Autumn Budget 2025 predictions: What could Chancellor Rachel Reeves announce? 

Chancellor Rachel Reeves will deliver her second Budget on 26 November, making it one of the latest Autumn budgets in recent years.  

With government borrowing hitting a five-year high of £18 billion in August amid mounting fiscal pressures, speculation is rife about what tax changes and spending decisions the Chancellor might announce. 

For context, borrowing over the first five months of the financial year has reached £83.8 billion, which is £16.2 billion higher than in the same period last year, and above the £72.4 billion prediction made by the Office for Budget Responsibility (OBR) as recently as March. 

The timing of this Budget is key, as it’s been pushed back to allow the OBR enough time to analyse Labour's growth plans, including infrastructure spending and potential trade agreements with the EU, India and the United States.

The following is speculation; remember that nothing will be officially confirmed until budget day. 

The fiscal challenge  

Reeves faces an increasingly tricky economic backdrop that has deteriorated since taking office. The UK's deficit in the first five months of 2025 was £11.4 billion more than the OBR forecast at the spring statement, while UK 30-year bond yields have hit a multi-decade high of 5.6%.

This represents a significant increase in the cost of government borrowing, adding further pressure to public finances. 

And the economic data paints a sobering picture. Growth has stalled, with the economy flat in July after 0.4% growth in June, while the longer-term trend shows growth of just 0.2% in the three months to July. At 3.8%, CPI inflation remains almost double the Bank of England's 2% target, with the central bank caught between a rock of inflationary pressure and a hard place of weak growth.  

For context, the theory remains that further rate cuts will help grow the economy but at the expense of more deeply entrenched and higher inflation. 

On a longer-term viewpoint, public sector debt as a percentage of GDP, alongside taxes, have already reached levels not seen since the Second World War. Many economists now estimate that Reeves will need to find between £20 billion and £30 billion to maintain the wafer thin £9.9 billion headroom she carved out six months ago. 

With manifesto commitments ruling out increases to income tax, National Insurance (NI), and VAT for ‘working people,’ — and spending cuts looking politically impossible given the backlash to Winter Fuel Allowance and disability cuts — the Chancellor is exploring alternative revenue-raising measures. 

But it seems there are no easy answers.  

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Property and wealth taxes 

Speculation is rife over potential new wealth taxes that could fundamentally alter Britain's approach to taxing accumulated assets. For context, the government is reportedly considering replacing council tax and stamp duty with a progressive annual property tax targeting high-value homeowners. 

This radical reform addresses a long-standing anomaly in the UK tax system, whereby council tax valuations are based on an estimate of 1991 property prices. This creates significant distortions where, for example, owners of multi-million pound London homes pay less in annual property tax than owners of modest properties in some northern towns.  

A progressive property tax could correct these imbalances while generating substantial revenue for the Treasury. The blueprint proposes larger annual property taxes on homes worth more than £500,000, which would disproportionately impact homeowners in London and the Southeast, where decades of house price growth have created substantial paper wealth that remains largely untaxed. 

More dramatically, a ‘mansion tax’ could end the sacred principle of primary residence exemption from capital gains tax (CGT). A threshold of £1.5 million is under consideration, above which homeowners would pay CGT at rates of 18% for basic-rate taxpayers and 24% for higher-rate taxpayers on any gains made when selling their home. 

The Chancellor is also exploring taxes on sellers of homes over £500,000, effectively shifting the burden from buyers to sellers in the property transaction process. However, experts warn this could create significant hardship for downsizers, especially older homeowners whose properties have appreciated dramatically over decades of ownership, and who may rely on the sale of their primary asset to fund care. 

More widely, property developers and land speculators could face new levies under a potential land value tax, designed to capture increases in land values that result from planning permissions and infrastructure improvements rather than individual effort.  

While the reforms could generate more tax, it’s also true that they may have an adverse effect on housebuilding — and politically, the last time significant changes were made to local taxes was the poll tax.

This did not end particularly well for the government of the day. 

Inheritance tax 

Building on her previous Budget's controversial inheritance tax reforms, Reeves is considering further restrictions that could significantly impact wealthy families and estate planning strategies. The most discussed proposal involves introducing a lifetime cap on the value of gifts that can be passed on tax-free before death, fundamentally changing how families transfer wealth across generations. 

Currently, individuals can make unlimited gifts provided they survive seven years after making them. This ‘seven year rule’ allows wealthy families to gradually transfer assets out of their estates, but speculation suggests the Chancellor could extend this survival period to 10 years, increasing the risk that gifts remain within the taxable estate. 

Changes to taper relief rates are also under consideration. The current system provides graduated tax reductions for gifts made between three and seven years before death, but these could be restructured to reduce the benefits of early gifts.

The Chancellor may also extend the freeze on inheritance tax thresholds beyond 2030. The main nil-rate band has remained at £325,000 since 2009, and if it had risen with inflation, would have reached £555,000 by tax year 2029-30. Continuing this freeze while property values and other assets appreciate could mean that more families get dragged into inheritance tax. 

