{"id":37638,"date":"2025-11-12T12:03:58","date_gmt":"2025-11-12T12:03:58","guid":{"rendered":"https:\/\/www.langricks.com\/?p=37638"},"modified":"2026-04-22T09:13:44","modified_gmt":"2026-04-22T08:13:44","slug":"what-to-expect-in-rachel-reeves-budget-on-26-november-2025","status":"publish","type":"post","link":"https:\/\/dev.withcreative.co.uk\/langricks\/what-to-expect-in-rachel-reeves-budget-on-26-november-2025\/","title":{"rendered":"What to expect in Rachel Reeves\u2019 Budget on 26 November 2025"},"content":{"rendered":"

Langricks\u2019 Tax Director, Nigel Shaw, once again peers into his crystal ball to offer insight on what to expect in the upcoming Budget Statement later this month.<\/p>\n

His task has been made easier by the Chancellor\u2019s recent \u201cscene-setting\u201d speech, in which she warned of tough decisions ahead\u2014i.e., further tax increases are imminent, likely including changes to one of the \u201cbig beasts\u201d of the UK tax world.<\/p>\n

So here goes on Nigel\u2019s top 5 predictions:<\/strong><\/p>\n

1.Income Tax rates to increase by 2p<\/strong><\/p>\n

After an initial \u201cfunding gap\/black hole\u201d of \u00a322bn in October 2024, it looks like the Chancellor is coming back for more of your money. Current projections estimate a new funding gap of up to \u00a330bn, and at this level, she may have little choice but to increase all current Income Tax rates by 2p\u2014to 22% (basic), 42% (higher), and 47% (additional).<\/p>\n

By raising Income Tax rates by 2p, the additional revenue would do the \u201cheavy lifting\u201d for the predicted shortfall, generating roughly \u00a316bn.<\/p>\n

This 2p increase would be the first change in the basic rate since April 2008 when her friend and mentor, Gordon Brown, reduced<\/em><\/strong> the basic rate by the same amount. A sort of irony here, one \u201ciron clad\u201d Chancellor going one way and the other in the opposite direction, but then again Brown\u2019s reduction was in anticipation of a general election 2 years later.<\/p>\n

Also, expect a slight delay in the implementation of these new rates until 6 April 2026. This is a classic HM Treasury tactic to encourage taxpayers to \u201cbring forward\u201d bonuses, dividends, and other income before the increases take effect\u2014a nice little bonus for the Tax Collectors.<\/p>\n

2.Time for a Capital Gains Tax (CGT) exit charge on UK taxpayers leaving the country<\/strong><\/p>\n

The UK is an outlier when it comes to mobile business owners and entrepreneurs who build successful companies here and generate substantial capital gains. Consider, for example, Nik Storonsky of Revolut, who recently relocated to the UAE \u2014 an estimated \u00a32 billion in CGT is thought to have been lost as a result.<\/p>\n

The current government shows little support for wealth-creating individuals, so it is likely to seek ways to \u201cplug\u201d this CGT gap when you move to a country with no equivalent tax. Their justification will be that the capital gain was generated in the UK \u2014 and therefore they want their share of it.<\/p>\n

3.Reduce 100% Capital Gains Tax (CGT) exemption on main home<\/strong><\/p>\n

If there is one group of asset owners in the UK which the Government believes are not paying their fair share it is UK homeowners (despite the UK suffering the highest level of property taxes across OECD countries)<\/p>\n

UK property represents a major source of personal wealth, and we expect them to look to \u00a0existing wealth taxes – including Capital Gains Tax (CGT), Inheritance Tax and Stamp Duty to generating additional funds to make up the spending gap.<\/p>\n

Currently, your main residence is exempt from CGT when sold, allowing you to retain the full proceeds. Some might argue this exemption is necessary, given the high Stamp Duty payable when reinvesting in another property.<\/p>\n

