As summer fades into autumn, it’s once again time to look ahead to the Autumn Budget 2025, and the speculation about potential tax rises has already begun.
Last year, Chancellor Rachel Reeves announced her discovery of a “£22 billion black hole” in the public finances, leading to tough measures such as restricting the Winter Fuel Payment. This year, the headlines are similar, but the hole is caused by policy reversals.
The budget gap for 2025
Two major U-turns have added to government spending:
- Winter Fuel Payment: Reversing plans for strict means-testing has left a £1.25 billion bill.
- Disability benefits reform: Scaling back earlier proposals has created an additional £5 billion cost.
Coupled with slowing economic growth, these factors have sparked debate over where the government might look for revenue, and which taxes could be targeted.
Taxes the Chancellor says are off-limits
Rachel Reeves has ruled out increases to income tax, national insurance, and VAT for “working people”. That leaves other areas firmly in the spotlight.
Possible upcoming tax changes
Further freeze on income tax thresholds
The personal allowance and main income tax thresholds, set by the UK Government for savings and dividend income, and for non-Scottish taxpayers, were frozen for four years by Rishi Sunak, then extended by Jeremy Hunt to 2027/28. Reeves could push this freeze all the way to April 2030, increasing the number of people dragged into higher tax bands (known as “fiscal drag”).
Pension contribution tax relief
Pension tax relief has long been seen as a tempting source of revenue. A move to a flat rate of relief for all taxpayers, replacing the current system where higher earners benefit more, could raise billions. This would impact both personal and workplace pensions across Scotland.
A possible wealth tax
The idea of a wealth tax, taxing net assets rather than income, has resurfaced, with former Labour leader Neil Kinnock among those supporting it. While the government hasn’t ruled it out, a July 2025 House of Commons Public Accounts Committee report admitted HMRC currently has no full overview of individual wealth, making such a tax complex to implement.
Why a financial review matters now
With Autumn Budget 2025 changes on the horizon, now is a good time to review your personal finances. Whether it’s adjusting pension contributions, rethinking investment strategies, or planning for potential new taxes, acting early can make a difference.
Need expert tax planning ahead of the Budget?
Our tax and business planning services can help you prepare for changes and protect your income. We work with individuals and businesses across Scotland to create strategies that keep you one step ahead of the Chancellor.