Autumn Budget preview: Views from our team and latest news feed

The economic backdrop

Rachel Reeves’ first Budget in October 2024 introduced a record £40 billion in tax rises. At the time, she indicated that such measures would not be repeated in 2025.

However, the economic landscape has continued to deteriorate. With UK growth sluggish, the global economy still fragile, and a fiscal gap now approaching £50 billion, the pressure to increase government revenue is mounting. While headline-grabbing tax rate hikes may be avoided, the focus is likely to shift toward more subtle, less visible tax increases.

Budget press feed

Here is our round up of the Budget news in the media.

Budget could boost entrepreneur tax incentives

The Chancellor is considering lifting the cap on Enterprise Management Incentives (EMIs) in the Budget, a move that would provide substantial tax breaks for small businesses. Currently, the EMI cap is £250,000 over three years for firms with assets under £30m and fewer than 250 employees. A Treasury source has indicated that the new cap could be significantly higher. EMIs allow smaller companies to offer share options to employees with no income tax or National Insurance liabilities. In 2022/23, the scheme cost the Exchequer £670m. Source: 15/10/25, Sky News

Chancellor to explore reforms to business rates on second premises

The Chancellor will look at fixing the cliff edges in business rates that can discourage small business investment and growth, according to a report from HM Treasury. Currently when a business opens a second property, they lose access to all Small Business Rates Relief (SBRR), holding businesses back from expanding. That means that a local bakery would have to pay thousands of pounds more for opening a small shop in the next village. The report confirms that the government will review how SBRR can support business growth, potentially lifting growth and living standards in the future for those who work in these small businesses. Source: 06/10/25, HM Treasury

Government to shake up homebuying system

The UK Government plans significant reforms to the homebuying process, aiming to reduce costs and transaction times. Proposed changes include requiring sellers and estate agents to provide more upfront information, which could streamline buyer searches. Housing Secretary Steve Reed stated: “Buying a home should be a dream, not a nightmare.” The reforms could save first-time buyers an average of £710 and cut a month off the buying process. However, sellers may incur additional costs of around £310 due to new assessments. A full roadmap will be released after consultations in the new year. Source: 05/10/24, Financial Times, The Independent UK.

UK sees surge in new businesses

At the start of 2024, the UK had 5.7m businesses, an increase of 191,000 from the previous year, according to the Department for Business and Trade (DBT). This growth is primarily due to 201,000 new self-employed and one-person companies, despite a decline of 9,000 in firms employing staff. Jonny Haseldine from the British Chambers of Commerce noted: “It’s really welcome to see the UK’s entrepreneurial spirit created more private businesses in 2024.” However, he warned that many SMEs face “widespread cost pressures” and urged the Chancellor to avoid new taxes on businesses. Source: 05/10/24, The Times

Manufacturers double down on green investment

Manufacturers are increasingly committed to investing in green technologies, according to a report by Make UK. Over 80% of surveyed companies plan to incorporate green growth into their business strategies within five years. Despite this commitment, barriers such as higher business rates for energy-efficient technologies persist. Verity Davidge, policy director at Make UK, commented: “It is perverse that by making such investments their business rates increase.” The organisation urges the Government to remove these disincentives in the upcoming autumn Budget. Source: 05/10/24, The I

Top bosses urge Chancellor to scrap windfall tax

Rachel Reeves is being urged to abolish windfall taxes on North Sea oil and gas producers. According to the British Chambers of Commerce (BCC), the energy profits levy has diminished investment and business confidence, putting the UK at a “competitive disadvantage.” Bosses recommend a new fiscal regime linked to oil and gas prices. Shevaun Haviland, BCC director general, stated: “If we want the UK to be more productive and to grow our economy, then we must take action to become more competitive internationally.” The report also suggests changes to business rates and airport capacity expansion. Source: 02/10/25, City AM

PM insists ‘manifesto stands’ when pressed on tax

Prime Minister Keir Starmer has reinforced his commitment to Labour’s manifesto pledges but refused to explicitly rule out potential rises to VAT. With the Treasury looking to plug a £20bn black hole in public finances, there is speculation that November’s Budget could see the Chancellor hike taxes. There has been speculation that the Government could move away from its own fiscal rules and a manifesto pledge that ruled out increases to income tax, National Insurance and VAT. Modelling from HMRC shows that raising the standard rate of VAT by one percentage point could raise £8.8bn in the 2026/27 financial year. Mr Starmer, who was asked about potential changes to VAT during an interview with the BBC’s Laura Kuenssberg, insisted that “the manifesto stands.” On the potential need for tax hikes, Paul Johnson, a former director of the Institute for Fiscal Studies, said: “If they need to raise north of £30bn or £40m it’s going to be incredibly hard to do that without raising income tax, VAT or National Insurance.” He added: “It’s such a large amount of money that getting it from the other small taxes would do economic damage.” Source: 28/09/25, City AM, The Times.

