Will taxes rise this autumn? Why now might be the time to review your position with HWB

As the UK approaches the 2025 Autumn Budget, speculation is once again building over whether Chancellor Rachel Reeves will need to raise taxes to address a growing shortfall in the nation’s finances.

The National Institute of Economic and Social Research (NIESR) has warned that without action, the government could miss its borrowing targets by £41.2 billion. Under Reeves’ self-described “non-negotiable” borrowing rules, a moderate but sustained increase in taxes could be the most realistic route forward.

Reeves’ “trilemma”

When Rachel Reeves took office as Chancellor, she set two firm fiscal rules:

• Everyday government spending must be funded by tax revenues, not borrowing.
• Public debt must fall as a share of national income within five years.

These were designed to reassure investors and establish economic credibility. However, slowing economic growth, the reversal of some welfare cuts, and wider global trade challenges are putting evermore pressure on those rules.

NIESR suggests Reeves now faces a “trilemma”:

• Meeting Labour’s spending commitments.
• Honouring the manifesto pledge not to raise taxes on working people.
• Sticking to strict borrowing limits.

As Stephen Millard, NIESR’s deputy director for macroeconomics, put it:

“If the chancellor is going to be able to raise £40 billion, I think one of the big taxes is going to have to be raised.”

So where might the seemingly necessary tax increases come from?

• Extending the freeze on income tax thresholds beyond 2028 (a stealth tax that increases as wages rise).
• Further increases to Inheritance tax, through tightening reliefs around lifetime gifts.
• Reforming pensions allowances to a flat rate 25% relief.
• Overhauling council tax, potentially replacing it completely with a land value tax.
• Adjusting the scope of VAT, for example ending various exemptions for private healthcare.
• Merging of NIC and Income tax into a single tax at a slightly lower overall rate but importantly increasing the overall tax take.
• Fuel duty rise, ending the 5p per litre cut introduced in March 2022

Why this matters for you

We don’t yet know exactly which measures will be in the Autumn Budget, however whether it’s overt tax increases, stealth changes to thresholds, or shifts in the structure of the tax system, they could all have a direct impact on individuals and businesses.

HWB will be following the Budget closely and providing clear, actionable updates once announcements are made. But with potential changes on the horizon, now is a good time to review your financial and tax planning, especially if you want to make strategic moves before any new rules come into effect.

If you’re concerned about how possible tax changes could affect your business or personal finances, speak with the team at HWB. We can help you assess your position, explore options, and put a plan in place that works in today’s uncertain climate.

If you have any further questions regarding this article or on our personal tax services, please contact Steven Martin on 023 8046 1225 or email Steven Martin.