Autumn Budget Tax Rises Loom: Why Accountants Must Prepare Now for Client Conversations and Strategic Advisory

In this blog, we explore what is driving expectations of additional tax rises, what those tax rises may be and the financial plans that accountants in practice can implement to best support their clients.

If you are an accountant or tax advisor and want to ensure that you are providing your clients with the most up-to-date information on an extremely consequential Budget statement, 20:20 Innovation offer a branded Budget analysis. You can also keep up to date with everything in the world of tax and access exclusive subscriber guides on all Budget announcements by subscribing to RossMartin.co.uk.

When will the chancellor deliver the 2025 Budget?

Autumn Budget 2025 will be held on Wednesday 26 November.

In a surprise ‘pre-Budget’ speech on 4 November 2025, Rachel Reeves appeared to lay the groundwork for a tax-rising Budget on 26 November. She set out 3 priorities, all of which require funding:

• Reducing NHS waiting lists

• Cutting national debt

• Bringing down the cost of living

The intention was to ‘set the context’ of the announcements that will follow on 26 November.

“If we are to build the future of Britain together, we will all have to contribute to that effort…each of us must do our bit for the security of our country and the brightness of its future.”

The above quote from the speech is the clearest indication we’ve had to date that tax rises are coming for everyone; whether classed as a ‘working person’ or otherwise.

The political and economic landscape in the UK is shifting rapidly, and this autumn’s Budget promises to be another significant event. For accountants in practice, particularly those serving small and medium-sized enterprises (SMEs) and individuals, the developments emerging from Westminster are far more than just headlines; they’re the signals of the types of support that clients may require over the coming weeks and months, in managing possibly unexpected tax burdens.

Policy U-Turns and a Budget Under Pressure

In recent months, we have seen significant government U-turns. These included:

• Plans to break the manifesto and increase income tax by 2 percentage points across all bands – Despite being strongly implied during the 4 November Pre-Budget speech, it has since been reported that the move is no longer on the cards with attention instead being applied to extended freezes to income tax bands and alterative areas of taxation.

• Winter Fuel Payments (WFPs) - A July 2024 'tough choice' by the chancellor meant that, from winter 2024/25, households would no longer be eligible to receive the £200 - £300 WFPs unless they received certain means-tested benefits. This policy, while implemented for winter 2024/25, was met with widespread criticism and has now been reversed, for eligible individuals earning less than £35,000, when looking ahead to winter 2025/26. This change in plan has led to more than a £1 billion gap in the government's finances.
  
• Welfare reform - In Spring Statement 2025, over £5 billion of savings from the welfare budget were announced, as part of a plan to 'support more people back into secure work' and to, it would seem, avoid the government breaking its own recently set borrowing and debt rules. In June 2025, after ministerial backlash, significant changes to the welfare plan were announced, with protections now embedded for current claimants. The revised package is expected to deliver welfare savings of closer to £2.5 billion, with as much as £3 billion now missing from planned government finances.

In addition, global tariffs have knocked business confidence, pressures have resulted in an increase in defence spending and the Office for Budget Responsibility is widely expected to downgrade economic forecasts. 

In the Chancellor's 4 November speech beforehand, the Labour Party has been clear that it will not fund these changes through government borrowing, which leaves only tax rises and spending cuts. It is actually reported that the government is considering more than 100 separate tax and spending measures.

Before turning to Autumn Budget 2025, we must note that some of the ramifications of Autumn Budget 2024 are still to come. This includes:

• Capital Gains Tax (CGT) - in addition to the tax hikes that have already taken effect on 30 October 2024 and 6 April 2025, Finance Act 2025 also already provides for the rate of CGT where Business Asset Disposal Relief (BADR) applies to further increase from 14% to 18% from 6 April 2026.
• Inheritance Tax (IHT) - as initially announced in the last budget, IHT increases are already on the cards due to:
  • Restrictions on 100% relief for business and agricultural property from 6 April 2026.
  • The inclusion of unused pension funds and death benefits in IHT estates from 6 April 2027.

From a compliance perspective, there is also the new Making Tax Digital for Income Tax (MTD for IT) regime being made mandatory for over 864,000 self-employed individuals and landlords from 6 April 2026. While not a direct tax rise, the costs of compliance with a mandatory 'software' and quarterly filing regime should not be overlooked.

Autumn Budget 2025 Predictions

The chancellor had said that the 2024 Budget, with its significant tax increases, was one that she 'would not want to repeat'. However, for the reasons outlined above, fiscal circumstances have not allowed the government to 'wipe the slate clean' and it is now certain that another round of tax rises are coming this year.

What does the manifesto and roadmap say?

The government had been keen to honour its 2024 'Change' manifesto pledges, and these include ensuring taxes on working people are kept as low as possible and no increases to National Insurance, the basic, higher or additional rates of Income Tax, or VAT. The 2024 Budget has already pushed the boundaries of these promises by increasing the rate of employers' National Insurance Contributions (NICs) from 13.8% to 15% from 6 April 2025 and indirectly stalling wage growth. The chancellor’s speech of 4 November 2025 strongly suggests that other pledges will be broken. Her speech was setting out her defence of this action in advance of the Budget.

