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Following months of speculation, the Chancellor of the Exchequer, Rachel Reeves, yesterday delivered her second Autumn Budget
The principal measures are set out in our full briefing which can be found here.
Against a backdrop of elusive economic growth, increasing public debt and stubbornly high inflation, and alongside the Government's manifesto pledge not to increase National Insurance, rates of Income Tax or VAT for "working people", the Chancellor was left with little room for manoeuvre. Rather than pull any of the big (and simpler) tax "levers", the Chancellor opted for a relatively large number of smaller, in many ways more complex, measures, principally raising revenue from individuals. Key amongst these was a three-year extension to the freeze on personal tax thresholds which, coupled with inflationary wage growth, will see increasing numbers of workers drawn into higher tax bands. The capping of National Insurance benefits on pension salary sacrifice arrangements will also negatively impact many employees, as well as their employers. Measures to increase Income Tax rates on income from property, dividends and savings, bringing the taxation of such assets in closer alignment with the taxation of income from work, were justified on the grounds of fairness. A new tax on properties valued at £2 million or more in England was also announced, allowing the Government to tax an aspect of "wealth" without going so far as to introduce a standalone wealth tax. It's interesting to note that much of the "pain" from these measures will be felt towards the back end of the decade, by which point the Chancellor is no doubt hoping for better growth and in turn more fiscal headroom.
Although businesses appeared in the main to have escaped the Budget's headline-grabbing changes, a number of detailed measures were announced that will require further analysis from both advisers and clients in order to ascertain their full impact, including changes to business rates, the rates of capital allowances, the capital gains reorganisation anti-avoidance legislation and the transfer pricing, permanent establishment and Diverted Profits Tax provisions.
Some of the Budget's announcements are certainly to be welcomed, including the launch of a Call for Evidence aimed at supporting entrepreneurs through the tax system and confirmation of the new advance clearance service for major projects. However, there is also disappointment that the Chancellor did not take the opportunity for a more radical, systemic review of some areas, including property taxes, which were trailed as potential candidates in the run-up to the Budget, but in the end, did not make the cut.
Further information and details of a number of the Budget's announcements will be made available with publication of Finance Bill 2026, expected shortly.
A link to the Government's Autumn Budget 2025 website and full Government documentation can be found here.
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