Autumn Budget Predictions

Regarding the UK’s economic outlook, Labour and Chancellor Rachel Reeves have consistently used every opportunity to brace the public for impending austerity measures, suggesting that the upcoming budget could bring some uncomfortable changes. They frequently mention a £22 billion financial ‘black hole’, with Keir Starmer emphasising that tough times lie ahead.

Since their party conference occurred a month before the budget, no major announcements were made, as it’s apparent they are awaiting the 30th of October. However, based on their remarks, what predictions can we make for the Autumn budget?

Capital Gains

Tax rates

Capital Gains Tax rates are at a historic low, and there is widespread agreement that this is where Labour is likely to focus on raising taxes. Reeves has several options to choose from, including the following:

Taxing all capital gains at the regular income tax rates (up to 45% for high earners). Treating them as another form of income is a policy supported by the Institute for Public Policy Research.

Introducing a flat rate on all capital gains, set below the top income tax rate (historically, from 1965 to 1988, capital gains were taxed at a flat 30%).

Implementing a system that gradually reduces taxes on long-term gains while taxing short-term gains more heavily, similar to the U.S. strategy.

Reducing commonly used exemptions, such as introducing a cap on private residence relief.

Applying capital gains tax on assets disposed of upon death (in addition to inheritance tax), potentially at a lower rate than lifetime rates.

Should Reeve decide to do one of the above reforms, timing will be key.

Capital Gains Tax is a transaction-based tax, meaning it can be implemented administratively with relative speed. Announcing on 30 October that rates will change from April 2025 could lead to a short-term increase in tax revenue, as individuals may accelerate disposals to avoid higher taxes. This then risks disrupting market conditions by triggering a mass sell-off of assets.

The property market, in particular, could see a surge of buy-to-let properties available on the market. With landlords potentially offering below-market-value (BMV) prices to secure quick sales ahead of the new tax rates.

Stamp Duty

Labour has already pledged that the 0% stamp duty threshold for first-time buyers will decrease to £300,000 from 31 March 2025, but will remain at £425,000 until then. Similarly, the threshold for other buyers will revert to £125,000 from 31 March 2025, while staying at £250,000 in the meantime.

Some experts have stated that they think the government should extend first-time buyer relief further than March 2025. The Home Owners Alliance has even proposed to the Chancellor that stamp duty should be completely eliminated for individuals purchasing a home to live in.

Inheritance tax

Inheritance tax was an issue highlighted in Labour’s manifesto, where they pledged to “end the use of offshore trusts to avoid inheritance tax.” The inheritance tax is one of the most unpopular taxes in the country, so the government may be cautious about implementing significant changes.

Although only about 4% of individual estates currently pay the inheritance tax, this percentage is expected to increase even if the threshold remains unchanged in the Autumn Budget. The £325,000 threshold has not been adjusted since 2009, despite rising values due to inflation. As a result, more estates are likely to reach this threshold as their values naturally increase with inflation.

However, here are some more changes the government may decide to make to inheritance tax:

Increasing the inheritance tax rate above the current 40%, which would boost revenue without adding more taxpayers.
Lowering the threshold from its current level of £325,000, therefore more individuals will be paying the tax.
Reducing or eliminating the residence nil-rate band, which provides an additional £175,000 allowance when a home is inherited by direct descendants.
Capping or removing exemptions that currently exclude pensions, businesses, and agricultural land from the inheritance tax.