Autumn Budget 2025 - expectations and speculation regarding tax measures

There has been feverish speculation about the tax changes that could be unveiled at the Chancellor’s Autumn Budget on 26 November 2025. This is against the backdrop of an expected downgrade in the OBR’s growth forecast and the resulting rumours of a “black hole” in the public finances, estimated to be in the tens of billions of pounds.

This speculation has greatly increased in recent weeks. The unusual “Scene Setter” speech delivered on 5 November 2025, and the Chancellor’s comments since, have focused on making “hard choices”, noting that sticking to manifesto pledges would require “deep cuts” to spending and could damage investment and growth. It appeared all but certain that the Chancellor was laying the ground for rowing back key manifesto pledges not to raise taxes on “working people” and specifically not to raise VAT, national insurance (NICs) or the rates of income tax.

However, by last Friday (14 November 2025), plans to raise income tax were reported to have been abandoned. This reversal is thought to be part political, part fiscal, with reports that the OBR’s forecast now reflects improved wage growth figures. In order to raise the revenue required to meet fiscal rules, the Chancellor is said to favour a “smorgasbord” approach, i.e., raising revenue from an assortment of narrowly drawn taxes in an attempt to plug the “black hole”.

With only one week to go until the Budget speech, we have brought together a summary of key expectations and speculation. We expect speculation to continue to evolve over the next few days.

The below is split into two sections:

(1) Headline changes – widely thought to be changes which are, or have been, under the Chancellor’s consideration. Some areas of key speculation have been reported to be “ruled out” by the Treasury, and we have noted where this is the case.

As of today, the following are expected to be amongst the most likely announcements:

• Extending the freeze in income tax thresholds. 
• Charging national insurance contributions (NICs) on pension contributions exceeding £2,000 by way of salary sacrifice. 
• Increasing the tax rate on dividends and cutting the dividend tax-free allowance. 
• Increasing the rates of certain gambling duties and levies. 
• Introducing a new “mansion tax” – currently expected to be by way of applying a “surcharge” to higher value properties, using the existing council tax framework.
• Ending the freeze on fuel duty. 

(2) Anticipated technical changes / announcements / updates – fiscal statements are often accompanied by a raft of technical changes, which may not hit the headlines but are significant to the tax outcome for certain businesses and individuals.

Headline changes

Income tax

• Extending the freeze on income tax thresholds to 2029 – 2030 tax year. Currently frozen until the end of the 2027 – 2028 tax year. This is widely expected as it would arguably allow the government to maintain that it has kept its manifesto pledge not to raise income tax rates.
  
  It is also being reported that the Chancellor plans to freeze the personal savings allowance. This is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional rate taxpayers have no personal savings allowance. A more generous tax-free savings personal allowance (of up to £5,000) currently is available to those whose total income is up to £17,570 (the “starting rate for savings”).
  
  At one point, there was general speculation that the Treasury was (in lieu of increasing rates) considering reducing the thresholds at which higher rates of income tax take effect. However, this appeared to be swiftly ruled out by “government insiders”.
   
• Imposing employee and employer NICs on salary sacrifice pension arrangements above £2,000 per year. Pension contributions via salary sacrifice arrangements are exempt from both employer and employee NICs.
  
  It is suggested that the “NIC free” amount for such contributions could be capped at £2,000. NICs (both employee and employer) could apply at the marginal rate on contributions in excess of that amount.
  
  This might be expected to impact the generosity of employer-funded pension contribution arrangements.
  
  Additionally, it has been reported that the generosity of tax-advantaged salary sacrifice arrangements may also be limited in other ways. Recent reports suggest the Chancellor will introduce a new limit on the amount which can be spent on a bi-cycle / e-bike under the Cycle to Work scheme. 
  
  Again, this is widely anticipated because it would arguably allow the government to maintain it has kept to its manifesto pledge not to raise income tax rate, or NICs.
   
• A 2% increase in the basic, higher and additional rates of income tax, and a “corresponding” decrease in the rate of employee NICs. Press reports had previously suggested this announcement was close to certain. However, the Treasury reportedly abandoned this measure given that it would more directly be perceived as abandoning the pledge not to increase taxes on “working people”. 
  
  Reports had suggested that only the rate of employee NICs between the primary threshold and the upper earnings limit (£12,570 to £50,270) would be cut by 2% (from 8% to 6%). 
  
  Had all rates of income tax been increased, this would have caused a “net” increase on combined taxes on employment income for those earning over £50,270, on the basis that the current 2% employment NICs rate for those earnings would have remained the same.
  
  The impact of this measure would have also been to increase taxation on investment and pension income and (because pensioners do not pay NICs on employment income) pensioners’ employment income.
   
