Over the next few months, all eyes will be on Chancellor Rachel Reeves as she delivers her first Autumn Budget. While no official date has been set, it’s expected between late October and early November.
And make no mistake — this one’s shaping up to be a big one.
The Backdrop: A Budget Under Pressure
Remember when Rachel Reeves was outraged at the last government’s “shocking” £22 billion fiscal black hole?
Well… fast-forward 12 months and the Treasury are now stating she’s managed to double it!! Turns out, when it comes to public finances, the hole only ever seems to get deeper, regardless of who’s holding the shovel.
The Treasury insists she needs to plug this gap while still delivering on big-ticket promises: boosting productivity, investing in infrastructure, and fixing housing. The problem is, as anyone who’s ever tried to redecorate their kitchen on a maxed-out credit card knows, there’s not much room for manoeuvre without finding more money somewhere.
And in politics, “finding more money” almost always means you and I will be paying more tax — just in new and imaginative ways.
Which brings us to the fun part — trying to work out what the Chancellor might do.
Note: Please remember this is a bit like weather forecasting in Britain: we can’t be certain what will happen, but we can usually see the storm clouds gathering.
So let’s look at the Budget rumour mill:-
- Inheritance Tax (IHT) Reforms
I want to start with inheritance tax as few areas are attracting as much speculation as IHT. Rumours include:
- Introducing a Lifetime Gifting Cap – Currently, the Inheritance Tax rules allow you to give away up to £325,000 (the “nil-rate band”) every seven years without triggering a tax bill. After seven years, the clock resets, meaning that over a lifetime, a wealthy individual in their 50s or 60s could pass on substantial sums — often well over £1 million — entirely free of IHT if planned carefully. A proposed lifetime gifting cap would close this opportunity, replacing the resettable seven-year rule with a single, fixed ceiling on tax-free gifts for your entire lifetime. Once you hit the cap, any further gifts could face an immediate tax charge.
- Tighter taper relief – Gifts made within seven years of death could face higher tax rates. In simple terms, the current rules gradually reduce the amount of Inheritance Tax payable on gifts made more than three years before death. If taper relief is tightened, that sliding scale could become less generous — meaning more of the gift’s value is taxed, even if it was given away years before you passed away.
With pensions due to fall into the IHT net from April 2027, now is definitely the time to start thinking about how you plan for Inheritance Tax. For many people, pensions are one of their largest assets, often built up precisely because they’ve been outside the IHT trap — but that advantage will soon be gone. If you wait until the new rules take effect, your options could be far more limited.
Why?
Because these reliefs cost the Exchequer billions — and in the current climate, anything that looks like a “loophole” for the well-off is a political sitting duck.
- Wealth Tax Talk
A full-blown wealth tax is still considered unlikely — partly because it’s a nightmare to value private assets and partly because it would be a political grenade.
However, “not a wealth tax” taxes are more plausible:
- Aligning CGT with income tax rates – Currently, most gains are taxed at lower rates than income. Aligning the two could mean a jump from 20% (or 24% for residential property) to as high as 40% or 45% for higher earners, significantly increasing the tax bill when selling investments, second homes, or businesses.
- Reducing pension tax reliefs – At present, higher and additional rate taxpayers get tax relief at their marginal rate when contributing to pensions. Reducing this to a flat rate (say 25% or 30%) would make pensions less attractive for wealthier savers and reduce the incentive to contribute large sums.
Stealth taxes are politically neat — nobody gets a scary bill in the post, but your take-home pay mysteriously shrinks.
- ISAs and Other Savings Vehicles
Some reports suggest the Chancellor could restrict how much you can put into Cash ISAs each year. It’s unlikely to raise huge sums, but it looks like “everyone’s doing their bit” — and that always plays well in speeches.
4. Threshold Freezes & Relief Cuts
The freeze on personal allowances and higher-rate thresholds has already pulled millions into higher tax bands. This happens because wages often rise over time, but the tax bands stay the same — meaning a bigger slice of your income is taxed at higher rates even if your standard of living hasn’t really improved. Extending this freeze would quietly raise billions more — and best of all (for the Treasury), most people don’t notice until their payslip looks a bit sad. Reeves, of course, seems to think most people won’t see this as a tax on working people — a bit like when governments raise National Insurance and insist it’s something entirely different.
What This Means for You
If even half of these rumours materialise, the knock-on effects could be significant:
- Estate Planning – Lifetime gifting, trusts, and pension nominations may need revisiting.
- Investment Planning – Timing of sales and asset switches could change.
- Business Owners & Farmers – Succession planning reliefs may no longer look as generous.
- High Earners – Pension tax relief and frozen thresholds could erode retirement plans.
How to Prepare Without Overreacting
While it’s tempting to take drastic action now, rushing in based on rumour alone can backfire. Also, like I’ve always said “I can only advise on current legislation” So, whilst a calmer approach works best, I see no reason why you still should not be:
- Reviewing your estate plans – Update wills, trusts, and nominations.
- Run “what if” scenarios – Test your plan against likely tax changes.
- Be ready to act – Have strategies in place you can implement quickly if the rules change.
- Stay informed – Some changes will come with transitional rules; being first to act can be a big advantage.
In summary: This Autumn Budget could be one of the most consequential in years. Reeves may have criticised her predecessors for the nation’s finances, but now she’s in the hot seat — and with a £50 billion hole to fill, it’s unlikely she’ll resist wanting a piggy back on ‘those with the broadest shoulders’.
The trick is to be ready — so you can protect your wealth and keep more of what you’ve worked for, no matter what colour the Chancellor’s rosette.
If you’d like me to run a pre-Budget financial check-up for you, covering IHT, CGT, pensions, and gifting strategies, get in touch.
Brian
