With the Autumn Budget to be delivered on 28 October 2026, attention is turning to how the Government will strike a balance between revenue and spending. The prime minister has previously indicated that he intends to stick to his party’s manifesto pledges, including a commitment not to increase the rates of income tax, VAT or NICs. The Chancellor, meanwhile, has promised fiscal discipline and refused to speculate on potential tax increases.
While no changes have been confirmed, a number of tax measures are being widely discussed ahead of the Budget and may give an indication of the areas the Government is considering.
Some of the common themes which appear in the media and political reporting ahead of the Autumn Budget include:
Prime suspect – capital gains tax
If the increases to the main rates of income tax and VAT were to be ruled out, capital gains tax appears to be the prime target for changes. Speculation ranges from a modest increase in rates to a closer alignment of capital gains tax rates with income tax. Changes to exemptions, reliefs and the treatment of particular assets could also be considered.
Any announcement could be particularly important for landlords, shareholders and business owners considering disposals.
Fiscal drag
The Government may also rely on fiscal drag rather than announcing a politically difficult headline rate increase. When tax allowances and thresholds remain frozen while earnings and prices rise, more income becomes taxable and more people move into higher tax bands.
The personal allowance has not increased since April 2021 and it was previously announced that the freeze would continue until April 2031. The freeze could potentially be extended beyond that date.
Property taxes
Landlords, second-home owners and property investors may also find themselves in the spotlight, as property taxation could come under review. One proposal would replace Council Tax and Stamp Duty Land Tax (which applies to the purchase or transfer of land and property located in England and Northern Ireland) with an annual charge based on property values.
Pension tax relief and savings incentives could also attract attention. The Government might consider restricting relief for higher earners, altering annual allowances or changing the treatment of certain savings income.
A Scottish perspective
Scottish taxpayers should remember that responsibility for taxation is divided between Westminster and Holyrood. The Scottish Parliament sets rates and bands for tax on non-savings, non-dividend income, while matters including the Personal Allowance, National Insurance, dividends and savings taxation remain reserved to the UK Parliament. Changes announced in the UK Budget may affect Scottish taxpayers differently depending on whether their income comes from employment, property, dividends, savings or capital gains.
As the Budget approaches, taxpayers and businesses alike will be watching closely for announcements that could have a significant impact on their future planning.