Job guarantee will target those not earning or learning

Chancellor Rachel Reeves is set to announce an initiative that will see every young person who has received universal credit (UC) benefits for 18 months without “earning or learning” guaranteed an offer of paid work. Those who refuse to take up these jobs without a reasonable excuse will face sanctions such as losing their benefits. The Chancellor is expected to tell Labour’s party conference: “I believe in a Britain founded on contribution – where we do our duty for each other, and where hard work is matched by fair reward.” Work and Pensions Secretary Pat McFadden will declare that ministers “will not stand by while a generation is consigned to benefits almost before they’ve begun.” The initiative aims to eliminate long-term youth unemployment and is part of a broader “youth guarantee” scheme. Source: 28/09/25, Financial Times, BBC News, City AM.

Pensioners warned over lump sum giveaways

Experts have warned that pensioners are at risk of hefty inheritance tax bills if they give away their lump sums. Last year, nearly 1m pension pots were accessed, with a record high of £71bn withdrawn, driven by fears that the tax-free lump sum could be reduced. The number of withdrawals also surged after it was revealed that, as of April 2027, unspent pensions will be included in estates for inheritance tax. Data shows that there has been an increase in giving as people look to pass on pension wealth that will no longer be protected from IHT. Currently, if someone dies between three and seven years after giving a gift, the value that exceeds their IHT allowance threshold of £325,000 is taxed at a reduced rate. However, regular cash gifts are exempt under “normal expenditure out of income” rules if they are part of a normal pattern and made from regular monthly income. Source: 26/09/25, Daily Telegraph.

PM acknowledges SME challenges

Sir Keir Starmer has acknowledged the significant challenges facing small businesses, particularly regarding rising costs. The Prime Minister noted that the Government’s small business plan aims to address issues including late payments and supply chain problems. He emphasised the need for economic stability, saying it “has to be the foundational stone of this government.” Source: 26/09/25, BBC News.

Small firms face tax relief blow

The Federation of Small Businesses (FSB) has warned that start-ups and sole traders will be hit by changes that will remove tax relief on business rates. Small business rate relief (SBRR) reduces firms’ annual business rates bill, with discounts of 100% on some properties. However, the Valuation Office Agency has started to disqualify firms in shared office spaces from receiving a discounted rate. The FSB, which says up to 150,000 small businesses and sole traders will be affected, has called on the Government to ensure relief remains in place. Describing SBRR as a “lifeline” for many small firms, FSB policy chair Tina McKenzie said: “This creeping change is really limiting growth among small businesses.” She added: “We want to work with Government to create a fair business rates framework.” Source: 27/09/25, The Mail on Sunday.

London offices face ‘stealth tax’ hit

From April, businesses in London’s prime offices will face an estimated £600m increase in business rates, according to tax advisory group Ryan. Chancellor Rachel Reeves has outlined plans to bring in a “fairer business rates system” with lower business rates for smaller retail, hospitality and leisure properties funded by a higher band for premises with a rateable value above £500,000. This, officials argue, will help to “level the playing field.” Alex Probyn, Ryan’s European practice leader of property tax, said: “Thousands of large offices, the kind that attract global investment and house the UK’s biggest employers, are being asked to foot the bill for high-street tax breaks.” Ryan said the “stealth tax threatens London’s status as a global financial centre.” Source: 27/09/25, The Times

PM considers axing top talent visa fee

Sir Keir Starmer is considering eliminating visa fees for top global talent to enhance the UK’s appeal. The PM’s global talent task force is exploring the initiative to attract leading scientists and digital experts. Source: 22/09/25, Financial Times.

