The UK Autumn Budget 2025 – a winter chill in the air for taxpayers?

Fiscal backdrop

On Wednesday 26th November, the UK Chancellor will deliver the 2025 Autumn Budget to Parliament. With a backdrop of rising government spending, twinned with weaker economic growth expectations following a recent downgrade in OBR forecasts, it is reported that the Chancellor will need to seek to fund tax rises to the tune of £30bn in an attempt to balance the UK books.       

The government continues to face a difficult balancing act. They have their “non-negotiable” pledges in place not to borrow to fund ongoing (and rising) costs of running the country, together with an intent to reduce national debt as a share of the economy during the term of government. This leads to announcements of further tax rises seem somewhat inevitable. However, at the same time the Chancellor must try to work within the political constraints of Labour’s manifesto commitments — most notably, the promise not to raise the main rates of Income Tax, National Insurance (for working people), Corporation Tax or VAT.  

Stealth tax rises?

Given these factors, many commentators expect the government to continue the penchant for “stealth” tax-raising measures. These can increase the tax take without increasing headline rates or otherwise attracting too much attention.

One such known measure is fiscal drag, which could include extending freezes on personal income and other tax thresholds and allowances, or indeed reducing them, and therefore puling more individuals into higher tax bandings but without rising tax rates themselves.  

The tightening up of certain tax reliefs could also come into play. Examples could include removing the current Inheritance Tax protections afforded to non-residential UK property ownership through non-UK companies, by non-UK resident individuals. Or, perhaps tinkering (again) with the non-dom tax rules in order to seek to attract or retain more wealth within the UK. Alternatively, might we see yet more amendments to the tax position of carried interest in the UK as it applies to fund managers, to seek to align it yet further to income tax rates?

However, as we have seen from images earlier this year of tractors being parked outside Westminster to protest against the removal of certain Inheritance Tax reliefs for farming families, even these “stealth taxes” can be fraught with political risk…

More radical changes?

Given the deficit that the Chancellor requires to fill, one cannot write off the potential for more radical tax changes to be brought into effect.

One that is spoken about increasingly is in relation to Capital gains tax (CGT), and potentially aligning CGT rates, which currently tend to be more favourable, with income tax rates.  There is also ongoing discussion around broadening the scope of National Insurance, potentially to include income such as property rental income, employer pension contributions and partnership profits.

Such changes, if adopted, could certainly have a significant impact on those non-UK resident investors in UK real estate. Other changes in relation to property could see an abolition of council tax in favour of a new regime, and the introduction of some levy on homes over a certain value, to again target perceived ‘wealth.’

And then we come onto perhaps some form of wealth tax applied on individuals, which have been shown in the past by various countries to be notoriously difficult, if not impossible, to implement successfully. Or indeed, potentially, could we see some form of UK exit tax levied upon individuals’ assets when leaving the UK?

Often these types of more complex reforms require lead in periods and consultations and, often, transition periods prior to change taking effect. Therefore, whether any more radical measures could be enacted by the government during the term of parliament could present a challenge and may end up being rushed if it were to be attempted.

Plenty of uncertainty

The Autumn budget can just about be called that, though it is this year being delivered just a matter of days before Winter officially sets in. With such a late budget coming on the back of almost three months since it was announced, there has been plenty of time for speculation and rumour to swirl as to what it may contain.

In the Channel Islands, we continue to see a steady number of individuals relocating from the UK, and rumours of the implementation of further taxes which are viewed as punitive on UK wealth creators continue to be cited as one of the reasons for leaving.

The Channel Islands continue to be a highly attractive choice for HNW and UHNW individuals to relocate to, given the preferential tax regimes which exist to incentivise individuals to move along with their wealth and business and other interests. Supporting such inbounds in making the move to the Islands is an area in which we specialise, and see increasingly strong interest in.

So, what now?

The question as to what impact the budget will have on those with UK interests is currently not possible to forecast nor quantify. There has been significant talk and commentary over what may or may not be announced. As usual, the devil will be in the detail, once we have had a chance to have detailed review of the raft of documents that tend to closely follow the budget announcement itself.

Those with UK tax interests should certainly remain alert to changes, and it is always good pre-planning to have a handle on how one’s affairs are currently structured to allow for more agile re-planning, if necessary, once more is known.

We will of course provide a full summary and analysis once the budget is delivered. In the meantime, please don’t hesitate to contact us if you would like to discuss potential scenarios and how they could affect your tax position.