Navigating the Autumn Budget 2025: Key Predictions
The Autumn Budget, confirmed for 26 November 2025, is set to be a defining moment for the new government.
Chancellor Rachel Reeves must navigate a narrow path, balancing ambitious spending commitments with a challenging economic backdrop and firm manifesto pledges.
At Zyla Accountants, we understand that uncertainty over tax can be disruptive for both personal financial planning and business strategy. This article provides an authoritative overview of the fiscal situation and the potential policy changes under discussion.
The Fiscal Context
The Chancellor's options are heavily constrained. The government is bound by its own fiscal rules: debt must be on a path to fall as a share of GDP, and day-to-day spending must be controlled.
However, this commitment clashes with economic reality. Public sector net debt is currently 95.3% of GDP, a level not seen in over six decades. Recent figures from the Office for National Statistics show government borrowing has overshot the Office for Budget Responsibility (OBR) forecasts.
This pressure, combined with pledges not to raise headline rates of Income Tax, National Insurance (NI), or VAT, forces the Treasury to seek revenue elsewhere. Consequently, speculation is focused on reforms to wealth, capital, and specific business structures.
Key Areas of Speculation
While nothing is confirmed, the following areas are reportedly under review.
1. Inheritance Tax (IHT) IHT is a frequent target for reform. We may see changes to gifting rules. Currently, gifts made within seven years of death are subject to a tapering relief. This system could be tightened or potentially replaced with a total lifetime cap on tax-free gifts.
Furthermore, a simple way to raise revenue is through 'fiscal drag'. The main nil-rate band has been frozen at £325,000 since 2009, and the residence nil-rate band has been £175,000 since 2017. Extending these freezes beyond 2030 would be a quiet but effective tax rise, pulling more estates into the 40% tax net.
2. Capital Gains Tax (CGT) CGT has already seen significant changes. The Annual Exempt Amount (AEA) was drastically cut to just £3,000 from April 2024. The Chancellor could revisit this, either by reducing the AEA even further or by increasing the rates of CGT. This would impact individuals realising gains from assets such as shares or second properties.
3. Changes for Businesses, Landlords, and Professionals The government may look at specific sectors to raise funds.
Landlords: There is persistent speculation that National Insurance could be applied to rental income, which is currently exempt.
Partnerships: A significant proposal involves professionals operating in partnerships (such as law firms, consultancies, and some accountancy practices). These partners are currently classified as self-employed and do not pay employer NI. Removing this exemption could generate substantial revenue, even if a new, lower rate is introduced.
4. Property and Wealth Taxes Several proposals concerning property tax are being discussed. These range from introducing new, higher-value council tax bands to more radical reforms like applying Capital Gains Tax to primary residences above a certain value, often referred to as a 'mansion tax'. While a widespread annual wealth tax on all assets remains politically difficult and unlikely, targeted property levies are a distinct possibility.
5. Pensions and Savings While the triple lock on state pensions appears protected, private pensions and savings may be reviewed.
Tax Relief: Reducing tax relief on pension contributions for higher and additional-rate taxpayers is an often-discussed option.
ISA Limits: Earlier proposals to cut the annual Cash ISA limit from £20,000 (perhaps to £4,000) could be revisited. The stated aim would be to encourage investment in equities rather than cash savings.
6. Income Tax and NI Pledges The pledge not to raise headline Income Tax rates is central. One debated idea is a 'tax switch': cutting employee NI contributions while raising Income Tax bands by the same amount. This would be technically neutral for many employees but would broaden the tax base to include pensioners and landlords who pay income tax but not NI.
More likely, the government will continue to rely on fiscal drag by keeping personal tax thresholds frozen (currently until 2028), pulling more people into higher tax brackets as wages rise.
How to Prepare
It is crucial to remember that all these points are speculation. Making sudden financial decisions based on rumours is not advisable.
However, the direction of travel suggests a clear focus on capital and wealth. Proactive planning is essential. At Zyla Accountants, we strongly recommend reviewing your current financial position, particularly if you have concerns about Inheritance Tax, Capital Gains Tax, or the structure of your business.
Navigating a changing tax landscape requires expert guidance.
Contact our team today to ensure your personal and business strategies are robust, compliant, and structured efficiently for the years ahead.