Budget 2025: What Could Be on the Horizon?

With the chancellor confirming that the Autumn Budget will take place on 26 November, the annual rumour mill has begun. Speculation is already swirling about possible tax changes, and for good reason. After a turbulent first year, the government is battling weak growth, rising long-term borrowing and falling approval ratings. Yet its self-imposed promise not to raise income tax, National Insurance (NI) or VAT for “working people” has left it with few obvious levers to pull.

A recent newsletter we received highlighted what Rachel Vahey, head of public policy at AJ Bell, has addressed as five areas the chancellor may be tempted to explore:

1. Extending Frozen Tax Thresholds

Tax thresholds are currently frozen until 2028. Extending the freeze would pull more people into higher tax bands (“fiscal drag”), but the chancellor previously ruled this out for personal income tax and NI – reversing that stance could be politically awkward.

2. A ‘Mansion Tax’

An annual property tax on homes worth over £500,000 has been floated, potentially replacing stamp duty. Details are scarce, and this may be a case of “kite-flying” to gauge public reaction.

3. Another Move on Capital Gains Tax (CGT)

After last year’s CGT rise, there’s speculation about further changes, including equalising CGT rates with income tax. Any move would likely need to be implemented immediately to avoid a rush of asset sales before April.

4. National Insurance on Retirement Income

Applying NI to retirement income would be controversial. It’s unclear whether it would break the government’s promise not to raise taxes on “working people,” but it would almost certainly be unpopular – particularly with pensioners still frustrated over the winter fuel payment changes.

5. Inheritance Tax (IHT) Changes

With farmers and pensions already affected by recent measures, the chancellor could turn to IHT. Lowering allowance thresholds, tightening gift rules or extending the seven-year rule wouldn’t generate fast revenue but might still be seen as an option.

And What About Pensions Tax Relief?

Changes to tax-free cash or contribution relief aren’t on the official list, but rumours continue. These are especially sensitive for public sector workers with defined-benefit pensions, where even small tweaks could prompt strong resistance – including strike threats.

Why This Matters for Clients

All this speculation creates uncertainty for long-term planning and undermines confidence in saving for retirement.

We understand clients will be looking to you for clear, balanced advice. Clear Finance will also offer advice to help you make sensible, long-term decisions rather than reacting to rumours will be more important than ever as the Budget approaches.

For more information about our Financial Services and products in Doncaster call 01302 835938

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