The Corporate Tax Roadmap of October 2024 also include commitments not to increase the 25% main rate of corporation tax and to retain the small profits rate and marginal relief. The £1 million annual investment allowance for plant and machinery capital allowances is also due to be preserved, as is the system of permanent full expensing. Enhanced research and development tax reliefs will also be retained for companies undertaking qualifying activities.

So, what money-raising proposals does that leave for the upcoming autumn budget?

Fiscal drag is here to stay

The chancellor has previously promised that income tax thresholds, including the tax-free allowance, would start to be uprated in line with inflation again, from 6 April 2028. The same was said about employee national insurance thresholds. Despite the government saying that extending frozen income tax thresholds any longer would hurt working people, it now seems inevitable that the thresholds will remain at their current levels until 5 April 2030, mirroring the time period for which inheritance tax thresholds are frozen.

Probability of extension to threshold freezes: 99%

Income tax increases

It had looked as though the chancellor may have broken manifesto pledges by increasing income tax rates by 1-2 percentage points across the higher and additional rates. This no longer seems likely. 

Probability of direct income tax increases: 5%

National Insurance Contribution increases

While increases to NICs are ruled out by the manifesto, the government may contemplate a more subtle method to raise taxes:

• Defence levy (or equivalent) – we’ve seen this approach before, under the previous government, in the form of the Health and Social Care levy. An additional 1.25 percentage points were due to be added to NICs from April 2023, raising billions, which would then be invested in the NHS. While breaking a manifesto pledge, the coronavirus pandemic and the impact on health services were presented as an explanation for doing so. The plan was however scrapped before implementation. It is possible that unforeseen global pressures to increase defence spending (or otherwise) could be put forward as a reason for a new NIC add-on.

  Probability of a NIC levy: 5%
  

• Widening the types of income subject to existing NIC rates – National Insurance for landlords may be on the cards, levelling the playing field with those running their own trading business. 
  

  Probability of NIC being made applicable to landlords: 10%
  

Partnerships and employers' NIC

A hot topic throughout October 2025 has been suggestions that the government consider that partnerships are currently receiving a tax break through being able to distribute partnership profits without the application of 15% employers’ NIC. The analogy here would be that if a company had a budget of £200,000 for a new worker, they would need to allocate more than £25,000 of this ‘pot’ to employers’ NIC, leaving £175,000 available for the gross salary, from which income tax and Class 1 NIC would be deducted. Conversely, a partnership can simply distribute the £200,000, leaving the partner with a higher take-home share, after income tax and Class 4 NIC are paid. 

Partnerships are transparent in the UK tax system and this would continue to be the case. Instead, proposals seem to be being prepared to introduce additional ‘partnership NICs’ on partners, effectively administered as an income tax top-up. 

It is understood that these proposals are no longer being progressed.

Probability of NICs for partners: 5%

Pensions and ISA savings

The chancellor is thought to be eyeing up increasing taxation of monies saved in pension pots. There are a few ways she could do this:

• Pension contributions and flat rate relief - While an annual allowance does impose a cap, pension savings are currently afforded tax relief at the saver's marginal income tax rate; 20%, 40% or 45%. A route to raise income tax outside of the manifesto pledge would be to instead offer a flat rate of income tax relief on pensions of say 30%; thereby collecting more tax revenue from higher earners. Alternatively, some restriction on the ability to carry forward unused annual allowances for 3 years may be considered.

  Probability of pension flat rate relief and/or restrictions in annual allowance usage: 40%

• Salary sacrifice for pension contributions - Generally, in cases where an employee gives up earnings in return for a benefit, income tax and NIC are calculated based on the amounts of salary sacrificed, if higher than the sums due on the benefit. Salary sacrifice for additional employer pension contributions is currently exempt from these rules, but it is understood to be a point under consideration. Removing the exemption would prevent the employer and employee NICs and the employee income tax savings currently on offer. Whether targeting both income tax and NIC relief or just the NIC element (for employers and employees), this measure seems high up the list since the U-turn on plans to increase income tax rates. 

  Probability of additional taxes on pension salary sacrifice arrangements: 90%
  

• Pension income tax-free lump sum - eligible individuals of retirement age are often able to take 25% (or £268,275 if lower) of the amount accumulated in their pension as a tax-free lump sum. While cuts in the available tax-free allowance were initially the topic of Budget speculation, it is now understood that the chancellor will not make changes in this area.

  Probability of additional income taxes on pension lump-sum income: 0%

Individual Savings Accounts (ISAs) were also on the agenda earlier this year, with the chancellor reported to be interested in maintaining the £20,000 annual investment limit but restricting the amount that can be saved into a cash ISA to £4,000. This ultimately did not form part of a summer announcement but could still be on the cards for later this year, perhaps to a slightly more generous level of £10,000.

Probability of cash ISA investment limit being reduced: 50%

Wealth taxes

Our government considers that wealth taxes are already in operation, in the form of capital gains and inheritance taxes (below).