Chancellor urged to take 2p off employee NI and add it to income tax

Rachel Reeves has been advised by the Resolution Foundation to increase income tax by 2 pence while reducing national insurance by the same amount. The change could generate £6bn, impacting pensioners, landlords and self-employed individuals but sparing salaried workers. The foundation also suggested raising sugar taxes and reducing the VAT threshold from £90,000 to £30,000 – a move that would raise £2bn a year by 2030. Adam Corlett, the principal economist at the Resolution Foundation, said: “These sensible reforms would raise revenue while doing the least possible harm to workers and the wider economy. And by acting decisively, the Chancellor can turn her full attention back on to securing stronger economic growth.” The left-leaning think tank’s former boss is pensions minister Torsten Bell who is now playing a key role in writing November’s Budget. Source: 22/09/25, Daily Mail, The Guardian, The Independent, The Times.

Reeves to review tech tax policy

Rachel Reeves, the Chancellor, will review Britain’s Digital Services Tax amid pressure from Donald Trump to abolish it. This assessment will coincide with the upcoming Budget announcement. The Digital Services Tax imposes a 2% levy on the British revenues of major social media companies, predominantly American firms. Source: 21/09/25, The Daily Telegraph.

Reducing public sector workforce would improve fiscal position

Data from the Office for National Statistics (ONS) show the public sector workforce has expanded to 6.2m, up by 75,000 in a year and the highest figure in 14 years. This comes as private sector companies cut back on hiring following an increase in employment taxes and the minimum wage earlier this year. Since before the pandemic, the number of people employed by the state has risen by nearly 600,000, while productivity in the public sector has decreased by 4.2%, according to the ONS. Jagjit Chadha, an economics professor at Cambridge University, says the Chancellor should strip back the number of people working for the state to improve her fiscal position. Their productivity must be improved too, to reduce the need for tax hikes or spending cuts. Source: 21/09/25, The Daily Telegraph.

Rachel Reeves expected to impose 20% VAT on all cab journeys

The Chancellor is considering proposals to impose 20% VAT on all taxi journeys, which would raise around £750m a year for the Treasury. A spokesman for the Stop the Taxi Tax campaign, which has been set up to oppose the move, said: “The Taxi Tax breaches Labour’s manifesto promise not to raise VAT. Not only that, it will hit those living in rural communities especially hard, who lack reliable and accessible public transport.” Source: 21/09/25, The Sunday Telegraph.

New home approvals hit record low

Official data shows that the number of planning approvals for new homes has fallen to a record low. Fewer than 29,000 projects were granted permission by councils in England in the year to June 2025, while 7,000 applications were granted permission in the April-June quarter, marking the lowest three-month figure since records began in 1979 and an 8% fall on the same period a year earlier. While approvals have fallen, the proportion of applications given the go ahead by councils has risen. Around three-quarters of applications were approved in the year to June, up from 71% the year before. Housing Secretary Steve Reed said the number of planning approvals is “unacceptable,” adding that he will “leave no stone unturned” as he looks to deliver on the Government’s promise to add 1.5m homes by the next election. Source: 18/09/25, BBC News.

BoE warns of Budget tax concerns

The Bank of England says fears of further tax increases are negatively impacting the economy. The Bank’s agents, who speak to business leaders across the country, said bosses have voiced concern over potential tax rises in the upcoming Budget. Reflecting on why inflation is almost double the Bank’s 2% target, Governor Andrew Bailey cited the increase in employer National Insurance contributions “and pay growth in sectors with a large share of employees at or close to the National Living Wage.” Economists estimate that Rachel Reeves needs to identify £20bn to £50bn in tax increases or spending cuts as she looks to plug a gap in public finances. Source: 18/09/25, The Daily Telegraph.

Ministers urged to drive up productivity, not taxes

Sir Clive Cowdery, founder of the Resolution Foundation, has urged Labour to shift its focus from taxing the rich to enhancing productivity growth. He highlighted that living standards have stagnated for two decades, with typical incomes at £31,000, far below the £51,000 expected if growth had continued at the rate seen in 2005. Sir Clive said: “The overriding question facing Britain is not who should benefit from the spoils of growth, but how we get back to having some spoils of growth to share.” He emphasised that future improvements in living standards depend on economic growth rather than increased taxes. Source: 17/09/25, The Daily Telegraph.

