Autumn Budget 2025 – no tax shock?

Rumours

It is impossible to know conclusively what might change, and while there are some areas we have been talking about for years where action can be considered, it is difficult to know for sure what the Chancellor will decide to do. What is becoming apparent though, is that the Budget has the potential to have a few nasty surprises in store as the Government is forced to take action to reduce the growing budget deficit.

Last month, we covered many of these rumours, and you can read that here: Link to Budget article

In summary, the changes that have been written about in the press include:

• Increase in Capital Gains Tax
• Changes to pension tax-free cash
• Changes to pension contribution tax relief
• Potential reduction in the ISA limit, especially for cash ISAs
• Reform of the Inheritance Tax (IHT) rules

With the clock now ticking in the run-up to the Budget, if you are going to take action, it is best to start thinking about doing this as soon as possible.

Do you want to bring forward your plans?

With a Government in need of raising taxes, it is likely that change will happen, but which taxes or reliefs will be affected and how they will change is unknown until Budget day. Many of the changes above have been speculated about for years, but there are good reasons why they may not happen. With taxes on working people seemingly off the table, it is becoming clear who are likely to be the targets for tax rises – businesses and people owning assets including pensions, property and investments.

With any decision based on speculation, there is the risk of unforeseen consequences and the possibility that you may end up being disadvantaged. We are not advocating any knee-jerk reaction to any of these rumours, but it would seem prudent if you have plans to utilise any of the current allowances or reliefs in the short-term to consider carrying out these transactions before Budget day. We would always say you should take professional advice before taking any action to avoid unforeseen consequences.

Possible pre-Budget actions

We also highlighted last month some actions [Possible pre-Budget actions] that we believe are worth considering, although time is rapidly running out. These are actions that you may have been considering anyway, and you are simply bringing the transaction forward rather than trying to second-guess what may be in the Budget. These include:

• Paying more into your pension
• Ensure you have used your ISA allowance
• Selling investments with large gains (if this is possible in the short timescale)
• Use gift exemptions for IHT
• Drawing your pension tax-free lump sum

Comment

While Labour was very careful to reassure people that there would not be a ‘tax shock’ if they were elected, the rhetoric since has pointed towards taxes going up. If you are considering any of the options above in the near future, it may be beneficial to bring this forward before the Budget, while we know the rules. It is certainly wise to ensure you are maximising the allowances you have ahead of the Budget, whether it be using the maximum current Individual Savings Account (ISA) allowances or gifting to your family.

While it is not certain that Capital Gains Tax will change again, if you have large capital gains and are able to crystallise these at an 18% rate of tax, then this may be worth considering as it is unlikely this rate of tax will be lower in any future changes. Do speak to your financial planner, however, before you take any action.

Based on the main UK tax rates and allowances for the 2025/26 tax year, not Scotland.

While Labour was very careful to reassure people that there would not be a ‘tax shock’ if they were elected, the rhetoric since has pointed towards taxes going up. If you are considering any of the options above in the near future, it may be beneficial to bring this forward before the Budget, while we know the rules. It is certainly wise to ensure you are maximising the allowances you have ahead of the Budget, whether it be using the maximum current Individual Savings Account (ISA) allowances or gifting to your family.

While it is not certain that Capital Gains Tax will change again, if you have large capital gains and are able to crystallise these at a 18% rate of tax, then this may be worth considering as it is unlikely this rate of tax will be lower in any future changes. Do speak to your financial planner however before you take any action.

Based on main UK tax rates and allowances for the 2025/26 tax year: not Scotland.

As always, if you have any questions your Financial Planner will be pleased to hear from you.