With the Chancellor’s Autumn Budget coming on 26th November, investors, savers and the general public must be prepared for fiscal changes as the government looks to drive economic growth and curb borrowing costs.
The UK’s net borrowing in the public sector stood at £20 billion in September 2025, according to the Office for National Statistics, making it the second-highest figure of the year and the highest September borrowing total for half a decade. This has sparked speculation that tax hikes are on the horizon, but could Capital Gains Tax yet again be one of those areas for change, particularly after the government’s pledge to leave VAT, National Insurance and Income Tax alone?
Government set to claim ‘easy win’ amid 50% surge in borrowing costs
We predict that the Chancellor is likely to make Capital Gains Tax more closely aligned with Income Tax, particularly after Capital Gains Tax rates were raised at the last Budget – increasing the lower rate from 10% to 18% and the higher rate from 20% to 24%. This shows that it’s not only a viable prospect, but one which the Treasury has already looked to for an ‘easy win’. With the black hole in public finances widening by 50% in the last year, to peaks of £30 billion now, the government would be remiss to dismiss such low-hanging fruit.
However, room for change appears to be narrowing after revisions to the annual exemption allowance in recent years. The exemption rate is the amount that investors can earn in gains before being taxed via Capital Gains Tax, and it has drastically dropped from £12,300 in 2022/23, to just £3,000 in the present day. With this in mind, it’s no wonder that investors are clamouring to know how the impending announcement may impact their hard-earned assets.
Will Capital Gains Tax be an Autumn Budget target?
The government hasn’t explicitly indicated that it will be targeting Capital Gains as a means of raising more money through taxation – yet. But it has grown in prominence as a rumoured strategy, due to Labour’s repeated and persistent commitments not to raise Income Tax, VAT or National Insurance throughout the course of this government.
Of course, that limits the number of taxes they are able to increase to boost the public purse, with the likes of Inheritance Tax and, of course, Capital Gains Tax, at the top of that alternative list.
Lower and higher rates for Capital Gains Tax could well be increased at the upcoming Autumn Budget as a result of this, but the government could also look at more specific areas around asset classifications, such as second homes, particularly in the wake of the public fallout around the former Deputy Prime Minister earlier this year.
Income Tax alignment in the Autumn Budget 2025?
This is not the first year we have seen suggestions of bringing Capital Gains Tax rates in line with the Income Tax rates, but it does look statistically much more likely than ever.
However, we don’t feel this will have the desired effect. With uncertainty at the helm of the British government, it is especially unlikely that investors will look to buy or sell assets under altered rates, due to the expectation of regime change and volatile potential policy reversal in the coming years. This would invariably stunt any potential for economic growth and could harm tax totals as business owners find ways to keep their tax bill within limits.
It has been a challenging few years for businesses, with frequent changes to business rates, tax brackets and fiscal policies all combining to create an air of mounting uncertainty. Whatever decisions are made in November, it is important that the government looks firmly to the future, in order for our economy to have a clear roadmap for forging stability – in contrast to the very inconsistent ‘chop and change’ promises we’ve seen with each recent Budget and election cycle.
Worried about fiscal changes ahead of the Autumn Budget? Here to help
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