Chancellor warned over further tax hikes

Stuart Morrison from the British Chambers of Commerce has warned that rising National Insurance costs and tariffs are squeezing company margins, saying: “Businesses will be worried by inflation holding at 3.8% at a time when cost pressures continue to bite.” He added: “Our message to the Chancellor is clear – there must be no new tax rises on business. Firms cannot provide the economic growth we all need if they continue to be hampered by rising costs.” Elsewhere, Tom Clougherty from the Institute of Economic Affairs has highlighted the ongoing cost-of-living crisis, attributing it to poor economic management and rising taxes. Source: 17/09/25, Daily Express.

London would be hardest hit by property tax

A proposed national property tax on homes valued over £500,000 could significantly impact London homeowners, according to estate agent Benham and Reeves. The Treasury is said to be considering a tax which would replace stamp duty and a report from the think-tank Onward suggests an annual rate of 0.54% to be paid on home values between £500,000 and £1m – with a higher rate for higher-valued homes. Critics argue this tax disproportionately affects London, where 53.3% of property sales exceed £500,000. Source: 17/09/25, The Standard.

Older homeowners release £636m to avoid IHT hit

Older homeowners have released £636m from their properties in Q2 2025, a 10% rise year-on-year, as demand for equity release surged following Chancellor Rachel Reeves’s inheritance tax reforms. The average new loan was £126,422, according to the Equity Release Council, with many over-55s using lifetime mortgages to gift money to children and grandchildren before new pension rules bring them into the inheritance tax net from April 2027. Wealthier households – particularly those with estates above £3m – are increasingly seeking advice, as more estates will now exceed the £325,000 per person inheritance tax allowance, or up to £1m for couples including the main residence. Source: 15/09/25, The Daily Telegraph.

UK urged to back its innovators

A report by the Purposeful Company think-tank has proposed reforms designed to support the growth of UK firms amid a surge in foreign takeovers. The think-tank has called for the creation of a pension “super fund” to back later-stage venture capital funding, support IPOs and boost the stock market. Julia Hoggett, chief executive of the London Stock Exchange, said that while the UK has “no shortage of consequential, purposeful companies scaling at pace … we will do those companies a disservice … if we do not ensure that we have the capacity to back them with domestic risk capital.” She added: “Ensuring that companies can start, grow, scale and most importantly stay here requires the UK to support its own innovators and have the public policy to do so.” This comes amid an increase in London-listed firms being taken private by foreign investors. Source: 15/09/25, City AM.

State pension hike could boost tax take

The state pension is likely to rise by £560 a year in April, with the triple lock pledge set to deliver a 4.7% increase. Under the triple lock, the annual state pension increase follows the highest of inflation, average earnings growth or 2.5%. While inflation is forecast to be 4% in September, Office for National Statistics data shows that pay including bonuses for the three months to July was up 4.7%. An increase at this rate would see the new flat-rate state pension rise to £12,534.60 a year, while the old basic state pension would go up £431.60 to £9,607 a year. Former Pensions Minister Sir Steve Webb, notes that the standard rate of the new state pension is “creeping ever closer to the frozen personal tax allowance,” which currently stands at £12,570 and is set to remain at the same level until 2028. Baroness Ros Altmann, another former Pensions Ministers, says the cost of collecting the tax will outstrip the money brought in, warning: “The amounts of tax owed will be tiny.” Dennis Reed, director of over-60s campaign group Silver Voices, has urged officials to stop the “old age tax trap plunging thousands more pensioners into poverty.” He added: “It would add insult to injury if the Chancellor makes things worse by extending the freeze as has been mooted.” Source: 16/09/25, City AM, BBC News, Daily Express.

OBR to downgrade productivity forecast

The Office for Budget Responsibility (OBR) has reportedly told the Chancellor that it will downgrade productivity forecasts for the UK economy. A Treasury source said: “We don’t know precisely what they are going to say on productivity, but we have been given indications there will be a downgrade.” The source pointed to the Conservative government’s poor record on productivity, arguing that Labour “are the ones picking up the bill.” It is noted that a downgrade to growth forecasts would hit the Chancellor’s fiscal buffer. The National Institute of Economic and Social Research says Rachel Reeves will have to find up to £50bn in extra taxes or savings to rebuild her headroom. While Capital Economics has suggested that the Chancellor faces a shortfall of around £30bn, analysts at Deutsche Bank and JPMorgan believe it may be lower. Source: 16/09/25, Financial Times.

