With the arrival of autumn comes growing anticipation around the Chancellor’s upcoming Budget and the potential tax changes it may bring.
This year, speculation is particularly widespread, with reports focusing on potential tax increases affecting wealthier households, including changes to Capital Gains Tax (CGT) on high-value properties, as well as reforms to pensions and Inheritance Tax (IHT). While no measures will be formally announced until 26 November 2025, this article outlines the key areas under consideration, the potential implications for financial planning, and why a measured, strategic approach remains essential.
What’s on the table? Key rumours to watch
1. Capital Gains Tax (CGT) on high-value homes
Currently, when you sell your main residence, you benefit from Private Residence Relief, meaning no Capital Gains Tax (CGT) is due on the property’s increase in value. However, there’s less certainty going forward.
According to reports, the Chancellor is considering scrapping this exemption for properties valued over £1.5 million. Gains above the annual CGT allowance (£3,000) could be taxed at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
Impact: If introduced, this could have far-reaching effects – discouraging downsizing, delaying moves, or deterring long-term home ownership as a wealth strategy.
2. Pension tax relief
One of the most widely speculated changes is to the pension tax relief system. At present, any contributions receive relief at the marginal rate – which is highly beneficial for higher earners. The government may replace this with a flat rate of 25-30%, which could reduce the incentive for those in the 40-45% tax brackets to save into pensions.
Impact: While a flat rate might benefit some basic-rate savers, higher earners could see significant reductions in tax efficiency.
3. Further freezing on personal tax thresholds
Since 2021, the personal allowance and income tax thresholds have been frozen. This fiscal drag pulls more people into higher tax brackets over time – a quiet but powerful form of tax increase. While the freeze is due to end in April 2028, extending it further could raise billions without making headlines.
Impact: For those with growing incomes, the real tax burden quietly rises year on year.
4. Inheritance Tax (IHT) and capping lifetime gifts
Already, we will be seeing pensions fall into IHT scope. From April 2027, unused pension pots will no longer be automatically excluded from a person’s estate on death – a major shift in IHT planning which requires some foresight and professional guidance.
With the Autumn Budget coming up, another major IHT change is now being closely watched:
Proposals may limit the value of gifts made during a person’s lifetime, and before death, that can be exempt from IHT. Under current rules, there is no lifetime limit on tax-free gifting, providing you survive seven years after making the gift. Introducing a cap would restrict the total value individuals can pass on during their lifetime without incurring IHT.
Impact: High-net-worth individuals relying on gifts and pensions as vehicles for wealth transfer may need to revisit estate plans.
5. Stamp duty
According to reports, the Chancellor is considering replacing stamp duty on owner-occupied homes with a new tax paid by the seller, rather than the buyer. This proposed change would apply to properties sold for over £500,000, potentially shifting the tax burden at the point of sale. Currently, first-time buyers pay stamp duty only on the portion of a property’s price above £300,000, provided the total value is under £500,000.
Impact: Shifting stamp duty from buyers to sellers could ease entry for first-time buyers but may reduce sellers’ proceeds, discourage downsizing, and put downward pressure on house prices.
6. Council tax
With regards to council tax, rumours have been circulating about a potential shake-up to the current system. Rather than tax being structured into bands (A-H in England) which are currently set by local authorities, it’s rumoured that tax bills will be determined by the value of the home alone. Details of how this would work in principle, have not been confirmed.
Impact: This would likely increase tax bills for owners of higher-value properties while reducing them for those in lower-value homes.
What should you do now?
It might be tempting to act quickly, but it’s important to remember that at this stage, it’s all speculation. Reacting to unconfirmed changes can be riskier than staying the course. Here’s why:
- Taking pension cash early could unintentionally trigger tax penalties under pension recycling rules if reinvested.
- Making large gifts too soon could compromise your own future financial security – especially with unknowns like care fees or medical costs.
- Selling property to “beat the tax” may incur costs that outweigh any hypothetical savings.
Plan, don’t panic
Instead of making irreversible moves, consider these smart steps that align with current rules:
- Maximise tax-efficient contributions
Use your pension and ISA allowances while the existing reliefs and exemptions are still available. These remain among the most tax-efficient vehicles for long-term wealth growth.
- Review your estate plan
If your estate could exceed the IHT threshold, it may be worth reviewing your strategy – but do so with professional advice. Pre-emptive gifting or trust planning could still make sense, but only if it aligns with your long-term needs.
- Check the value of your primary residence
If your main home is worth over £1.5m, it may be worth discussing the implications with your adviser – not to act hastily, but to understand potential future exposure.
[i] Speculation is part of the political landscape, particularly in the lead-up to a Budget. But well-built financial plans are able to withstand uncertainty and work with the tides. If you have questions or want to review your current strategy ahead of the Budget, Lumin can assist with a pre and post-Budget review. Call 03300 564 446 to find out more, or get in touch via our contact form.