Capital Gains Tax (CGT)

As noted above, capital gains tax rates when BADR is claimed are already set to increase from 14% to 18% on 6 April 2026. It is possible the 2026/27 rate could be further increased, with 20% perhaps looking attractive to the chancellor. The BADR rate will, however, need to stay at or below the CGT rate payable by basic rate taxpayers on general disposals, currently 18%.

On general CGT rates, we’ve seen suggestions before that the rates could or should be aligned with income tax rates; taking the current 18% CGT rate for basic rate taxpayers to 20% and the current 24% CGT rate for higher and additional rate taxpayers up to as much as 40% or 45% respectively. 

Probability of CGT rate increases: 60%

Capping of Private Residence Relief

Another possible CGT measure could be capping the current unlimited amount of private residence relief (PRR) available when an individual sells their home. This would be controversial, given the purpose of the relief in the first place.

Probability of PRR restriction: 50%

Other property taxes

Property wealth is on the radar. It is possible that a ‘mansion tax’ will be introduced; triggering an annual tax charge on properties with a market value over a specified sum; likely around the £2m mark. This may go hand in hand with changes to the council tax banding or Stamp Duty Land Tax (SDLT) regimes.

Probability of mansion tax: 30%

Inheritance Tax (IHT)

The nil rate band and residence nil rate band are currently frozen at their respective £325,000 and £175,000 levels until April 2030.

We have already seen draft legislation to curb the availability of 100% business property and agricultural property relief from 6 April 2026 and to include unused pension funds and death benefits in estate valuations from 6 April 2027.

The anticipated tax revenue from those measures is subject to how affected individuals respond and tax planning strategies put in place, including lifetime gifting to reduce estate values. To combat this and to raise additional tax revenue, new restrictions to lifetime gifting could be on the cards. The chancellor is rumoured to be considering:

• Modifications to the potentially exempt transfer (PET) regime - so that gifts only become exempt if the donor lives for (say) 10 years after the date of the gift. This would keep gifts within the scope of IHT for 3 years longer than the current regime.

  Probability of extensions to the PET regime: 50%

• Reduction or removal of taper relief - the current taper relief awarded for gifts given 3 to 7 years before the donor's death could be curtailed or removed altogether. Combined with the above, gifts (in excess of other exemptions) would only escape IHT if made substantially in advance of death.

  Probability of taper modifications: 40%

• Annual or lifetime limits on exempt gifting - with likely the unlimited 'normal expenditure out of income' exemption for regular payments in mind, the upcoming budget may include requirements for better (digitalised?) tracking of ongoing gifting as well as personal income and expenditure levels. This would simplify estate administration for executors and lay the groundwork to impose a limit on the total amount an individual can give away outside of the IHT system.

  Probability of gift tracking and a lifetime cap: 40%

VAT

It is looking as though VAT changes are on the chancellor’s bingo card in the run up to Budget 2025. This could be a mix of good news measures (cuts to the 5% VAT rate on household energy for example) and those that will prove less popular in some circles (for example, a possible extension of the application of 20% VAT to private education to privately funded healthcare as well).

Probability of changes (increases and decreases) to VAT rates: 80%

The £90,000 VAT registration threshold may well be reduced to avoid the cliff edge effect of businesses resisting growth above this level and to collect VAT from a wider range of services. The chancellor will be carefully balancing this ambition with the need to control inflation and her stated priority of bringing down the cost of living. Questions however, have to be raised about the thresholds now set for quarterly reporting under the (MTD for IT) regime and whether aligning VAT registration thresholds makes sense.

Probability of lowering the VAT registration threshold: 30%

Further measures to tackle avoidance and evasion

This is a staple of any Budget and measures targeted at both taxpayers and agents can be expected this Autumn.

Probability of plans to curtail avoidance and evasion: 100%

In keeping with her fiscal rules and in an attempt to generate additional revenue, the chancellor is likely to announce wide-ranging changes in the budget, whether badged as 'wealth taxes' or otherwise.

Individuals and family businesses will be affected, and for many, it will be unwelcome. Clients will look to their accountants and trusted advisers for a glimmer of hope; a plan or strategy to retain as much of their income and wealth as possible.

The Opportunity for Advisory Services

This evolving tax environment presents further opportunity for accountants in practice to shift from reactive compliance to proactive advisory. Understanding, explaining, and advising clients on significant tax changes will deepen client trust and the value they place in your services. It will also open new revenue streams.

Keeping clients up to date, offering additional support and segmenting them into groups experiencing similar financial and tax pressures creates an opportunity to deliver valuable and scalable advisory services.

This is where 20:20 Innovation comes in with two simple solutions.

1. Pre-Written Client Newsletter

Branded for your firm and built around client personas, the Budget Newsletter allows your firm to communicate confidently and authoritatively within hours of the Budget.

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Tailored for UK accountants in practice, our Budget Update webinar will cover:

• The latest tax announcements.
• Practical implications.
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Prepare for Budget 2025 today and be ready with innovative, practical solutions and ideas for your clients.

The contents of this blog are budget predictions. Those predictions and the probabilities assigned to them are speculative and judgmental. Budget content will only become certain on Budget Day. 20:20 Innovation cannot be held responsible for action taken or not taken as a result of this blog.