Budget 2025: Tax Changes and Spending Plans Expected from Rachel Reeves
The Budget scheduled for 26 November 2025 will not include a planned rise in the basic rate of income tax by about 2p, which was to be offset by cuts to National Insurance (NI). Instead, no income tax rise is expected.
Income tax thresholds are likely to remain frozen for an additional two years beyond 2028, a measure anticipated to raise approximately £8 billion.
Changes to pension sacrifices via salary sacrifice are proposed, with a cap set at £2,000 per year; any excess contributions would incur NI charges of 8% for individuals earning below £50,000 and 2% for those above that threshold.
A possible lifetime gifts tax is under consideration, featuring a cap around £100,000, alongside extending the current seven-year inheritance tax window to 10 years or more, and a review of the taper relief rate.
A new levy targeting limited liability partnerships (LLPs) may be introduced to raise around £2 billion.
Regarding property tax reforms, proposals include replacing stamp duty with a tax on homes valued over £500,000 and introducing a local property tax to replace the existing council tax system.
