Article last updated 22 October 2025.
Everyone has their own autumn traditions. Yours may involve countryside walks or watching the latest popular Netflix show in front of the fire; the UK government has the Budget.
What’s in the news?
In this year’s Autumn Budget, Chancellor Rachel Reeves faces a quandary when it comes to plugging the gaping “black hole” in the nation’s finances.
There has been talk of overhauling pensions, council tax, property tax and everything in between. But Reeves is staunchly committed to not raising taxes for “working people”, facing pressure to raise revenue without breaking Labour’s tax pledges.
(No) changes to income tax thresholds
With no desire to increase income tax rates, the Chancellor could continue to freeze the income tax thresholds, which may well be extended past 2028. These tax bands have been frozen since April 2021, pushing people into higher tax brackets as their salaries have increased through fiscal drag, which is when your income rises but the tax thresholds don’t. On top of a greater tax burden, the cost of living has continued to soar, potentially putting a spanner in the works for anyone in the process of accumulating wealth.
“One way to combat this and claim some of this additional tax back is to increase contributions into a workplace pension or a private pension,” says Faye Church, Head of the Rathbones Guildford Office. “For every £100 contributed into a pension, you receive £20 basic rate tax relief. Higher and additional rate taxpayers get more. Pension contributions through salary sacrifice are also a common and straight forward way of pulling you down into a lower tax bracket.”
Changes to pensions
Pensions. They don’t quite have the same exciting ring to them as the Australian version – superannuation – but they are still one of the most tax-efficient ways to save for retirement.
Currently, the advantage of a pension is that you receive tax relief on money going into your pot, that money grows tax efficiently while invested, and you can ordinarily take a 25% lump sum from age 55 (age 57 from April 2028), to a maximum value of £268,275, in tax-free cash at some point in the future.
Speculation is mounting that the amount of tax-free cash available could be capped or removed, meaning some people have withdrawn money from their pensions earlier than they had originally planned.
Retirement may be a long way off for you and there are likely to be further changes to legislation by the time you reach pension age. If any of these changes happen, does this still make saving into a pension an attractive option? In a word, yes, because of the tax relief. If you’re a basic rate taxpayer, for every £80 you put into your workplace pension, the government will add £20 to your pension pot. If you’re a higher or additional rate taxpayer, you can claim the additional tax back through self-assessment.
Using your allowances
Ensure you’re using of all your available tax-advantaged allowances like ISAs, dividend allowance, and CGT allowance to name a few. There are many ways to grow your wealth and save for the future, on top of your pension, so make sure you explore all other options.
Changes to property taxes
Media reports are full of speculation on property tax reform, as council tax bands are based on 1991 valuations. Proposals include replacing stamp duty and council tax with a single new house value tax based on the market value of your home. This will impact you if you live in an area with high property prices.
If you are an accidental (or ‘on purpose’) landlord, you’ll be interested in talk of extending national insurance contributions to rental income. Currently, landlords pay income tax on rental income, but not national insurance on that income. If Reeves decided to mirror the NIC structure for employee earnings, this would entail 8% in national insurance contributions on rental income up to £50,270 and 2% national insurance contributions on rental income above £50,270.
One more change that has garnered column inches is the possible removal of capital gains tax (CGT) exemption on primary residences valued over £1.5mn. If you fall into this category, you’ll see an 18% CGT bill if you’re a basic rate taxpayer, and 24% if you’re a higher rate taxpayer.
What should you do?
We would caution against making knee-jerk decisions based on speculation, as you may negatively impact your future. If you have any questions or concerns ahead of the Budget, please get in touch with your Rathbones contact or get in touch with us via the button below. We’re always happy to help.
This information is based on our current understanding of HMRC tax regulations in the UK. Tax treatment depends on your individual circumstances and may be subject to change in future.