Pensions raid not off the table

Torsten Bell, the pensions minister, has not dismissed the possibility of pension cuts in the upcoming Budget. He described last year’s tax increases as “difficult but fair choices” necessary to address the economic “doom loop.” While he refrained from commenting on specific Budget plans, he acknowledged the need for more funding for public services. Bell, who recently took charge of Budget preparations for Rachel Reeves, has previously advocated for reforms, including reducing the tax-free lump sum. Source: 11/09/25, The Daily Telegraph.

Big retailers at risk from tax changes

Hundreds of large UK retailers could face closure under government plans to introduce a higher business rates band for properties valued above £500,000, the British Retail Consortium (BRC) has warned. The group said around 400 supermarkets and department stores are at risk, threatening 100,000 jobs and £100m in lost local revenue. The BRC argued these stores already pay a disproportionate share of rates and face mounting cost pressures. However, the Federation of Small Businesses countered that larger firms should contribute more to help struggling smaller companies. The Government said reforms aim to reduce “cliff edges” and create permanently lower rates for retail, hospitality, and leisure, with further measures to be detailed in November’s budget. Critics argue the system is outdated, penalising physical retailers compared to online competitors. Source: 11/09/25, The Times.

Chancellor concedes tax hikes may hinder growth

Rachel Reeves has acknowledged that tax increases could negatively affect economic growth while addressing the British Private Equity and Venture Capital Association summit. The Chancellor said: “I do recognise that tax policy does impact economic growth. One of the reasons why I spoke about the need for spending restraint at Cabinet yesterday is that I recognise [that] to make sure that the numbers add up it’s not just what you bring in, it’s also what you’re spending. But crucial for all of this is economic growth. If you can grow the economy, you can make these decisions around tax and spend so much easier.” The Chancellor’s comments come after the head of the Confederation of British Industry (CBI) called on her to ditch Labour’s manifesto commitment not to hike taxes on working people. Source: 10/09/25, The Daily Telegraph, City AM, The I, The Independent UK.

Tax raid on partnerships could raise £2bn

Chancellor Rachel Reeves is reportedly considering a plan to impose National Insurance (NI) on partnerships, potentially raising nearly £2bn annually. This plan, presented by the Centre for the Analysis of Taxation (Centax), could have an impact on 190,000 professionals, including GPs, lawyers and solicitors, accountants and financial advisers. The report suggests that 98% of the revenue would come from the top 10% of earners. CenTax described the fact that companies pay NI while partnerships do not as “a particularly conspicuous anomaly” in the tax system, adding: “Partnerships face significantly lower effective tax rates on their labour costs than companies, for no good reason.” The report argues: “The tax privilege offered to partnerships results in economic distortions that are bad for productivity and growth.” Source: 06/09/25, The Sunday Telegraph.

Pension withdrawals surge amid tax concerns

The amount withdrawn from UK pensions increased by more than 60% in the 2024/25 financial year, climbing to £18.1bn from £11.25bn the year before. The number of savers taking 25% tax free cash jumped by 33% to 111,869, according to figures from the Financial Conduct Authority. This comes after ministers announced that pensions would be subjected to inheritance tax by April 2027. In the six months to the end of March, £10.43bn was withdrawn by pension savers, marking a 36.5% increase on the six months before the tax plans were set out in the Budget. It has been suggested that the Chancellor may reduce the size of the tax-free lump sum as part of efforts to tackle a black hole in public finances. Source: 05/09/25, Financial Times, The Daily Telegraph, City AM, Daily Mail.

Taxes on homeowners could hit downsizers

Downsizers could face a heavier tax burden after the Budget, with the Chancellor reportedly considering new taxes on sellers of homes worth more than £500,000. The move may replace the current stamp duty system, and could be accompanied by capital gains tax on primary residences over £1.5m. Industry experts warn such measures would hit older homeowners hardest, particularly those whose properties have appreciated significantly over decades, and may discourage them from moving. This could have a knock-on effect on the wider housing market, with downsizers accounting for around 40% of property sales last year. Source: 04/09/25, The Daily Telegraph