More dramatically, reports suggest Reeves could remove the residence nil-rate band worth £175,000, which currently allows married couples to pass on up to £1 million to their children tax-free when the family home is included. Removing this relief would significantly increase inheritance tax bills for middle class families whose main asset is their property. 

For context, the agricultural and business relief changes announced in the last Budget demonstrate the Chancellor's willingness to target previously protected assets.

Targeting landlords 

National Insurance on rental income appears increasingly likely, with reports suggesting this could raise around £2 billion annually. The measure would treat rental profits more like employment income, aligning with Labour's apparent willingness to target landlords following their Renters' Rights Bill. 

The Resolution Foundation has backed creating a new NI class for rental income at a basic rate of 20%, with an additional 8% on earnings above £50,270.

However, the growing trend of landlords using limited company structures might reduce the effectiveness of this measure — and combined with other relatively recent regulatory and tax changes, could drive more landlords to sell up — which could drive up rents.

ISA & pension reforms 

While Reeves has delayed announcing ISA changes after widespread backlash, reform remains on the agenda. The government wants to push savers from cash ISAs into stock market investments to boost economic growth. 

Rumours suggest the annual £20,000 ISA allowance could be reshaped, with cash savings capped at just £4,000 while the remaining £16,000 — or the full £20,000 — would still be available for investments. The proposal has drawn strong criticism from the savings industry, and the Chancellor may ultimately opt to stimulate stock market investment through new incentives rather than by restricting cash savers.

Scrapping stamp duty on shares may be a popular policy, but given the constraints both politically and financially, seems unlikely at this time.

Despite establishing a Pensions Commission to investigate under-saving, major pension reforms seem unlikely given the winter fuel payment backlash.

However, technical changes remain possible, including restrictions on salary sacrifice arrangements for pension contributions, changes to tax relief for higher-rate taxpayers (possibly moving to a flat rate), and potential limits on the 25% tax-free lump sum (currently capped at £268,275).

The growing cost of the state pension triple lock adds further pressure for pension system reforms. Politically it has become difficult to scrap, but demographically, it’s arguably unaffordable over the longer term. 

Rumours that National Insurance (which is not paid by retirees) may be reduced by 2p, while income tax (which is) could be increased by 2p, may be designed to address this issue with limited political fallout.

Stealth taxes 

The most likely revenue raiser is extending the income tax threshold freeze beyond 2028. This stealth tax has already dragged seven million taxpayers into higher rates since 2021. Extending the freeze by just one year to 2029-30 could generate an additional £10 billion. 

As wages rise with inflation, more workers are pulled into higher tax brackets without any formal rate increase, which seems a politically palatable way to boost revenues. 

Of course, this doesn’t help with the growth agenda.

Other potential measures 

• Banking sector — With UK banks recording bumper profits from high interest rates, windfall taxes on excess profits or income from Bank of England reserves could raise several billion pounds
• Gambling tax — A new levy on online casinos and high-stakes betting could generate as much as £3 billion annually, supported by leading figures including Gordon Brown
• Fuel duty — The freeze and 5p cut could both be unwound, raising another £3 billion, though this would directly impact ‘working people.’ Rumours on new pay-per-mile taxes also abound

What seems unlikely 

Despite calls from Labour backbenchers, a wealth tax appears to be a ‘non-starter’ according to Cabinet sources, with the exodus of non-doms since Labour took power serving as a warning about the risks of aggressive wealth taxation. 

Reducing the £90,000 VAT threshold to bring more small businesses into the VAT net has also been rumoured, to address the so-called VAT cliff. While this may well happen in the medium term, it could be unlikely this year given the extra compliance costs, higher prices for non-VATable customers and current SME struggles.

Major pension reforms affecting millions of public sector workers representing Labour's core support base also seem politically unpalatable.

While dividends could be hit once again, a recent dividend tax rate increase from the last government, and the reduction of the dividend allowance from £5,000 ten years ago to just £500 today, might make dividends safe.

For now.

The dilemma

The November Budget will likely feature more tax rises, including stealth taxes through frozen thresholds, and targeted measures on landlords and potentially banks. While dramatic reforms seem unlikely, the cumulative impact of multiple smaller changes could be significant. 

The Chancellor faces a delicate — some might say Herculean — balancing act of raising substantial revenues while maintaining her commitment not to increase taxes on ‘working people’ - a definition that may prove increasingly malleable as the details emerge on 26 November. 

As always with Budget speculation, the crucial reminder is that these remain rumours. Making financial decisions based on speculation rather than confirmed policy can prove costly, as demonstrated by those who rushed to access pension funds ahead of last year's Budget based on unfounded fears. 

The key dilemma remains that the UK has low growth that does not support increased public spending, high inflation which makes reducing interest rates much lower financially unviable, and taxes that may already be on the wrong side of the Laffer Curve.