Autumn Budget 2025: Rumoured Tax Changes to Inheritance, Property and Pensions
The UK Autumn Budget 2025 will be announced on 26 November 2025, and speculation is already growing about possible tax changes. Last year’s Budget brought major reforms, particularly to Inheritance Tax, with agricultural relief being reduced from April 2026 and pensions set to be included in estates from 2027.
Although the Government initially suggested there would be no further significant tax rises in 2025, it now appears that more changes could be on the horizon. Below, we explore the main areas being discussed, including Capital Gains Tax, Property Tax, ISAs, Inheritance Tax, pensions and Income Tax.
Capital Gains Tax changes 2025: What Could Happen?
Capital Gains Tax may be looked at again. A possible change would be to lower the annual allowances, which are currently set as follows:
(i) individual annual allowance of £3,000,
(ii) trust annual allowance of £1,500, and
(iii) more than one trust, the annual allowance of £1,500 is split equally among the trusts.
The rates of tax were increased in the 2024 budget, with the lower rate increasing to 18% and the higher rate increasing to 24%. A further increase is not out of the question.
Property Tax Changes: Council Tax, Stamp Duty and LBTT
Property taxes are often linked to Capital Gains Tax, and it is likely any changes to Property Tax rules will see more people having to pay Capital Gains Tax. At present, principal residences are exempt from Capital Gains Tax. However, it is rumoured this is one of the changes under consideration.
The other rumoured change is to scrap stamp duty and Council Tax and replace it with an annual property levy. It should be noted that stamp duty applies to England and Wales and Scotland has LBTT instead, so it is not clear if the Scottish Government would follow suit. Another consideration is changing the Council Tax bands.
ISA Changes 2025: What’s Under Review?
Earlier this year, the Government indicated that it was reviewing ISAs. Whilst it is not anticipated that the annual allowance of £20,000 will be reduced, the Government want to encourage people to invest in the stock market via stocks and shares ISAs, as opposed to cash ISAs. It is rumoured therefore that the amount which can be put into cash ISAs may be limited.
Inheritance Tax Changes 2025: Potential Reforms Ahead
Following the significant changes introduced in the 2024 budget, further changes may be on the horizon. It is thought that the Government may seek to change the rules on gifting (beyond the annual £3,000 per annum gift exemption). The current rules on gifting are that a person must live a total of seven full years after the date of gift for the value of it to be excluded from their estate after they die. It is rumoured that this could be changed to ten years.
The nil rate band of Inheritance Tax has been set at £325,000 since 2009 and is set to remain at that level until 2030. It is possible the Government will extend that period further.
Pensions and salary sacrifice: Possible Adjustments
It is rumoured that the salary sacrifice option which many employees take advantage of could be changed, as this allows employees to sacrifice part of their salary for higher pension contributions, thus reducing the amount of income tax and national insurance payments they make.
Income Tax: Allowance Freeze and Fiscal Drag
The Government made a promise not to raise Income Tax. However, they could generate more revenue by simply freezing the allowances for a longer period. This means that more people would be pulled into taxation, as their wages increase.
What Should Clients do Before the 2025 Autumn Budget?
Our advice to clients is not to rush into making decisions to get ahead of any rumoured changes. Although, the advice which can be given in advance of the budget is limited, it is often the case that rushing into decisions can be more costly long term, particularly if rumoured changes do not come to fruition or if the changes made end up being different than anticipated.
We recommend that clients take advice as appropriate from ourselves, financial advisors, investment managers, accountants etc.
After the budget has taken place, it will be possible to provide more specific advice. Our conveyancing team will be happy to assist you with any property queries, and our core private client team can assist with the updating of Wills and/or Inheritance Tax advice, as necessary.
