There is a lot of media speculation about the upcoming Autumn Budget (scheduled for 26 November 2025). Many are worried that tax rises are on the horizon, especially in light of the UK’s struggling public finances.
Clients are calling their financial advisers to ask what they should do. In this piece, we explain why it is unproductive (and possibly counterproductive) to try to second-guess what the Autumn Budget will contain.
Rather than building your financial plan based on what “might happen”, a better approach is to stay true to a long-term strategy that gives you maximum flexibility and strength – regardless of what the Chancellor may announce in November.
Budget Predictions – A Lesson from 2024
Cast your mind back to September 2024. Media pundits were commenting (often wildly) about what might arrive in Rachel Reeves’ first budget as the UK’s new Chancellor.
The Labour Party was signalling pain – highlighting the £20bn “black hole” left in the public finances by the last Conservative government. As such, many analysts were expecting heavy tax rises.
One prediction was that capital gains tax (CGT) rates would rise, equalising with their respective income tax bands (e.g. 20% and 40%). In the end, CGT did increase, but not by as much as many had expected. In 2025-26, the basic and higher rates stand at 18% and 24%, respectively.
There was also speculation about a rise in “sin taxes” (e.g. gambling) and fuel duty. There was even fear circulating about a possible removal of the tax-free lump sum (for pensions). However, all of these turned out to be wrong.
Some predictions were remarkably accurate, for example, non-tax tax reforms, changes to inheritance tax (IHT) and employer national insurance (NI). However, the 2024 Autumn Budget serves as a crucial reminder that predictions—no matter how well-informed—are not ironclad.
Why the Gloom in 2025?
Despite this backdrop, analysts are broadly pessimistic about the upcoming Autumn Budget in 2025. Inflation has been riding above the Bank of England’s 2% target for some time now (pressuring household finances). UK growth has been muted in Q2 (the second quarter), and yields on UK government bonds have risen to levels not seen since the 1990s.
Despite the Chancellor’s edorts to balance the books, the UK is now staring into an even bigger “black hole” – arguably double the one faced in late 2024 (i.e. £50bn). With pressure mounting on the Treasury, there are three main options facing the Chancellor:
- Raise borrowing further. This is unlikely, as investors are already concerned about the state of UK borrowing (hence the surge in bond yields in 2025). Borrowing more could lead to a bond crisis reminiscent of Liz Truss’s ill-fated premiership in 2022.
- Cut spending. Also unlikely, given the widespread opposition amongst MPs. A case in point is the Government’s recent attempt to pass its welfare bill, which was massively watered down following votes against it from MPs across the aisle.
- Raise taxes. Arguably, this is the Chancellor’s only realistic option given the ideological makeup of Labour’s MPs in the House of Commons (where they hold a big majority).
What Will Happen in November?
Again, we cannot be sure what the Autumn Budget will contain. Perhaps the Chancellor will throw caution to the wind, engaging in big spending cuts. However, given the realities of politics and economics facing the government, here are some possibilities:
- An extension to the “income tax freeze” could be announced (beyond the current date in April 2028).
- Changes to Cash ISAs – e.g. a reduction from the current £20,000 yearly limit, to try and encourage more investment.
- A tightening of “salary sacrifice” options to try and claim more income tax and NI from pension contributions.
- Further changes to IHT, such as extending the “7-Year Rule” to 10 years.
- Changes to pensions, such as the tax-free lump sum or tax relief (e.g. standardising it).
There are many other speculations in addition to these, and nobody knows what the Chancellor will decide (perhaps not even she does, yet).
What You Can Do
Given the uncertainty, it makes little sense to make significant financial decisions based on predictions that may not be accurate.
The best you can do is to check your financial goals – are these still the same as when you last met your financial adviser? Is the long-term strategy (to achieve them) still strong? Has your adviser been in touch to say otherwise?
Here are the realities: policies change, governments come and go, markets rise and fall. These should be accounted for in a long-term plan for your wealth and finances, where you have already run multiple “stress tests” and “scenario plans” with your adviser.
Of course, speak with your financial adviser if you have questions or worries. However, take rest in the knowledge that you already planned for this. Stay calm, and stay the course.
Please note:
This content is for general informational purposes only and does not constitute personalised financial, tax or investment advice. The views expressed are based on current publicly available information and subject to change. Even well‑informed speculation about future Budgets may prove inaccurate. Always consult your financial adviser or tax professional before acting on any matters discussed above.