Four months till the Autumn Budget 2025: Let's get Prepared

The Autumn Budget 2025 is shaping up to be a pivotal moment for UK tax policy. With mounting fiscal pressures, a recent welfare U-turn, and ongoing economic challenges, the government is widely expected to announce measures that will increase the tax burden for both individuals and businesses from April 2026 onwards. Here’s what you need to know about the likely changes, their impact, and—crucially—how to prepare so you don’t get caught out or end up cash flow negative.

What Tax Changes Are Expected?

Income Tax Threshold Freeze?

Chancellor Rachel Reeves is expected to extend the freeze on income tax thresholds, a move that effectively increases the tax burden as wages rise. This “stealth tax” means more people will be pulled into higher tax bands without any change in the income tax rates themselves.

According to HMRC, the number of higher-rate taxpayers is projected to rise to over 7 million in 2025/26, with the total income tax take set to hit £323 billion. The freeze is already drawing in more pensioners and middle-income earners, and if extended, will continue to do so for years to come .

Inheritance Tax (IHT) Changes

From April 2026, the government plans to cap full inheritance tax relief at £1 million, with only 50% relief above that. This is a significant shift, especially for those with agricultural or business property, and could see many families facing much larger IHT bills unless the policy plan does go ahead.

Property and Business Taxes

Large industrial firms are set to face a new business rates levy from next April, costing around £685 million annually. This is part of a revaluation intended to fund relief for high street retail, leisure, and hospitality sectors, but it means higher fixed costs for many businesses .

VAT on Private School Fees

The removal of VAT exemption for private schools will push fees up by over 17% in the next academic year, according to recent analysis. This change is expected to raise £1.8 billion a year by 2029-30, but it’s already leading to falling student numbers and could have wider knock-on effects for families and the education sector .

Other Possible Measures?

There is speculation about further changes, such as adjustments to pension tax relief, a possible defence or health and social care levy, and tweaks to capital gains tax or ISAs. The government is under pressure to find new revenue sources, and these areas are all under review .

Why Are These Changes Happening?

The government’s recent reversal on welfare cuts has left a £1.5 billion hole in the budget, increasing the likelihood of tax rises or spending cuts. The Institute for Fiscal Studies (IFS) has warned that taxes are likely to remain high for decades, and that further increases may be needed to meet fiscal rules and fund public services .

What Should Individuals Do Now?

Review Your Tax Position and Plan Ahead

With more people being dragged into higher tax bands, it’s vital to review your income and tax position now. If you’re close to a threshold, consider whether you can defer income, make pension contributions, or use other allowances to stay in a lower band .

Maximise Available Reliefs and Allowances

Take full advantage of current tax reliefs before they are potentially cut. This includes making the most of your ISA allowance, pension contributions, and any available capital gains tax exemptions. If you’re eligible for the child tax credit or other credits, ensure you claim them while they last .

Estate and Inheritance Planning

With changes to inheritance tax on the horizon, now is the time to review your estate plan. Consider making gifts, setting up trusts, or restructuring your assets to take advantage of the current, more generous reliefs before the new caps come in .

Tax-Efficient Investing

Consider shifting investments into tax-advantaged accounts, such as ISA’s or pensions, and use tax-loss harvesting to offset gains. Holding investments for more than a year can also help you benefit from lower long-term capital gains tax rates .

Regularly Review and Adjust Your Financial Plan

Tax planning is not a one-off exercise. Review your financial plan regularly, especially as new announcements are made, to ensure you’re making the most of available reliefs and not being caught out by changes.

What Should Businesses Do Now?

Monitor Tax Developments and Stay Flexible

Keep a close eye on government announcements and work with your tax advisors to model the impact of potential changes. Scenario planning can help you understand how different tax rises or relief cuts will affect your cash flow and profitability .

Optimise Cash Flow Management

With higher taxes and business rates on the horizon, robust cash flow management is essential. Track your cash flow closely, forecast for different scenarios, and consider strategies like deferring income or accelerating deductible expenses to smooth out your tax liabilities .

Leverage Available Tax Credits and Reliefs

Make sure you’re claiming all industry-specific tax credits and reliefs available to your business. For example, R&D credits, capital allowances, and other sector-specific incentives can help offset higher tax bills .

Invest in Technology and Advisory Support

Implementing advanced tax compliance software can help you stay on top of changing rules and avoid costly errors. Consider engaging a tech-forward tax advisory service for real-time updates and compliance monitoring .

Consider Financing Options

If you anticipate cash flow challenges due to higher taxes or rates, explore business loans or lines of credit. Interest on these can often be deducted from taxable income, helping to manage your tax bill and maintain liquidity . We work with partners who can help you with funding and/or grants, please get in touch.

Lessons from History

Looking at past tax rises, the impacts are clear: higher taxes can reduce disposable income, discourage investment, and prompt some individuals and businesses to relocate or change their behaviour. However, those who plan ahead—by maximising reliefs, managing cash flow, and seeking professional advice—are best placed to weather the changes and even find new opportunities .

Final Thoughts

The Autumn Budget 2025 is likely to bring a mix of tax rises and relief cuts, with the effects felt from April 2026 onwards. By acting now—reviewing your tax position, maximising reliefs, planning for inheritance, and managing cash flow—you can avoid nasty surprises and ensure you remain financially resilient.

As always, staying informed and seeking expert advice is the best way to navigate an evolving tax landscape and protect your wealth or business for the future.

This blog is for informational purposes only and does not constitute financial advice. Please consult with our tax tax for advice tailored to your individual circumstances.