• Charging “employer NICs” on partnership / LLP profits. The main rate of employer NICs is 15%. Employer NICs are not currently levied on partnership profits because partners (including LLP members) are not employees (and there is legislation – the salaried members rules – to deal with perceived avoidance where partners are effectively treated as employees). 
  
  Press reports at the end of last week suggested that a proposal to levy employer NICs on partnership / LLP profits had also been abandoned. Behavioural changes (bringing forward profits, and re-structuring) were expected to negate any / the majority of the revenue benefit. 
  
  Earlier reports had indicated that the Treasury planned for any employer NICs charge on LLP profits to be “less onerous” than levying the full 15% rate. It is unclear whether this referred to a much lower rate under consideration. It may have referred to the effective increased rate of tax on LLP profits if the “full” 15% rate were levied. This effective rate was expected to be c.7%, should regard have been given to the deductibility of employer NIC from other taxes paid by LLP members, and parity with the effective rate where a limited company pays employer NICs.
   
• Increasing the income tax rate applicable to dividends. Speculation has focused on measures including an increase to the basic rate (8.75%), given the disparity between this and the basic rate applicable to other income (20%).  Another possibility that has been the subject of speculation is the ending of the tax-free dividend allowance.
   
• Raising the  £250,000 EMI (Enterprise Management Incentives) cap. There is currently a £250,000 cap on the value of share options qualifying as tax-advantaged EMIs that an individual can receive in a 3-year period. There is also a company-level cap of £3 million of shares that can be under option at any one time. It is reported that the Chancellor plans to raise that cap to “a multiple” of its current £250,000 level. It is unclear whether there would also be an increase to the company limit.
   
• Reducing the cash ISA allowance from £20,000 – possibly to £10,000 or £12,000. Currently, it is possible for an individual to use all of their £20,000 annual ISA allowance for cash savings. There was heavy speculation prior to the Autumn Budget 2024 that the portion of an individual’s £20,000 annual ISA allowance which can be invested in cash ISAs would be significantly reduced. This at one stage appeared to have been quietly abandoned, but recent press reports have again raised this possibility.
   
• Subjecting rental income to NICs. Given the “U-turn” on recent reports relating to an increase in income tax and “corresponding” decrease in NICs, this may be back on the table. It would have a similar effect on the overall tax rate on rental income received by individuals, and would arguably allow the government to maintain that it has not raised the rate of NICs, and continues to protect “working people”. However, in reality the cost may be passed on to tenants.
   
• Raising income tax rates with no “corresponding” decrease in NICs. Treasury consideration of 1% and 2% increases has been reported. However, recent press reports state that proposals to increase income tax rates have been abandoned, given that such measures would break key manifesto pledges.
   
• Limiting the pension tax-free lump sum. At least one news outlet has reported that it has received confirmation from the Treasury that the Chancellor will not cut the pension tax-free lump sum from its current level of £268,275, previously (and prior to last year’s Autumn Budget) seen as a likely announcement.

Capital gains tax

• Capping principal private residence relief from capital gains tax on main homes. Currently there is a full exemption from capital gains tax on the sale of an individual’s main home. It was previously reported that the Chancellor was considering a proposal whereby the exemption would not be available in relation to homes with a value above a certain amount (variously reported as £1.5m or £2m).
  
  However, speculation in relation to higher value properties is now focused on the introduction of a “mansion tax” charged through the existing council tax system (see below). 
   
• Introduction of an “exit tax”. The UK is an outlier in the G7 in not charging capital gains tax on gains “accrued” (but not crystallised) when an individual loses their UK tax residence status. The UK’s higher rate of capital gains tax, applicable to most types of gain, is 24%. It was previously speculated that the UK might introduce an “exit tax” regime, which may also include a rebasing for capital gains tax on arrival in the UK. 
  
  Recent reports have suggested the introduction of an exit tax is now unlikely, given its potential to disincentivise individuals moving to the UK.
   
• Ending the capital gains base cost uplift on death. The base cost uplift on death means beneficiaries do not pay capital gains tax on any increase in value of an inherited asset during the deceased’s lifetime. Removing the base cost uplift would cause a significant increase in the overall tax rate on inheritance assets, when inheritance tax is also taken into account, particularly given recent changes to the reliefs for business and agricultural property (known as BPR and APR).

Property taxes

• Residential property tax reform. Several press reports in the late summer indicated that the Treasury was considering measures proposed in a report by the think tank Onward. The report appeared to propose the replacement of council tax with a local property tax and the replacement of stamp duty land tax (SDLT) with a national property tax applicable in relation to properties with a value of more than £500,000. 
  
  Speculation on this more radical overhaul of residential property taxation softened, but has very recently increased due to the evidence provided by property experts before the Treasury Select Committee on 12 November. The experts were broadly critical of the current residential SDLT regime. 
  
