The UK Autumn Budget 2025 is scheduled for 26 November, and with it comes a mix of anticipation and uncertainty. The country’s ongoing economic challenges—poor growth and a £40 billion fiscal shortfall—mean that further tax increases are widely expected to help meet government spending commitments and adhere to fiscal rules.
But what does this mean for you? And how can you prepare?
Immediate changes vs future planning
Some tax reforms are announced well in advance and apply from the start of the next tax year or later, giving you time to adapt. Others, however, can take effect immediately after the Budget announcement, leaving little to no time to respond.
Why talking to Sumer matters
No matter what happens on Budget day, our advice is clear: stay in close contact with us. We’re here to ensure your tax affairs—and those of your family—are as robust and efficient as possible, no matter the changes ahead.
Food for thought before Budget day
Here are some key areas you might want to consider in advance of the 26 November budget statement:
Dividends
One possibility is the alignment of dividend tax rates to income tax rates. This would increase the tax that will be paid by individual shareholders on dividends taken out of any company. Any changes in this respect are likely to be implemented immediately, not giving any opportunity for shareholders to take dividends at the current rates. If clients have flexibility and the cashflow to pay dividends ahead of the budget to clear out distributable reserves that would ordinarily be paid later in the year, it might be advisable to pay earlier to have certainty on the tax rate.
Life Insurance
No matter the Budget outcome, after last year’s changes to the IHT regime regarding Business Property Relief and pensions, reviewing your life insurance is essential.
A policy can help cover any IHT bill which may save your executors having to sell assets to cover the tax or worse still take money out of a company (suffering income tax) to pay the IHT bill. Most estates are liable to pay the tax within a 6 month window, so it’s important the estate has the liquidity to pay.
Regular reviews, including business valuations, ensure your insurance keeps pace with future liabilities.
Inheritance Tax (IHT) Lifetime Giving
Reports suggest the government may introduce a cap on lifetime gifts that qualify for IHT relief. Possible changes include:
- A lifetime limit on the total value of gifts exempt from IHT
- Extending the current seven-year exemption rule to ten years
- Restricting the ‘normal expenditure out of income’ exemption, which allows surplus income to be gifted tax-free
These changes could particularly impact individuals with pension savings—subject to IHT from 2027—who plan to gift unused funds.
Agricultural and Business Property Reliefs (APR & BPR)
Draft legislation confirms previously announced changes to APR and BPR, including that the £1 million relief allowance for qualifying assets will not be transferable between spouses or civil partners.
It’s wise to review your current business arrangements and Will provisions to ensure this allowance is maximised across family members and trusts.
Cash ISAs
To encourage equity investment, the government might reduce the cash ISA limit. If you have funds to deposit, consider doing so before Budget day to take full advantage of the current £20,000 tax-free allowance.
Final thoughts
Remember: nothing is confirmed yet. Reacting hastily to speculation can do more harm than good. Snap decisions often lead to costly mistakes and may be impossible to reverse.
If you’re worried about what lies ahead, reach out to us. We’ll help you review your circumstances and objectives to protect your family, wealth, and legacy.
If you have any questions or want to start planning now, get in touch with us via the form below.
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