With the Autumn (although arguably Winter) Budget confirmed for 26 November 2025 and with the Chancellor Rachel Reeves under ever-growing pressure to address a significant fiscal gap (estimated at around £20–£40 billion), speculation is growing unabatedly and somewhat exhaustingly! While Labour maintains its manifesto pledge not to raise income tax, VAT, or National Insurance on working people the Government appears (through ongoing media speculation) to have inheritance and property in its crosshairs to plug the shortfall.
Potential changes on the horizon
So, given the constant fiscal newsfeed and the potential urgency, we have waded through the media speculation to present the key potential changes to look out for in the private client space:
Inheritance Tax (IHT)
In this Budget, we may see an announcement of a lifetime cap on tax free gifts, limiting the total amount that can be passed on exempt from IHT, even if the donor survives seven years. Possibly, instead of or in addition to this, we may see an extension of the so-called ‘seven-year rule’ to ten years, which would align conveniently with the latest IHT changes introduced on 6 April for Long-Term Residents.
Stamp Duty Land Tax (SDLT) Overhaul and Mansion Tax
Reports in various media outlets suggest a radical overhaul of SDLT, including:
- Replacing upfront SDLT with a proportional ‘national property tax’ on homes over £500,000; and
- Introducing a ‘mansion tax’ or wealth-based levy on high-value properties (possibly above £1.5 million or even £2 million).
How this applies to non-residents and owners of additional properties remains to be seen, but we would expect some form of surcharge to remain to dissuade overseas buyers from accumulating too much UK property.
Capital Gains Tax (CGT) on Primary Residences
This may shock many but the exemption on gains from selling primary residences could be removed for high-value properties, with speculation that this would apply to properties valued over £1.5 million with CGT kicking in at the excess of this.
National Insurance on Rental Income
The Government is considering subjecting private landlords’ rental income to NIC (potentially an 8% lev) affecting individual and partnership income.
What can be done?
Without wanting to dive into complex prose not turn this into an opinion piece, I will keep this punchy in the interests of time.
The key takeaways are as follows:
- Review assets in the next two months and establish (with the assistance of both lawyers and financial advisors) what assets can be gifted; and
- Consider any upcoming property transactions and establish whether to accelerate or delay pending the outcome of the Winter Budget and further clarity on SDLT reforms.
If you have any queries relating to Inheritance Tax and gifting, please contact Ben Rosen of Quastels LLP.