  Other recent speculation regarding property taxes has suggested that the Treasury’s focus has moved away from significant reform and is now on increasing council tax, either by introducing additional bands for higher value properties, or by increasing the existing rates applicable for higher bands (see below).
   
• Introduction of a “mansion tax” – using the existing council tax system, in relation to higher value properties. It has recently been reported that the Treasury is closely considering levying a new “surcharge” on properties within the highest council tax bands of F, G and H. Such properties would first be subject to a revaluation. Some press reports suggest that any “surcharge” would only be levied in relation to properties which are revalued over a certain threshold, variously reported to be either £1.5m or £2m. It is expected that a deferral mechanism would also be introduced, allowing owners to delay paying any such surcharge until sale, death, and/or for a certain number of years.
   
• Business rates reform. An interim Treasury report published in September stated that the Chancellor would provide further updates on reforms to business rates to incentivise investment. In particular, the report confirmed the Treasury is reviewing changing the business rates regime from a “slab” to “slice” approach, and strengthening Small Business Rates Relief to support small business growth.

Inheritance tax

• Introduction of a lifetime gift allowance. The UK does not currently have a “gift tax”, although certain lifetime gifts can be subject to UK inheritance tax, for example where the donor dies within seven years. A lifetime gift allowance would, it has been suggested, apply a tax on gifts made by a donor over a certain lifetime threshold.
   
• Changes to “potentially exempt transfers” – inheritance tax on gifts made in the seven years before death. Currently, lifetime gifts to individuals are free of inheritance tax provided the donor survives seven years from the date of gift. This could be extended, for example to 10 years. The reduction in the rate applicable once the donor has survived at least 3 years could also be under review.

“Wealth” taxes

• Introduction of a wealth tax. Various prominent Labour party figures have been supportive of a wealth tax. In an address to the IMF in Washington in the summer, the Chancellor appeared to rule this out, stating “we are not going to be introducing a wealth tax” and referring to a number of other ways in which wealth is already subject to tax in the UK.

VAT

• Reducing the VAT mandatory registration threshold. This currently sits at £90,000. A reduction in this threshold would be a means of increasing revenues from VAT, without increasing the rate. The existing threshold is widely considered to have a negative impact on growth because it incentivises traders earning slightly below the threshold to slow or stop activity to avoid reaching the threshold. Therefore, an increase in the threshold is also a possibility.

Taxes relating to certain business sectors

• Increasing various rates of gambling taxes. There has been material speculation that gambling duties on remote gambling will be increased.  Following the report of the Treasury Select Committee published on 7 November, it seems likely that remote gaming duty and machine gaming duty will both be increased. 
  
  In addition, recent press reports state that the government intends to make changes to general betting duty, to differentiate between online and on premises betting. It is currently expected that the Chancellor may maintain the 15% rate applicable to sports bets made on premises, with a marginal increase (reportedly to 21%) for sports bets made online. It is also expected that some kind of relief will be afforded to bookmakers in respect of bets on which they pay horserace betting levy (bets placed on British horseracing). Whilst the Treasury has declined to confirm that horseracing bets will be carved out of increases in general betting duty, a Treasury spokesperson recently stated in response to one paper that the government has no plans to change the 100% exemption applicable to horseracing bets placed at the races. 
  
  Prior to the more recent speculation detailed above, it was reported that the Treasury has “abandoned” its proposals to merge several gambling taxes (remote gaming duty, general betting duty and pool betting duty) into one “remote betting and gaming tax”. These proposals were contained in a consultation released in April this year.
   
• Ending the Energy Profits Levy one year early, in March 2029. The government announced the extension of the levy to March 2030 at the Autumn Budget 2024.
   
• Increase in the rates of Insurance Premium Tax (IPT). IPT is currently charged at the standard rate of 12% on most types of insurance, and the higher rate of 20% for certain vehicle insurance, travel insurance, and insurance for mechanical / electrical appliances. Given recent focus on the “smorgasbord” of measures, it is expected that the Chancellor may turn to raising revenue from taxes which are (to the general public) more obscure, and therefore less likely to garner negative headlines; amongst those may be IPT.
   
• Increasing the corporation tax bank surcharge. Currently the corporation tax surcharge for banks is 3%, such that the overall corporation tax rate for banks is 28%. There were reports of a proposed 2% increase in the surcharge. Reports had suggested the Treasury had abandoned this plan given the overall burden of taxation on banks. However, in light of the Chancellor’s reported decision not to increase income tax rates, it has been reported that her opposition to increasing taxes on banks has “softened”.
   
