Autumn Budget 2025: A ‘smorgasbord’ of worries for wealthy taxpayers

With sources suggesting the Chancellor has abandoned plans to raise Income Tax rates at the Autumn Budget in favour of a series of smaller measures to address the UK’s fiscal shortfall, Saffery warns this has created a ‘smorgasbord’ of worries for wealthy individuals, landlords, and property owners ahead of November 26.

The Chancellor is due to present her Budget tomorrow. There she will outline plans to raise tax revenue to fill a fiscal hole in the public finances estimated between £20 billion and £30 billion – with the latest better-than-expected OBR forecasts suggesting it could be closer to the former.

The approach the Chancellor is reportedly favouring would involve a series of smaller changes to more narrowly drawn taxes – the so-called ‘smorgasbord’ approach.

In the months preceding this year’s Budget, various such proposals have been floated, including:

• LLP members – earlier suggestions of applying a charge equivalent to National Insurance Contributions (NIC) on members (partners) of limited liability partnerships (LLPs) now appear to have been ruled out by the Chancellor.
• Rental Income – NIC could be applied to rental income raising additional revenue.
• ‘Mansion Tax’ – Recent reports suggest that a Council Tax surcharge is being seriously considered for homes valued between £1.5-2 million. Other potential measures targeting high-value homes have previously been raised.
• UK Exit Tax – Previously discussed proposals for a 20% tax on business assets moved abroad now appear to have been discounted by the Treasury.
• Pensions – Proposals for a potential cap on the 25% tax-free lump sum now also seem to have been taken off the table, although other changes to tax relief rates remain possible.
• Capital Gains Tax (CGT) – Possible alignment with income tax and reduction of reliefs and allowances such as Private Residence Relief.
• Inheritance Tax (IHT) – Potential limits on lifetime gifting and the removal of the CGT ‘base cost uplift’ on death.
• Stamp Duty Land Tax (SDLT) – Possible replacement with an ownership-based property tax.
• Wealth Tax – Discussion of a 2% levy on net assets above £10 million.
• Income Tax – while rate increases appear to be off the cards, a two-year threshold freeze seems likely, which could increase the effective tax rate for some earners.

Mike Hodges, Partner in the Private Wealth team at Saffery, analyses the speculation and the implications for taxpayers:

“In last year’s Budget, UK businesses arguably came out worst hit following the increase in employer’s NIC. This year, with growth flatlining and business confidence in the doldrums, the Chancellor is unlikely to lay the burden at the doors of British businesses again. Moreover, Labour’s manifesto commitment to protecting ‘working people’ from tax rises continues to limit the more obvious revenue-raising options. This has naturally got wealthy individuals worried that they are the group most exposed to carrying a greater share of the burden this time around – despite many feeling they bore the brunt last year with cuts to IHT agricultural and business reliefs, CGT hikes, and more.

“If income tax rate rises are truly off the table (the latest speculation seems to be a homing in on a continuation of freezing of allowances and thresholds – our old friend fiscal drag), and the Chancellor wishes to avoid placing additional pressures on businesses, it’s reasonable to speculate that pensions – as a significant proportion of the nation’s overall wealth – could be next under consideration. It would be relatively straightforward to apply National Insurance on pensions income, for example. It may come down to the political decision of how narrowly the government is willing to define the concept of ‘working people’. Those who have spent 40 or 50 years in the workforce, diligently saving into their pension pots to secure a comfortable retirement, may well resent being excluded from protections afforded to younger households.

“The policies speculated ahead of the Budget this year for taxing wealthy people and their assets have ranged from modest adjustments to major upheavals. Examples of the latter include major reforms – or even an end – to lifetime gifting for IHT, which would totally upend people’s succession strategies for their family estates and businesses. Similarly drastic are the proposals around property taxation for higher-value homes, which raise many daunting practical questions and could have a detrimental impact on property transactions and values. It’s worth remembering the policies that ultimately materialise on Budget Day are often softened versions of what was previously speculated, allowing the government to project an air of compromise and moderation while still increasing the overall tax burden.

“The so-called ‘smorgasbord’ of little measures approach which is reportedly favoured by the Chancellor may avoid breaking key manifesto-pledges around income tax, but it would also bring significant uncertainty to an already extremely complex tax regime for wealthy individuals. Even with the new FIG regime for new arrivals with foreign income and gains it could further undermine the UK’s attractiveness as a destination for the world’s wealthy and entrepreneurial, with potentially serious implications for the wider economy.

“Each item on the smorgasbord of smaller tax changes will inevitably prompt behavioural shifts from taxpayers, which could significantly reduce – or even eliminate – the additional revenue expected, while generating administrative burdens and ill-will. This is likely why, when speculation appears to crystallise around a potential policy – such as extending national insurance to LLP members – it is often followed by a fairly rapid retreat but gives the Treasury the opportunity to assess people’s reactions and decide whether on balance it would be likely to create more hassle than it’s worth.

“This reinforces the crucial point that taxpayers should not look to make plans or alter their affairs on the basis of the latest speculation. In some cases, it may be sensible to accelerate transactions that are already in progress in order to complete before November 26, but even then, planning should be grounded in the current rules and the confirmed changes ahead – including the reductions to APR and BPR, and the introduction of pensions into the scope of IHT.

“The ‘smorgasbord’ approach may allow the government to signal action on fiscal responsibility while avoiding overtly unpopular tax hikes on the general population. However, it also risks creating complexity and a smorgasbord of worries for wealthy individuals, landlords and property owners, who will feel the cumulative weight of multiple smaller changes.”