Autumn Budget 2025: What it means for you

After months of speculation and market uncertainty, Chancellor Rachel Reeves has delivered the 2025 Autumn Budget.

While the headline news avoided the dramatic income tax hikes some predicted, the Budget nonetheless introduces a series of measures that will impact estates, property owners, business holders and savers across the UK.

Here, we’ve outlined the key announcements, what they really mean and the planning considerations you should be thinking about now.

Frozen inheritance tax threshold

One of the most significant developments for families is the continued freeze of the inheritance tax (IHT) nil-rate band at £325,000 and the residence nil-rate band at £175,000 until 2031.

This extended freeze is, in effect, a substantial stealth tax.

While thresholds stand still, property prices in Sussex continue to rise – particularly in Brighton & Hove and the surrounding villages, where even modest family homes routinely exceed £500,000.

As a result, more estates will be dragged into the inheritance tax net without any change in the official rates.

While couples retain a combined allowance of £1 million, inflation steadily erodes its real value, leaving many households exposed to higher tax bills than they might anticipate.

Planning options such as lifetime gifts, trusts and appropriate insurance remain crucial for managing potential liabilities.

Agricultural and Business Property Relief capped at £1m – and transferable

Farmers and business owners face notable changes through the introduction of a £1 million cap on Agricultural Property Relief (APR) and Business Property Relief (BPR) from April 2026.

Previously unlimited, relief above this threshold will now attract only 50%, increasing tax exposure for larger estates.

A positive clarification is that unused allowances can be transferred between spouses, even where the first death occurs before the cap takes effect.

With the new rules only two years away, reviewing asset structures and exploring planning strategies is advisable.

A wealth tax in all but name: The High Value Council Tax Surcharge

The Budget also introduces the High Value Council Tax Surcharge, a targeted property wealth charge for homes.

From April 2028, owners – not occupants – of residential property worth £2 million or more will face an annual surcharge of between £2,500 and £7,500.

Properties will be valued in 2026 and revalued every five years. A consultation will determine how tied accommodation, complex ownership structures and hardship cases will be handled, including the possibility of rolling up the charge until sale or death.

While only a small proportion of Sussex properties currently exceed the £2 million threshold, house price inflation means more homeowners – particularly in Brighton’s premium postcodes – could be caught over time.

And given the history of similar taxes, there is every possibility the threshold could be lowered in future.

Income tax increases by another route

The government may have abandoned its original plan to raise headline income tax rates, but that doesn’t mean income tax is untouched.

Rates on non-employment income – property rental income, savings interest and dividends – will all rise by 2% over the next two years.

Those on the cusp of income tax thresholds should also be aware that the freezing of rates and bands until 2031 means many will drift into higher tax categories through earnings inflation alone.

Pensions, ISAs and salary sacrifice

A series of technical changes add further complexity for savers. Executors will no longer be liable for IHT on pension assets discovered after probate clearance, which is a sensible and overdue correction.

However, from 2029 the National Insurance exemption for salary-sacrificed pension contributions will be capped at £2,000 per year – reducing the attractiveness of one of the most commonly used workplace planning tools.

And from 2027, the annual tax-free cash ISA allowance for those under 65 will fall from £20,000 to £12,000 – a change that will affect anyone relying on ISAs as a core part of their savings strategy.

None of these individually is transformative, but together they form another layer of tax pressure on long-term savers.

No major changes to Capital Gains Tax

Capital Gains Tax remains untouched, with the top 24% rate preserved and hold-over relief still available.

Given speculation that these reliefs might be significantly curtailed, many investors will breathe a sigh of relief.

Non-dom and trust reforms

There are also complex changes affecting non-domiciled trusts, including a new £5 million cap on certain 10-year charges, and fresh anti-avoidance rules targeting agricultural and UK-linked assets held through offshore structures.

These will affect only a small number of individuals but signal a continuing move toward tightening the residence-based regime.

Final thoughts

Taken together, this budget marks a clear move towards incremental taxation of wealth, particularly wealth held in property, business assets and investments.

While not the dramatic restructuring many feared, the cumulative impact will be substantial for households across the South East.

In an environment where thresholds are frozen, reliefs capped and surcharges introduced, waiting passively is no longer an option.

Understanding the implications early and taking steps to plan ahead will be essential in navigating what is now a much more demanding fiscal landscape.

If you’d like to understand how these changes affect you, your business or your family, our team at Mayo Wynne Baxter is here to help with clear, practical advice tailored to your circumstances.