• Ending the freeze on fuel duty. Fuel duty has been frozen since 2011. The 5p-per-litre reduction announced in 2022 will expire in March 2026. It has been reported that the Chancellor is considering ending (rather than extending) the 5p reduction, either wholly, or by reducing it to 3p-per-litre.
   
• Introducing a “pay-per-mile” charge on Electric Vehicle (EV) drivers. Against the backdrop of the increasing number of drivers of EVs (who will not incur fuel duty), the Treasury has reportedly been considering the introduction of a “pay-per-mile” tax for EV drivers. Reports suggest EV drivers would be expected to estimate their average mileage and pay a charge of 3p per mile (in addition to existing road taxes).
   
• Introducing a new “tourism tax” in England. Recent press reports suggest that the Chancellor is closely considering introducing a new levy on overnight hotel and rental home stays in England. Such levies are already being introduced in Scotland and Wales via their respective devolved governments. It has been reported that the Chancellor is considering granting the power to raise a tourist levy to mayors in England, via amending the English Devolution and Community Empowerment Bill, which is currently progressing through parliament. The Chancellor was originally reported to have been opposed to the introduction of such levy due to it discouraging tourism. However, it is suggested her original opposition has softened after considering reports which suggest similar levies do not discourage tourism in European cities.
  
  By way of example, the Scottish legislation has empowered each of Scotland’s 32 local authorities to decide whether to introduce a visitor levy, the level (which must be a percentage of the cost of overnight accommodation, excluding (1) Online Travel Agency (OTA) fees and (2) “add-ons”, such as room service, purchased during stays) and what precisely proceeds should be spent on. The City of Edinburgh Council has been first to introduce a levy, but some accommodation providers and online travel agents are reported to be struggling to implement some of its bespoke elements.

Anticipated technical changes / announcements / updates

• Carried interest reform. A key manifesto pledge, and implementation was confirmed at the Autumn Budget 2024. The outcome of the technical consultation on draft legislation is awaited. See our article on the detail here: A new chapter for carried interest – Where do we stand after the draft legislation?.
   
• Stamp duty on shares modernisation. A large amount of detail on the new regime was released in April this year, but further detail and draft legislation is awaited.
   
• “Anti-avoidance” legislation. The outcome of technical consultations on draft legislation is awaited on the following:
  • Amendments to the Disclosure of Tax Avoidance Schemes (DOTAS) legislation, including the introduction of a criminal offence for failure to notify.
  • Mandatory registration of tax advisers.
  • Amendments to the facilitation of tax avoidance legislation.
• Tax fraud “whistleblowing” legislation. At the Spring Statement earlier this year, the Chancellor announced the introduction of a US-inspired rewards scheme for tax fraud whistleblowing. Press reports suggest further detail is imminent.
   
• Further measures to close the “tax gap”. The Labour party manifesto included a commitment to closing the “tax gap” (being the estimated difference between total theoretical tax liabilities and the amount that is actually paid to HMRC). Measures designed to do so were announced at both the Autumn Budget 2024 and the Spring Statement earlier this year. HMRC’s recent report “Measuring Tax Gaps 2025” stated that small businesses represented the largest proportion of the overall tax gap (60%). Therefore, it is possible further measures may be announced, specifically targeted at small (and possibly medium) sized businesses.
   
• Update on the introduction of full expensing for leased assets. The government has committed to introducing full expensing of plant and machinery expenditure for leased assets “when fiscal conditions allow”.
   
• Outcome of the consultation of the tax treatment of pre-development costs. The consultation was postponed as a result of a Court of Appeal decision from earlier this year. Further development may be delayed until the outcome of HMRC’s appeal of that decision to the Supreme Court, which is listed for hearing in February 2026.
   
• Update on advance tax certainty for major projects. Part of the government’s Corporate Tax Roadmap, released at the Autumn Budget 2024. Feedback is being analysed from the consultation published in March this year.
   
• Update on the offshore anti-avoidance legislation consultation. The response to the Call for Evidence published at the Autumn Budget 2024 stated that the government is committed to improving the operation of legislation in this area, which includes transfer of assets abroad, settlements legislation and attribution of gains.
   
• Outcome of the technical consultation on Diverted Profits Tax, Transfer Pricing, and Permanent Establishment draft legislation. Draft legislation was released for technical consultation in the spring.

We are continuing to monitor all developments in this area, and will be publishing our usual analysis of the key Autumn Budget announcements on 26 November 2025. To receive this direct to your inbox, please sign up for Law-Now alerts here: Subscription portal, or check the Law-Now UK tax feed here: Search Results | CMS LawNow.

Please reach out to Elizabeth Sherwood (elizabeth.sherwood@cms-cmno.com), Hannah Jones (hannah.jones@cms-cmno.com) or your usual CMS tax contact if you would like to discuss any of the above in more detail.