It’s important to stress: these are rumours, not facts. The official Budget will be delivered next week, and only then will we know the reality. That said, understanding the current chatter can help businesses and individuals to think about and prepare for potential changes.

A Tax-Raising Budget?

The consensus among commentators is that this will be a tax-raising Budget, driven by the need to close a significant fiscal gap. Although recent Office for Budget Responsibility (OBR) forecasts suggest the shortfall may be smaller than feared (around £20 billion rather than £30 billion) the Chancellor is reportedly keen to increase her “headroom” against fiscal rules if possible.

This means new measures to boost revenue are widely expected. Here’s what’s being talked about:

Income Tax and National Insurance

• Rates unchanged, thresholds frozen: Plans to raise income tax rates appear to have been abandoned, but the freeze on personal tax thresholds could continue for another two years, until 2030. This could push the number of higher-rate taxpayers above 10 million for the first time.
• Dividend tax increases: Reports suggest the Chancellor may raise the basic rate of dividend tax by four points to 12.75%, alongside a further cut to the tax-free dividend allowance (currently £500).
• Savings allowances under pressure: The personal savings allowance is expected to remain frozen, and there are rumours of a reduction in the annual Cash ISA limit from £20,000 to £12,000.
• National Insurance Contributions (NICs) on rental income: Persistent speculation suggests landlords’ rental income could be subject to NICs, although proposals for an NI-style levy on LLP members appear to have been dropped.

Pensions

Salary sacrifice pension schemes may face new restrictions. A cap of £2,000 per year on tax-free contributions is being discussed, with amounts above this attracting NI charges (albeit tax relief should still apply within the normal limits).

The tax-free lump sum limit for pension withdrawals (currently 25% of the pot, capped at £268,275) is expected to remain unchanged.

Property Taxes and Capital Gains

• ‘Mansion tax’ on high-value homes: One of the most talked-about ideas is an annual surcharge on properties worth over £1.5m or £2m. A 1% levy on the value above the threshold could mean an extra £5,000 per year for a £2m home.
• Deferral options: Owners on modest incomes may be allowed to defer payment until sale or death, with the tax deducted before inheritance tax is calculated.
• Capital gains tax tweaks: While rumours persist about changes to private residence relief for very high-value homes, there seems little talk of further CGT rate hikes this time.

Inheritance Tax

The rules on lifetime gifting are under review. Possible changes include:

• A lifetime cap on tax-free gifts (potentially £50,000–£100,000).
• Adjustments to the seven-year rule.
• Restrictions to the relief available for gifts of surplus income.
• Revisions to business and agricultural property reliefs, with transitional arrangements for older farmers under discussion.

Business Taxes

• Business rates reform: Expect a move from the current “slab” system to a “slice” approach, and possibly measures to protect small businesses.
• Gambling industry levies: A rise in taxes on gambling (excluding horse racing) could raise around £1 billion.

VAT and Indirect Taxes

• ‘De minimis’ rule scrapped: Overseas retailers may lose the ability to send goods under £135 to UK consumers without VAT or customs duties.
• Energy bills: Cutting VAT on energy or shifting levies into general taxation is under consideration.
• Private hire services: A flat 20% VAT charge on all private hire bookings (Uber, Bolt) is rumoured.
• Other levies: Possible increases in alcohol duties, expansion of the sugar tax to milk-based drinks, and even a pay-per-mile charge for electric vehicles are being discussed.

Tax Administration

HMRC may introduce a US-style whistleblower reward scheme, offering up to 30% of recovered tax to informants in large-scale fraud cases.

What Does This Mean for You?

If even some of these measures materialise, they could have significant implications for individuals, families, and businesses – from higher dividend taxes and frozen thresholds to new property levies and pension changes.

However, it’s crucial to remember: none of this is confirmed. These are informed rumours, not policy announcements.

Next Steps

The Budget will be delivered by Chancellor Rachel Reeves on 26 November 2025. SRLV will share our initial reaction on the day of the announcement, followed by a detailed analysis report the day after and a podcast episode the following week, where our tax team will explore the changes and reforms in depth.

In the meantime, if you’d like to discuss how potential changes could impact your tax position – or explore planning opportunities – get in touch with one of SRLV’s Tax Specialists today.

 

This material is published for the information of clients and contacts. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or SRLV LLP.