Autumn Budget 2025: Mixed messages for private clients

The headline from the Chancellor’s Autumn 2025 Budget was the freezing of Income tax and NICs thresholds. Rather than raising rates, which would have been the progressive course of action, fiscal drag will end up raising a similar amount for the Treasury. This was the most significant announcement from the Budget and the one to raise the most for Government coffers.

However, what is notable is what was absent. There were no changes to the rates of SDLT, or indeed any reform of SDLT. There were also no changes to the rates of CGT. While there were some reforms to CGT, including the perverse policy of a government purportedly interested in growth slashing the CGT relief on qualifying disposals to Employee Ownership Trusts from 100% to 50%, CGT remains largely the same tax as before.

Actively positive good news for Private Clients also came in a U-turn whereby the £1 million allowance for 100% BPR/APR from 6 April 2026 will now be transferrable between spouses/civil partners. This is a welcome change, and it would be churlish to state that this should have been the policy from the outset. There was even a cap put on grandfathered excluded property settlements of a maximum of £5 million in Inheritance tax charges under the relevant property regime on a rolling ten-year basis.

Perhaps stretching the concept of good news, the introduction of a High Value Council Tax Surcharge for English residential properties worth more than £2 million, whilst an imposition on those who own a property on The Bishops Avenue, London N2, is a property tax. It is not a reform of Inheritance Tax and it is not a Wealth Tax chargeable on all assets.

It is there that the good news ends. The Inheritance Tax nil rate band remains frozen at £325,000 until April 2031 (it has been frozen at that level since 2009) and the £1 million BPR/APR transferrable allowance between spouses/civil partners is also frozen until April 2031; fiscal drag is not confined to Income tax and NICs. There are also 2% increases in the rates of Income tax for dividends, savings income and property income. Differential rates for earned income versus dividends and savings income is nothing new; differential rates for rental income are. The distinction between earned and unearned income is becoming starker for Income tax and it will be easy for future Chancellors, of all political colours, to raid landlords for more treasure in the future.