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UK Tax Policy Update 2025: What You Need to Know Before the Autumn Budget

UK Tax Policy Update 2025 – Latest Income Tax, CGT & Property Tax Changes


Stay informed on the UK’s 2025 tax policy updates. Discover the latest on income tax thresholds, capital gains reforms, property tax proposals, and the end of non-dom status ahead of the Autumn Budget 2025.

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Introduction


With the Autumn Budget 2025 just around the corner, taxpayers and businesses alike are watching Westminster closely. Inflation, slow growth, and pressure on public finances are forcing the government to look for new sources of revenue — without breaking election promises.

This article breaks down the latest confirmed rates, upcoming changes, and possible reforms shaping the UK tax system for 2025–26 and beyond.


1. Current Tax Landscape: 2025–26 Confirmed Rates

The UK’s income tax rates for the 2025–26 tax year are unchanged:


  • Personal allowance: £12,570

  • Basic rate (20%) up to £37,700

  • Higher rate (40%) between £37,701 and £125,140

  • Additional rate (45%) above £125,140


Although these figures look stable, the freeze on thresholds acts as a stealth tax — as wages rise, more people drift into higher tax bands, boosting HMRC’s revenue.

Employers should also note: PAYE Settlement Agreement (PSA) payments for 2024–25 must reach HMRC by 22 October 2025 if paid electronically.


2. The Autumn Budget 2025: What to Expect

The Autumn Budget, set for 26 November 2025, is expected to deliver few direct tax hikes but several indirect measures. With income tax, VAT, and National Insurance rates locked by political promises, the Treasury is likely to rely on subtler strategies to raise funds.

a. Continuing Threshold Freezes

Freezing thresholds is expected to continue — pulling millions more into higher tax brackets by 2026. It’s the government’s most effective “silent” revenue tool.

b. Capital Gains Tax (CGT) Reform

The Chancellor is reportedly reviewing Capital Gains Tax, potentially aligning it more closely with income tax rates. Investors, landlords, and small business owners could see higher liabilities when selling assets.

c. Wealth and Property Taxes

Property and wealth taxes may face reform. Ideas include taxing second homes or revising stamp duty to target asset wealth over earned income — politically tricky, but fiscally tempting.


3. Landlords and Rental Income Under Review

Rumours are mounting that the government could introduce National Insurance (NI) on rental income. Currently, landlords pay income tax on profits but not NI — an exemption under scrutiny.

Such a move would raise the tax burden for landlords and could ultimately increase rents, as property owners pass costs on to tenants.


4. Savings and Investment Allowances

Tax-free savings limits, such as for ISAs, are also likely to be frozen. While this doesn’t cut the allowance outright, it erodes its real value amid ongoing inflation.

There’s talk of simplifying the ISA system by merging Cash, Stocks & Shares, and Lifetime ISAs into a single flexible product, possibly launching in 2026.


5. The End of the “Non-Dom” Tax Regime

One of 2025’s biggest reforms is the abolition of the “non-dom” tax status, which allowed certain UK residents to avoid paying tax on overseas income.

This change has already had ripple effects in the luxury and financial markets. For example, Ferrari has reportedly reduced the number of cars it sends to the UK, citing a decline in demand from high-net-worth clients adjusting to new tax realities.

For the Treasury, the reform signals a clear message: the era of preferential treatment for offshore wealth is over.


6. Preparing for 2026 and Beyond

Looking ahead, the UK’s tax environment will likely continue tightening through subtle measures. Even without explicit rate hikes, freezes and redefinitions will gradually increase effective taxation.

Action points for individuals and businesses:

  • Review your income and investment structure before April 2026.

  • Maximise pension contributions to mitigate fiscal drag.

  • For employers, stay up to date with HMRC compliance deadlines and payroll changes.

  • Seek professional tax advice to anticipate impacts of CGT or NI reforms.


Conclusion

In 2025, the UK’s tax strategy can best be described as one of quiet tightening. The government aims to raise revenue without overtly increasing major tax rates, relying on threshold freezes, allowance stagnation, and closing long-standing loopholes like the non-dom system.


As the Autumn Budget 2025 approaches, both individuals and businesses should stay proactive. In modern fiscal policy, it’s not always the headline rates that matter — it’s the hidden details in the fine print that shape your financial reality.




 
 
 

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