Budget 2025 – what could be coming?

As the chancellor prepares the next autumn budget, speculation is mounting over how the government will raise revenue while keeping its promises on growth.  While much of the noise will remain just that, some measures look increasingly likely. This article will outline some possible outcomes.

Personal tax thresholds frozen for longer

The freeze on income tax thresholds and allowances has already cause many more people to pay more tax as wages rise. Currently in place until 2027/28, there are strong signals this could be extended to 2030.

Without changing tax rates, this measure increases the government’s tax receipts.  Similarly, the inheritance tax (IHT) nil rate band remains frozen, meaning more estates may become liable for IHT as property values rise.

Property taxes under review

Property remains firmly in the treasury’s sights. Rumours suggest possible changes to capital gains tax (CGT) relief on main homes. For example, capping the current full exemption for high value properties.  A mansion tax or new higher, higher council tax bands could also be introduced, targeting wealth tied up in housing.

Rental income and NIC

Landlords may soon face a new burden.  The government is considering making rental income subject to national insurance contributions (NICs). With Making Tax Digital set to capture landlord income from 2026/27, the mechanics of collection would be straightforward.  While details remain unclear, this could significantly change the tax profile for private landlords.

Pension reform on the horizon

Tax relief on pension contributions, worth an estimated £45 - 50bn annually, is always under scrutiny. One idea gaining traction is a small annual levy on pension fund values, collected by fund managers. Even a modest 0.25% levy would raise billions. Such a move would be easy to administer and harder for savers to avoid, making this a high probability reform.

Business tax changes

Businesses should also expect movement in tax law. Customs duty on low value imports (currently exempt under the £135 de minimis rule) is under review, with the aim of levelling the playing field for UK retailers against overseas sellers. Business rates reforms are also likely to continue, with larger premises and online warehouses facing higher costs.

The direction of travel seems to point to more revenue raised through freezes and targeted changes, rather than headline tax rate rises. Now is the time to review your position and explore planning opportunities before any new rules come into effect.