The Chancellor has confirmed that the Autumn Budget 2025 will be delivered on Wednesday 26 November. With the public finance deficit continuing to dominate headlines, there is much speculation and anticipation building around possible tax rises and reforms.
Before we speculate on what might lie ahead, it’s important to remember that some of the ramifications of Autumn Budget 2024 are still to come.
What’s already on the way?
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)
- From 6 April 2026, 100% relief for business and agricultural property will be restricted.
- From 6 April 2027, unused pension funds and death benefits will be included in IHT estates.
What is unlikely to change in the Autumn Budget?
According to Labour’s 2024 manifesto and the Corporate Tax Roadmap (October 2024), certain areas are expected to remain stable.
The following are pledged:
- No increase to National Insurance Contributions (NICs)
- No increase to basic, higher or additional rates of Income Tax
- No increase to VAT
- No increase to the 25% main rate of Corporation Tax
- Retain small profits rate and marginal relief
- Preserve the £1 million Annual Investment Allowance (AIA)
- Permanent full expensing of capital expenditure will stay in place
Despite the government saying that extending frozen Income Tax thresholds any longer would hurt working people, it now seems inevitable that the thresholds will remain at their current levels until 5 April 2030, mirroring the time period for which IHT thresholds are frozen.
What could change in the Autumn Budget?
While nothing is confirmed until the Chancellor takes the podium, here are several areas that we know are under consideration:
National Insurance Contributions (NICs)
- The government may extend NICs to landlords, aligning them more closely with trading businesses.
Pension Tax Relief
- Pension savings are currently afforded tax relief at the saver’s marginal Income Tax rate (20%, 40% or 45%). The rate could be capped at, say, 30%.
Salary Sacrifice and Employer Contributions
- Additional employer pension contributions made via salary sacrifice are currently exempt from Benefit in Kind rules. This exemption could be removed, making the contributions subject to Income Tax and NICs.
Capital Gains Tax (CGT)
- The current rates (18% for basic rate taxpayers, 24% for higher/additional rate) could be aligned with Income Tax bands, pushing top rates to as high as 45%.
Inheritance Tax (IHT)
- Further restrictions may be introduced, including caps on lifetime gifting exemptions.
VAT Registration Threshold
- Currently set at £90,000, this could be lowered – or removed altogether.
VAT on Domestic Fuel
- 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.
How can we help?
While we can’t predict exactly what the Chancellor will announce on 26 November, now is a good time to review your tax position, understand the risks and opportunities and prepare for change – particularly if you are thinking about:
- Selling a business or assets
- Making large pension contributions
- Gifting wealth to the next generation
Looking to understand what the Autumn Budget could mean for you? Contact our team at events@haroldsharp.co.uk for details of our upcoming Budget Breakdown event, hosted in conjunction with Glaisyers ETL.