Are more tax rises on the way? Time to review your plans

Individuals and businesses may still be adapting to the legislative changes implemented by the Labour government, but the Autumn Budget 2025 is on the horizon. With the UK economy shrinking, many are concerned about potential tax rises as Chancellor Rachel Reeves needs to find over £40bn if she is to meet her self-imposed borrowing rules. In changing times like these, effective tax planning is more important than ever. In this blog, we review what has happened, where we are now and what might be to come.

Autumn Budget 2024

In last year’s Autumn Budget, businesses took a hit as Reeves sought to raise revenues required to fund public services. From April 2025, the rate of employers’ National Insurance Contributions increased from 13.8% to 15%. Plus, the secondary threshold decreased from £9,100 to £5,000 per year. Overall, these changes have made it more expensive to employ staff.

The economy now

Despite the recent tax rises, the government is still spending more money than it is receiving. Data from the Office for National Statistics (ONS) has found that borrowing hit £20.7bn in June, the second-highest figure since monthly records began in 1993. According to the National Institute of Economic and Social Research (Niesr), the government is on track to miss its own borrowing target by £41.2bn.

The climbdown on welfare reforms

To help close the funding gap, the government initially proposed reforms to health and disability benefits. These included restrictions on eligibility for Personal Independence Payment (PIP) and a freeze on the health-related element of Universal Credit. However, following criticism from MPs and disability rights groups, the government made concessions which reduced expected savings from £4.8bn to £2bn by 2030. The lost £2.8 billion will need to be found elsewhere, thus intensifying the focus on tax as a likely source of revenue.

Could tax rises be next?

While Reeves has so far refused to confirm whether tax rises are on the table, she has also not ruled them out. Niesr has recommended “a moderate but sustained increase in taxes” to make up the shortfall. Any further changes would come against the backdrop of tax freezes; Inheritance Tax thresholds are frozen until 2030 while NI and Income Tax are currently held until 2028. Starmer has refused to rule out extending these freezes, meaning more people could be liable to pay higher rates.

Business Relief

One area where reform has already been confirmed is Business Relief, which reduces the Inheritance Tax liability on transfers of business property and assets. You can currently get 100% Business Relief on a business, interest in a business and shares in an unlisted company. However, from 6 April 2026, the current 100% rates of relief will only apply to the first £1m of combined agricultural and business property. Thereafter, the rate of relief will be 50%, including for quoted shares which are ‘not listed’ on the markets of recognised stock exchanges, such as AIM. These changes could therefore have a notable impact on the IHT exposure of business owners and investors with substantial holdings.

Business Asset Disposal Relief: act before changes hit

Another area of concern for business owners is the upcoming reform to Business Asset Disposal Relief (BADR), which currently allows individuals to pay a reduced Capital Gains Tax rate of 14% (as of April 2025) when selling qualifying business assets. From 6 April 2026, however, this preferential rate will rise to 18%, cutting the maximum potential lifetime tax saving from £100,000 to £60,000. If you are considering selling your business or shares, acting before these changes take effect could significantly reduce your tax bill. As always, professional advice is essential to ensure you qualify and structure your disposal efficiently.

The importance of professional advice

Although we don’t know exactly what the Autumn Budget will bring, it’s clear that further tax rises are a real possibility. It’s therefore essential to regularly review your plans to ensure they continue to maximise your wealth and minimise your tax liability.

Our team will keep you updated on the latest tax changes and explain what that means for you and your business. To start a conversation, please do not hesitate to get in touch with our experts in Corporate, Company & Commercial and Wills, Trusts & Probate.

Mark Stigwood, Partner, Corporate, Company & Commercial:

mark.stigwood@attwaters.co.uk and 0203 871 0022

Lesley-Ann Mayhew, Partner, Wills, Trusts & Probate:

lesley-ann.mayhew@attwaters.co.uk and 0203 871 0127

Tony Brownlie, Partner, Wills, Trusts & Probate:

tony.brownlie@attwaters.co.uk and 0203 871 0087

Andrew Flannagan, Senior Partner, Wills, Trusts & Probate:

andrew.flannagan@attwaters.co.uk and 0203 871 0058