Article last updated 17 October 2025.
Autumn brings with it woodland walks, apple-picking, and pumpkin spice lattes. It’s also a time of year when headlines are rife with Autumn Budget speculation.
What’s in the news?
There doesn’t seem to be much off the table this year, except the one thing that could do the most to plug the regularly reappearing “black hole” in the nation’s finances, as the media call it: a rise in income tax. But this would go against the Labour Party manifesto pledge not to raise taxes for “working people”, something Chancellor Rachel Reeves is standing strong on.
The black hole – the money that needs finding, through either higher tax or lower spending, to leave the Treasury confident of meeting its fiscal rules – has reappeared despite Reeves’ evasive action in her Spring Statement. So we now find ourselves trying to guess yet again which way the Chancellor will go in the search to bolster the nation’s finances. Whom will the Autumn Budget hit the hardest?
Changes to pension tax-free cash
The biggest topic in the headlines at the moment is whether the 25% tax-free cash limit on pensions will be removed or reduced. You can ordinarily take up to 25% of your pension in a tax-free lump sum, to a maximum value of £268,275, from age 55 (age 57 from April 2028).
“We know from experience that any significant changes take time to implement, and anyone in or close to retirement should be protected,” says Faye Church, Head of the Rathbones Guildford Office. “Hasty withdrawals of tax-free cash could undo many years of careful financial planning, if not done for the right reasons.”
If you're still contributing into a pension, there’s talk that higher or additional rate tax relief may be removed, or a flat rate may be introduced for everyone. Should this happen, you might have to contribute more into a pension or contribute over a longer period of time to achieve the same goal for your retirement income. You could consider maximising your contributions ahead of the Budget, if you can, to make the most of the higher rates of tax relief.
Changes to inheritance tax (IHT)
Coming a close second to pensions is the changes to IHT. Unused pension funds are due to be counted as part of your estate from April 2027 – but many are worried there may be more to come. For this reason, we’ve already seen a sharp increase in clients seeking advice on IHT and estate planning ahead of this year’s Budget: 43% of clients with investable assets up to £5mn anticipate the need for guidance over the next year.
Also widely spoke about is a lifetime cap on gifts, or increasing from when such gifts are outside the estate from seven to ten years.
There’s still time to plan for making gifts, whilst also making sure you are using any available allowances. That includes assessing whether you’d like to keep your savings in your pension for loved ones to inherit or instead withdraw and gift that money within your lifetime. You could do this through lump sums or by using the gifting out of surplus income exemption where appropriate.
Changes to capital gains tax (CGT)
As things currently stand, there’s a CGT uplift on death, whereby inherited assets are assigned a market value based on the date of death. Gains made during the deceased person’s lifetime don’t count towards this, so no CGT is due at this point. There’s been talk that this may be scrapped. So, a double whammy of CGT and IHT payments could be on the cards in future.
Some media reports have suggested changes to private residence relief. At the moment, homeowners don’t pay CGT when selling their main home, regardless of its value. A change to this could make sales of primary residences over £1.5mn liable and much more costly to sell.
Changes to income tax thresholds
Income tax bands in the UK have been frozen until April 2028 and could be extended until 2030. This fiscal drag has pulled many people into higher tax brackets over the years, which in turn pushes the amount of income tax paid. An increase in the amount of tax paid will reduce your net income overall, so you may need to consider whether you need to make any changes to achieve your financial goals.
What should you do?
It’s very difficult to make decisions or give advice based on speculation. If any of the reforms we’ve mentioned are made, it could tempt people to withdraw cash early and gift it to avoid getting caught in the web of changes.
If you were already planning to draw the tax-free cash from your pension or gift money to loved ones, there’s no harm in accelerating these decisions ahead of 25 November. And if you are a higher rate or additional rate taxpayer and maximise your pension contributions each year, it’s also worth doing so before the budget. However, by making any decision without good reason and, purely based on speculation, you may find yourself unnecessarily worse off.
If you have any questions or concerns ahead of the Budget, please do get in touch with your Rathbones contact. We’re here 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.
