Autumn Budget 2025: speculation mounts over personal tax reforms

With the UK facing a fiscal shortfall estimated at between £25 and £30 billion, the government is under pressure to raise revenue through tax rises and spending cuts. Reeves’ reference to “necessary choices” in her unprecedented pre-Budget statement on 4 November 2025, coupled with her refusal to recommit to Labour’s manifesto pledge to avoid tax rises for working people, signals that tax rises are likely and even increases to income tax, VAT and national insurance cannot be ruled out. It is important to note, however, that nothing has yet been confirmed by the government and what is being reported is rumour and speculation.

Whilst it is impossible to predict future developments with certainty, we are aware that many clients will want to stay alert to potential reforms and consider how they could impact their circumstances. A broad summary of the potential tax reforms that have been mooted in the press is as follows, but these are only rumours and we are unlikely to receive any certainty until the Budget speech itself.

We would encourage those considering taking any action in anticipation of possible tax rises, to discuss with their Wedlake Bell adviser or other professional advisers before proceeding.

1. Inheritance Tax (IHT)

Possible changes: limiting or capping the current IHT exemption rules for lifetime gifts, extending the lifetime gifts survival period (currently seven years), removing IHT taper relief for gifts that are survived between three and seven years, and restricting current IHT reliefs. As first announced in the Autumn Budget 2024, restrictions on IHT relief for business and agricultural property are already scheduled to come into force on 6 April 2026.

2. Capital Gains Tax (CGT)

Possible changes: further increases to CGT rates following the increases made in the Autumn Budget 2024, capping or restricting CGT “principal private residence” relief, removing the CGT-free uplift on death, and reducing or removing CGT annual exemptions such as the CGT exemption for wine, classic cars and other “wasting assets”. A possible “exit tax” to levy tax on the unrealised gains of individuals leaving the UK has also recently featured in press reports.

3. Pensions Tax

Possible changes: introducing a flat rate for pension tax relief, reducing or removing the 25% tax-free lump sum, and removing national insurance exemptions on salary sacrifice schemes.

4. National Insurance Contributions (NICs)

Possible changes: extending NICs to rental income, dividends, and pensions, and removing exemptions for those over pensionable age.

5. ISA Allowance

Possible changes: reducing the cash ISA limit from £20,000 to £10,000.

6. Wealth Tax

Possible changes: introduction of a wealth tax or property-based tax. Proposals floated by think tanks and pressure groups include a 2% annual levy on assets over £10 million, which could raise up to £24 billion a year. Other ideas include replacing council tax with a property-based wealth tax or aligning CGT rates with income tax.

7. Property taxes

Possible changes: a “mansion tax” in the form of a levy on properties worth at least £2 million, with an annual charge of 1% of the amount over that threshold; a national proportional property tax, levied on house values above £500,000, to replace stamp duty land tax (SDLT); and/ or a complete overhaul of the council tax system, potentially replaced by a new local property tax payable by homeowners rather than occupiers.

Closing comments

Although none of the above proposals have been formally confirmed, the breadth and depth of speculation and Rachel Reeves’ statement on 4 November indicate that the Autumn Budget may herald substantial changes to the UK’s personal tax landscape.

Residential Property partner, Emma Sear, reports the team are already seeing an impact in the conveyancing sector as persistent rumours of property tax reforms are causing many property transactions to stall. Speculation around a “mansion tax” in particular is provoking debate: property experts have warned that such a tax would cause market disruption and push down house prices, particularly in the capital and Southeast where these tend to be higher. The potential reforms to SDLT are also provoking much discussion – whilst reforms could benefit first-time buyers, measures that deter sellers at the top end of the market risk creating a ripple effect down through the housing ladder. Homeowners who purchased large family homes many years ago may be discouraged from downsizing if faced with unexpected CGT or sales tax liabilities. This could reduce the availability of larger homes for growing families.

As we await clarity in the Budget, your Wedlake Bell advisers will be on hand to guide you through any changes, review your estate planning strategies, and take any necessary action to help protect your interests and achieve your financial goals.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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