However, several left-leaning think tanks \u2014 including those with influence over the Chancellor \u2014 argue that regional disparities in house prices mean this exemption (costing the Treasury an estimated \u00a330 billion annually) disproportionately benefits homeowners in London and the South East, which they view as unfair.<\/p>\n

So, expect a \u201cceiling\u201d to be placed on either the maximum sale proceeds that can benefit from the full exemption or a cap on the amount of gain which will be exempt when you come to sell your main home \u2013 possibly time related depending on how long you have lived there.<\/p>\n

This CGT change might be part of a much bigger property tax re-structure also involving Council Tax.<\/p>\n

4.Extend the freeze on Income Tax bands beyond 2029\/30<\/strong><\/p>\n

This will be part of the \u201cdouble whammy\u201d in this year\u2019s Budget.<\/p>\n

Chancellors of all political stripes are addicted to something called \u201cfiscal drag\u201d\u2014because it lets them increase taxpayers\u2019 contributions without having to announce it in bright neon lights. Just a small note in the next Finance Bill, and hey presto: billions more generated over the course of the Parliament.<\/p>\n

Expect the current tax allowance (\u00a312,570) and tax bands\u2014\u00a337,700 (basic), up to \u00a3125,140 (higher rate), and above \u00a3125,140 (additional rate)\u2014to remain unchanged until the end of the 2029\/30 tax year, and probably well beyond.<\/p>\n

In fact, the previous Government\u2019s \u201cfiscal drag\u201d policy was so severe that millions of pensioners now have to pay tax on one of the lowest State Pension entitlements in the Western world.<\/p>\n

5.Inheritance Tax (IHT) Lifetime Gifting is going to get more difficult<\/strong><\/p>\n

I\u2019m not convinced that the Labour Government has finished tinkering with IHT, especially after the significant changes to pensions, business, and agricultural reliefs announced in October 2024.<\/p>\n

The simplest and most effective IHT planning strategy remains gifting wealth to the next generation during your lifetime and then starting the 7-year survivorship clock, allowing your potential IHT bill to reduce to zero\u2014hopefully.<\/p>\n

Unsurprisingly, many left-leaning think tanks view this as immoral\u2014passing wealth to your family? – and far too easy a way to avoid IHT on your estate. (Surely simplicity makes tax easier to understand?) Given this, I expect the government may introduce a lifetime cap on gifts, which would then be disregarded for future IHT calculations.<\/p>\n

How much might this cap be? Probably around \u00a3325,000\u2014aligned with the main IHT exemption, the \u201cnil rate band.\u201d It\u2019s not a huge sum after a lifetime of generating wealth for yourself and your family, but the Labour Government doesn\u2019t seem concerned.<\/p>\n

Wealth creation appears to be a dirty word for them, so we can expect further inroads into everyone\u2019s wealth through additional changes to the taxes mentioned above.<\/p>\n

If you would like further information or advice on how the 2025 Budget may affect you or your business, please join us at one of our upcoming Breakfast<\/strong> Budget Seminars.<\/strong><\/p>\n

Holmfirth Seminar<\/strong><\/h4>\n

???? Venue:<\/strong> Woodsome Hall Golf Club
???? Date:<\/strong> Tuesday 2nd December 2025
\u23f0 Time:<\/strong> 8:30am \u2013 10:00am
(Bacon butties, tea & coffee provided)<\/em><\/p>\n

>> Click here to Register for Holmfirth Seminar\u00a0<\/strong><\/a><\/p>\n

Wilmslow Seminar<\/strong><\/h4>\n

???? Venue:<\/strong> Langricks Chartered Accountants, 1 Swan Street, Wilmslow
???? Date:<\/strong> Wednesday 3rd December 2025
\u23f0 Time:<\/strong> 8:30am \u2013 10:00am
(Bacon butties, tea & coffee provided)<\/em><\/p>\n

>> Click here to Register for Wilmslow Seminar\u00a0<\/strong><\/a><\/p>\n

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What to Expect<\/h3>\n

Gain valuable perspectives from industry experts as they:<\/p>\n