UK Budget 2025: What to Expect from the November Autumn Statement

A Tight Fiscal Backdrop

The Chancellor will deliver the UK Budget 2025 on 26 November 2025, and the context could hardly be more challenging. Borrowing costs have risen sharply, and the Office for Budget Responsibility (OBR) has already warned that fiscal headroom under the rules is thin. The government’s scope for new spending or headline tax cuts is therefore extremely limited. At the same time, NIESR (the National Institute of Economic and Social Research) estimates that the UK faces a £41–51 billion gap to balance day-to-day spending by the end of the decade. Their UK economic outlook highlights an “impossible trilemma”: raise taxes, cut spending, or rewrite the rules.

The Case for Raising Revenue

NIESR’s research suggests that moderate, sustained tax rises are the most credible option. Markets are already watching the UK closely, with long gilt yields at multi-decade highs. Any sign of fiscal laxity could push borrowing costs higher still. For that reason, most experts expect the Chancellor to emphasise credibility and restraint while introducing targeted revenue-raising measures in the Autumn Statement 2025.

Wealth and Asset Taxes in Focus

One area drawing considerable attention is Capital Gains Tax changes in 2025. Rates and reliefs could be adjusted to bring CGT closer in line with income tax, or allowances could be pared back.

Inheritance and Property Taxes

Potential Inheritance Tax reform has been widely discussed, with a narrowing of reliefs or tightening of thresholds a live possibility. Speculation has also centred on property-related taxes, including higher charges on expensive homes or tweaks to stamp duty. None of these would be easy politically, but they offer a way of raising revenue without breaking pledges not to raise the basic rate of income tax.

Pensions and Savings: Closing Gaps

The pensions system is another likely target. Potential measures include restricting salary sacrifice arrangements to prevent national insurance leakage, adjusting the rules on tax-free lump sums, or scaling back higher-rate tax relief.

ISA and Savings Changes

UK pensions tax relief has long been seen as generous, and reforms here would raise significant sums. Savings products may also be in the spotlight, with the government considering a simplification of ISAs or a tightening of the more generous edges of the regime. These changes would be framed not as revenue grabs but as modernisation, even if their net effect is to boost the Exchequer’s coffers.

Threshold Freezes and the “Stealth” Effect

At the same time, frozen income tax thresholds continue to act as a quiet but powerful revenue generator. With inflation still above target on NIESR’s forecasts, more households are being pulled into higher tax bands each year. This mechanism raises money without altering headline rates, and it is likely to remain a cornerstone of the government’s approach to UK tax changes in 2025.

Business Taxation: Protecting Investment

On the corporate side, the Chancellor is expected to preserve the government’s pro-investment narrative. That means protecting key reliefs such as full expensing, while tightening anti-avoidance rules and broadening the base elsewhere.

The emphasis will be on raising revenue without undermining the UK’s attractiveness to investors. This balancing act is central to maintaining credibility in financial markets while supporting long-term growth, and will shape the debate around business tax changes in the UK.

Spending Discipline and Welfare Pressures

Alongside revenue measures, the Budget is likely to reaffirm spending discipline. The UK government’s spending plans for 2025 are already constrained by the recent Spending Review, leaving little room for new commitments beyond a handful of headline priorities.

Welfare reform is often cited as a potential saving, but recent political pushback makes significant cuts less likely in the short term. The government may therefore choose to signal caution rather than announce dramatic retrenchment.

NIESR’s Outlook: Growth and Inflation

NIESR forecasts GDP growth of around 1.2–1.3% in 2025 and inflation averaging about 3.3%. This is too high to deliver a significant boost to revenues via disinflation, while debt servicing costs remain elevated. Against this backdrop, the Institute argues that multi-year, phased tax rises are the most sustainable way forward.

Alongside this, supply-side reforms to lift productivity and trend growth are essential if the UK is to strengthen its fiscal position over the longer term.

A Budget of Trade-Offs

Overall, the Chancellor’s Budget 2025 is unlikely to contain fireworks. Instead, it will be framed around fairness, stability, and credibility. Expect measures that raise more from wealth, property, pensions, and savings, alongside the continued drag of frozen thresholds. Business incentives will be preserved, while spending will be tightly controlled. The Chancellor has little room for manoeuvre, and the Budget will reflect that reality.

The Bottom Line

If the Spring Statement was about resetting expectations, November will be about hard choices. With limited headroom, elevated borrowing costs, and the looming gap identified by NIESR, the Chancellor’s message will be clear: the era of easy options is over.

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