While it’s usual for the media to start speculating about what could be announced in a Budget in the weeks leading up to it, this year has been particularly active. In the month leading up to this week’s Budget on Wednesday 26 November, the headlines have been full of potential tax hikes and reduced tax-breaks.
One reason the rumour mill may have been so busy is the numerous tax proposals and myriad of ‘think tank’ reports that have been released recently. According to the BBC, there have been 13 different taxes floated by the Government, which has given media pundits plenty to sink their teeth into.
Against this backdrop, the UK still has a fiscal ‘black hole’, reported to stand at around £20 billion. Furthermore, the nation’s economy is looking sluggish. According to one media report, the S&P Global flash UK composite purchasing managers’ index (PMI) stood at 50.5 in November, dropping from 52.2 in October.
Any score above 50.0 indicates that economic activity is on the up, while any score below means it’s contracting. So, it would be fair to say the UK is currently on the brink.
This means that the Chancellor cannot fall back on a booming economy to deal with the fiscal black hole, which in turn, means she is likely to be looking at taxation instead. So, with this in mind, let’s look at 10 tax changes that might be announced by the Chancellor on Wednesday.
1. Income
When it was revealed that the Chancellor could raise Income Tax, the most lucrative tax of all, the media went into a frenzy. The good news is that Reeves has reportedly scrapped the idea, as it would be a breach of the Government’s manifesto promise not to increase the tax.
Yet the Chancellor may extend the current threshold freeze until 2030, which Sky news points out is something Keir Starmer has refused to rule out. If the Chancellor does extend the freeze, it might be seen as an Income Tax hike by stealth, as millions of workers will be dragged into a higher tax band as their incomes go up.
2. Property
According to the Telegraph, the Chancellor could introduce a Council Tax surcharge for properties in bands F, G and H. In addition to this, Reeves could be planning to introduce a ‘mansion tax’ on properties with a value above £2 million.
Introducing these taxes could significantly increase the cost of living for those in areas where homes are worth more, such as London and the Home Counties. According to the article, the Government may also scrap Stamp Duty and replace it with a tax that’s paid by sellers.
3. Pensions
There has been plenty of speculation that the Chancellor could cap the tax-free cash retirees can take from their pension pot. In 2025/26, those aged 55 and over can withdraw 25% of their pension pot as a tax-free lump, however this is limited to £268,275.
Rumours have been rife that Reeves may reduce the limit, however This is Money recently suggested that this is unlikely to happen. There has also been speculation that Reeves may introduce a 30% flat rate of pension tax relief, which would reduce the tax relief many higher earners receive.
In 2025/26, they can claim back 40% or 45% in pension tax relief, depending on their tax-bracket and Annual Allowance. While the Chancellor isn’t expected to change the tax relief provided to higher earners, she hasn’t ruled it out.
4. Salary exchange
Otherwise known as salary sacrifice, this is where you and your employer agree to reduce your salary and put the difference towards a type of benefit, such as your workplace pension or the Cycle to Work scheme.
According to The Guardian, Reeves could announce a £2,000 limit on salary exchange schemes. As such, any amount that’s spent over and above will become liable to National Insurance Contributions (NICs), which would make the perk less attractive.
5. Individual Savings Accounts (ISAs)
The government has made it clear that it wants more people to invest, rather than leave their money in cash savings. As a result, Reeves is expected to make Stocks and Shares ISAs more attractive than their cash counterparts.
In 2025/26, you can place a total of £20,000 into a Stocks and Shares ISA or a Cash ISA. Alternatively, you can split the amount between both.
However Reeves may slash the Cash ISA Allowance to £10,000, in an attempt to nudge people towards their stocks and shares stablemate. That said, there is speculation that she may also cut the allowance for Stocks and Shares ISAs, although it may not be to the same level as cash accounts.
6. Dividends
It is believed the Chancellor may increase the tax, which could affect investors or company directors who draw dividends as part of their earnings. In 2025/26, the tax is charged at:
- 8.75% if you’re a basic-rate taxpayer
- 33.75% if you’re a higher-rate taxpayer
- 39.35% if you’re an additional-rate taxpayer.
According to the media, Reeves could increase the rate or reduce the £500 Dividend Allowance, or do both.
7. Inheritance
During her 2024 Budget, Reeves announced that the unused element of a pension will be included in Inheritance Tax (IHT) calculations after April 2027. This means pensions will become exposed to the tax, meaning millions of households could see their IHT liability soar.
According to reports, Reeves could now be planning to introduce a lifetime cap on certain gifts that fall outside of your estate for IHT purposes if you live for seven years or more after making it. Currently, these gifts are unlimited.
In addition to this, the Chancellor may extend the seven-year period to 10 years or more.
8. Vehicles
Electric vehicle drivers have come under the spotlight thanks to rumours that Chancellor may announce a new ‘pay-per-mile’ tax for electric vehicles. This could be 3p per mile, which the Telegraph reveals, may cost the average driver £250 a year.
The Chancellor may also decide to end the temporary 5p cut to the levy. On top of this, she could increase fuel duty by 3p a litre, according to Sky News.
9. Transport
Additionally, a new ‘taxi tax’ may be something else Reeves announces, which could increase the cost of fares by up to 15%.
10. Milkshakes
According to the Telegraph, even the much-loved milk-based drink could soon be taxed. This is because the Chancellor is preparing to end the sugar tax exemption on milk-based drinks from April 2027, which could push the cost of the tasty treat up by 5%.
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Former BBC presenter, Mark Foster, will be joined by AFH’s Chief Advice Officer, Austin Broad, and AFH Independent Financial Adviser, Jade Soutter-Davies, to unpick the Budget announcements, using clear and easy to follow language.
The online seminar will help you to understand what the announcements might mean for you, and how you may be able to mitigate any forthcoming tax changes. To register for our ‘Taxing times: what the 2025 Budget could mean for your money’ simply complete the form at the top of this page.
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24 November 2025