Key Takeaways
- Ahead of the Budget, Britons are braced for a tax-raising speech.
- UK government is tied to a manifesto commitment not to increase income taxes, but could be forced to break that.
- Change to IHT and new property taxes could be under consideration.
The Autumn Budget is expected to take place in early November after a summer of negative news: Economic growth is sluggish, inflation is heading toward 4% and Rachel Reeves, the UK chancellor, is under pressure to fill a multibillion pound gap in the public finances. The extent of that pressure was evident from her tear-stained face in parliament on July 2.
Since the Spring Statement in March 2025, the scale of the challenge facing Reeves has become more acute—and bond yields have risen to a level last seen in 1998, betraying anxiety in financial markets about the tough task she has in balancing the books.
As the event approaches, a number of possible options for the chancellor have started to circulate. We look in detail at some of these likely ways the government can raise tax revenue. These range from increasing income tax, the nuclear option, to changes to inheritance tax rules and levies on the financial and gambling industries.
Labour’s Income Tax Pledge Under Pressure in Autumn Budget
At the July 2024 general election, Labour pledged it would not increase taxes on “working people” by increasing the headline rates of income tax, National Insurance, or VAT. Raising direct taxes is an invidious and unpopular choice for any chancellor to have to make, but there’s a chance Reeves will break Labour’s election promise.
At its first Budget nearly a year ago, the government skirted around accusations it was breaking its main tax promise by increasing employer National Insurance contributions. One very unpopular option open to Reeves could be to reduce the £12,570 personal allowance. A less unpopular move would be to adjust the rate at which it decreases for high earners.
Possible Tax on Landlords and Rental Income
A more popular avenue is for the government to make professional landlords, or people who own more than one property, pay national insurance contributions on their rental income.
Currently, landlords declare rental income via tax returns but pay no NICs on this money.
Property experts have warned that any extra levies would be passed on to tenants, who are already facing sharply higher rental costs.
There could also be changes to the “rental allowance,” which currently allows landlords to earn £1,000 a year in rental income, before paying tax.
Will Labour Target Cash ISA Holdings?
At the Spring Statement this year, speculation was rife that the government would make major changes to the amount ISA savers could hold in cash, with changes expected at the Mansion House speech on July 15. Instead, the government opted to take its time and “review” the ISA system instead.
The government says it is “laser-focused” on promoting economic growth, so it is still possible this review will result in a change to the £20,000 ISA allowance to limit the amount savers can hold in cash and encourage equity investing instead.
Potential Cuts to Pension Tax-Free Lump Sums
Reeves has so far swerved reducing the amount of tax-free cash savers can withdraw from their private pensions from the age of 55.
The limit is currently 25% of the pot, up to a ceiling of £268,275, but that could be reduced dramatically. These rules have now been in place for a decade, so the government may well put a stop to this attractive tax break without much fanfare from the press—particularly if the really bad news occurs elsewhere, for instance with ISAs and income tax.
Could there also be changes to higher-rate pension tax relief?
Capital Gains Tax on Main Homes and Property Reform Options
Despite rising house prices in recent decades, the sale of a primary residence is exempt from capital gains tax. Reeves is reportedly considering scrapping stamp duty altogether in favor of a tax targeting property sales—equivalent to capital gains tax on owner-occupiers selling homes worth more than £500,000.
It’s also possible the Treasury will merge stamp duty with council tax to create a single annual levy on homes. Council tax is currently used to fund local authorities, but the calculations are outdated. The UK’s eight council tax bands are based on the value of properties in 1991. House prices have grown significantly since. This tax reform would effectively replace the system with an updated set of levies that ultimately result in higher tax receipts for the Treasury’s coffers.
Inheritance Tax Reforms and Gifting Rules Under Discussion
The government is looking at restricting rules around gifting, which is a way of reducing inheritance tax liabilities by giving sums of money to children and grandchildren in an individual’s lifetime. The current “seven-year rule” means people must survive for seven years from the date the gift was made to avoid an IHT liability. The scope of the gift can be wide and include cash, jewelry, property, stocks and even antiques, but there is an annual gifting limit of £3,000.
In the wake of speculation about this change, Rachel Reeves has faced criticism for considering a move that would make it harder for donors to pass on assets to their families while they are still alive. Though the number of people liable for IHT is rising, it’s still below 5% of all estates.
The government already brought personal pensions into scope of the IHT regime as part of the March statement, in changes to take effect in 2027.
Possible Bank Levies and Financial Sector Taxes
UK banking shares fell sharply on Aug. 29 amid fears that the government is looking at levies on the domestic financial sector, which has prospered in the higher interest environment. UK banks like Lloyds LLOY, NatWest NWG Barclays BARC and HSBC HSBA have all seen large share price gains in recent years, declaring rising profits and paying higher dividends to investors.
NatWest, formerly Royal Bank of Scotland, was nationalized under the last Labour government and only returned to full private ownership in May 2025.
With memories of the global financial crisis fading, targeting banks will not be an easy win for Labour.
Government Considers New Gambling Taxes
The government is already reviewing the way gambling and betting companies are taxed, but pressure is mounting for it to do something. It’s feared gambling—and problem gambling in particular—disproportionately affects people in low-income households, contributing to the cost-of-living crisis and damaging families’ financial resilience. Former Prime Minister Gordon Brown recently argued Reeves should tax gambling companies to help alleviate poverty. The Betting & Gaming Council, a lobby group, is keenly awaiting government updates on this.
Modern governments are no stranger to temporary levies on company profits. In the wake of the Russian invasion of Ukraine in February 2022, the Conservative government’s energy profits levy targeted the extraordinary profits made by large oil and gas companies. Last year Labour increased the EPL and extended its lifespan to 2030.
Will Labour Really Implement a Wealth Tax?
Taxing overall asset wealth is an idea that dates back to at least the 1970s in Britain, when a Labour government hiked taxes on income to 83% and unearned income to 98%, leading to the exodus of rock stars like The Rolling Stones. Amid a slew of potential tax rises and bad economic news it’s highly unlikely Labour would bend to pressure from left-leaning MPs to do this, not least because of the efforts it made to woo business ahead of last year’s general election. That said, at this stage, nothing can be fully ruled out until we hear the contents of Rachel Reeves’ speech.
FAQ: Autumn Budget 2025
When is the Autumn Budget?
The Autumn Budget is expected in early November 2025, though the exact date has not yet been confirmed.
Will income tax go up in the Autumn Budget?
Labour pledged not to raise headline income tax rates, but the government may adjust allowances or thresholds, which could increase the tax burden indirectly.
Are ISA allowances changing in 2025?
The Treasury is reviewing the ISA system and could reduce the £20,000 cash ISA allowance to encourage more investment in stocks.
Will inheritance tax rules change?
Inheritance tax reforms are under consideration, including restrictions on gifting rules and changes to the seven-year exemption.
Could pensions be affected by new taxes?
Yes, the tax-free cash withdrawal limit and higher-rate pension relief are both under review.
Is property tax going up?
The government may replace stamp duty with a levy based on updated property values, which could mean higher annual costs for homeowners.
What sectors could face new levies?
The financial sector, landlords, and gambling companies are all being discussed as potential targets for new taxes.
Why are tax rises likely in this Budget?
The UK faces sluggish growth, rising inflation, and a multibillion-pound fiscal gap — forcing the chancellor to seek new revenue sources.
James Gard contributed to this story.
