 

The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). 

The value of your investments (any income derived from them) can go down as well as up, so you could get back less than you invested.  This could also have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.