What could we expect of the UK's November budget?

September 2025

By Will Glyn

ISA Reform

The government has signalled its ambition to build a stronger retail investment culture in the UK, encouraging more people to invest for the long term instead of leaving their savings in cash. We’re expecting further details in the upcoming Budget.

A logical first step would be to merge Cash ISAs and Stocks & Shares ISAs into one main product. At present, savers are forced to choose between the two, which doesn’t make much sense. Only 16% of ISA holders currently have both, highlighting the need for simplification.

According to AJ Bell, more than £100 billion currently sitting in Cash ISAs could potentially be redirected into long-term investments if these barriers were removed.

Tax-Free Cash and Pension Relief

Every Budget tends to trigger speculation around potential changes to pensions tax-free cash and tax relief. Ahead of the last Budget, these rumours reached such a level that many people rushed to withdraw their pensions tax-free cash or increase contributions in fear of losing these benefits.

This uncertainty undermines confidence in retirement saving. To restore stability, Chancellor Rachel Reeves could consider introducing a “Pensions Tax Lock” – a pledge not to alter tax-free cash or pension tax relief for the remainder of this Parliament. Such a move would demonstrate government support for those preparing for retirement.

National Insurance on Retirement Income

The Prime Minister and Chancellor have promised not to raise NI, VAT, or income tax rates for working people. However, applying NI to retirement income might technically avoid breaking this pledge. That said, such a move would be politically risky, as it would be perceived as penalising pensioners.

Inheritance Tax

Inheritance Tax (IHT) remains a politically sensitive subject. Recent policy changes have already targeted farmers and pensions, and another shift would be seen as a third strike.

The Chancellor faces a difficult fiscal challenge, with some estimates suggesting £50 billion must be found to meet fiscal rules. With the main taxes effectively ruled out, IHT is one of the few areas left to raise revenue.

Potential options include lowering thresholds or extending the seven-year gifting rule. While politically fraught, freezing thresholds is already pulling more estates into the IHT net through fiscal drag, so further action may be seen as inevitable.

Capital Gains Tax

Capital Gains Tax (CGT) could also be revisited. Aligning CGT rates more closely with income tax has been widely discussed and could raise short-term revenues as investors realise gains ahead of changes.

However, higher rates may prove counterproductive long term, discouraging investment, entrepreneurship, and potentially locking assets in place rather than freeing them up for the next generation.

Frozen Thresholds

Tax thresholds are currently frozen until 2028, dragging more people into higher bands over time. Extending the freeze is one way the Chancellor could raise funds without technically increasing rates. However, this risks contradicting Labour’s earlier stance that freezing thresholds would hurt working people.

Wealth Tax

Talk of a wealth tax has grown, with some MPs supporting a 2% levy on assets over £10 million. While this would only affect a small group, challenges remain around how assets are valued and which are included.

There are also concerns about fairness, given that wealth is often accumulated from already taxed income, and fears that it could drive wealthy individuals – and their tax contributions – abroad.

Property and a Potential ‘Mansion Tax’

Speculation continues about an annual tax on properties valued above £500,000, possibly replacing stamp duty.

While this could raise revenue, property taxes are highly emotive and politically sensitive. A “mansion tax” could cause concern among homeowners that thresholds might gradually be lowered, while also reducing mobility in the housing market.

Bank Tax

Finally, there are rumours of a new levy on banks to raise revenue. While this could appeal to the public given the large profits reported by UK banks, it risks limiting lending to households and businesses and could impact shareholders expecting dividends and buybacks.

Final Thoughts

Rachel Reeves faces one of the toughest balancing acts of any Chancellor in recent memory. With limited options to raise funds without breaking pledges or hurting economic growth, attention will turn to areas like IHT, CGT, and potential new levies.

Any changes made at the Budget will need to carefully balance short-term revenue needs against the long-term goal of encouraging saving, investment, and growth in the UK economy.

Will is an Independent Financial Adviser with over a decade of experience helping expats make the most of their international status.