Autumn Budget 2025: Where Reeves Might Go Looking for Your Money
The Abstract
Rachel Reeves is heading toward her second Autumn Budget under mounting pressure. Welfare U‑turns, rising borrowing costs, and slashed fiscal headroom leave her chasing revenue in unlikely corners. With manifesto constraints still tight, her options include property, pensions, and stealth taxes. Here’s what she might do—and what it means for your money.
A fiscal tightrope with no safety net
Labour doesn’t want to appear they’re breaking promises too early—but that’s beside the point. The chancellor is walking a tightrope: she promised no hikes to income tax, VAT, NICs, or corporation tax, yet the fiscal breathing space that gave her room to manoeuvre is evaporating fast.
U- Turns and risking costs – a deadly combo
Two things have smashed her breathing room:
- Welfare Reforms Reversed: Plans to save up to £5.5 billion through tighter rules on PIP and Universal Credit have been massively diluted—cutting less than half that, wiping out a sizeable chunk of her expected savings (Reuters, 2025).
- Borrowing Costs Spike: Higher long-term borrowing costs have squeezed the Chancellor’s fiscal headroom down to just £9.9 billion. Analysts warn she now faces at least £20 billion in new tax needs merely to restore what little buffer she had (IndexBox, 2025).
It’s more than just £20bn – Black Hole Headaches
Several think-tanks and outlets warn the bigger hit could be staggering:
- A Wall Street bank projection puts the gap at a sobering £20 billion (The Telegraph, 2025).
- The National Institute of Economic and Social Research (NIESR) now estimates a £41.2 billion hole, rising to £51.1 billion if Reeves reinstates her £9.9 billion buffer to meet fiscal rules by 2029–30 (Financial Times, 2025).
All this leaves Reeves pursuing revenue on narrow margins and with few big levers left to pull.
Where Reeves could turn next ?
Property: dull but deep pockets
Nothing sexy, but property taxes offer volume and political plausibility. Think CGT on expensive homes, council tax reform, SDLT tweaks (especially for overseas buyers) (Financial Times, 2025).
Capital gains & dividends: stealth‑tax mode
The CGT allowance is £3 k, and the dividend allowance £500 (IFS, 2025). Phasing them out—or modestly tweaking rates—lets Reeves raise money without “breaking” manifesto promises.
Inheritance tax: tightening the screws
Caps on BPR/APR from 2026, pensions folded into IHT by 2027 (HM Treasury, 2025). More fixes here are likely.
Pensions: the big red button
- Flattening tax relief has been on the table for ages (IFS, 2025).
- PCLS cap: a Commons Library briefing suggests a cap at £100 k raises about £2 billion/year (Commons Library, 2024).
Duties & sector taxes: the usual suspects
- Fuel duty freeze reversal would raise cash; politically reprioritized as “green.”
- Air Passenger Duty on private jets, banking surcharge tweaks—low profile, low friction.
A Thousand Cuts, Not One Big Slash
Rachel Reeves doesn’t have the political space, or the economic cover, for a single, headline-grabbing tax raid. Instead, she’ll lean on quieter tactics: stealth freezes, the erosion of allowances, and what the Treasury will brand as “base widening.” It won’t feel like one big blow, but rather a thousand little cuts, tightening the squeeze on households and investors year after year.
What does this mean in practice?
· Property owners should be ready for changes to capital gains tax, stamp duty or even council tax reform.
· Savers and retirees need to think carefully about pension strategy—particularly around tax-free cash (PCLS), which feels increasingly vulnerable.
· Investors should assume that both dividends and capital gains will carry a heavier tax burden going forward.
The direction of travel is clear: the fiscal safety net has worn thin, and asset-holders are firmly in the crosshairs.
The risk is that this approach proves penny wise, pound foolish. Britain’s wealth base is more mobile than ever, and it’s hardly surprising that many clients are asking whether the UK is still the most attractive place to call home. From Lisbon to Dubai, golden visa schemes and investor-friendly tax regimes are being marketed with increasing uptake. And it doesn’t take much imagination to see what happens if base-widening and incremental fiscal drag tip the balance: capital, talent and taxpayers follow the path of least resistance.
Reeves may not want to be remembered for swinging the axe—but the steady drip of a thousand cuts can leave just as deep a scar.