Autumn Budget 2025: latest predictions for landlords

Chancellor Rachel Reeves will deliver her second Budget this autumn. Slow economic growth and higher than expected inflation mean the government needs to close an estimated spending gap of £40 billion.

Despite a manifesto pledge not to increase income tax, National Insurance, or VAT, speculation is rife that tax rises are the only way the Treasury can raise the revenue it needs.

Ahead of the Budget, it has already been reported that the government could make changes to taxes paid by landlords, such as income tax, capital gains tax, and inheritance tax.

Is the Chancellor planning further tax rises?

The government needs to close a spending gap of approximately £40 billion, according to the National Institute of Economic and Social Research (NIESR) think tank. 

The Labour Party pledged in their manifesto that they wouldn’t raise taxes for working people and, more specifically, that they wouldn’t increase income tax, VAT, or National Insurance.

However, as part of her first Budget in October 2024, Chancellor Rachel Reeves announced £40 billion of tax rises, including changes to National Insurance and capital gains tax.

A commitment to increasing spending on defence and the NHS as part of the Spending Review, plus u-turns on pensioner and disability benefit cuts, mean that speculation over further tax cuts is growing.

According to the Treasury and the Institute for Fiscal Studies, tax rises later this year are ‘inevitable unless economic indicators improve’.

While the Chancellor may stop short of increasing tax rates to honour the manifesto promise, she may tinker with thresholds, allowances, or other taxes such as inheritance tax or capital gains tax.

Autumn Budget 2025 – what do landlords need to look out for?

Further capital gains tax changes?

Capital gains tax (CGT) rates for properties were left alone in the 2024 Autumn Budget (although rates for selling other assets were increased). As a result, capital gains tax for selling property could be a target this autumn.

The CGT rate for selling a property is currently:

• 18 per cent for basic rate taxpayers
• 24 per cent for higher and additional rate taxpayers

There’s also speculation that the capital gains tax allowance could be reduced further – despite being reduced from £12,300 to £3,000 in recent years.

Income tax threshold freeze to be extended?

One way the government could raise more money without increasing income tax is to extend the freeze on the tax thresholds. This is known as a ‘stealth tax’ as more people are dragged into higher tax brackets as wages rise.

Income tax thresholds, which determine the amount of tax people pay, are currently frozen until 2028 and have been the same since 2022. 

As part of the Autumn Budget 2024, Rachel Reeves said that income tax thresholds would start to rise again in line with inflation from the 2028-29 tax year. 

However, the Treasury may be considering extending the freeze to raise more revenue.

Income tax rises could raise billions – HMRC

Although the government has ruled out tax rises for working people, modelling from HMRC shows just how much money could be raised through higher taxes.

The table below shows how much extra revenue the Treasury could make by increasing: 

• the basic rate of income tax from 20 per cent to 21 per cent
• the higher rate of income tax from 40 per cent to 41 per cent

And this table shows how much could be made by increasing:

• Class 1 National Insurance for employees from eight per cent to nine per cent
• the standard rate of VAT from 20 per cent to 21 per cent

Changes to the inheritance tax threshold on the way?

The Labour government has already made a number of high-profile changes to inheritance tax. This includes the move to include unspent pensions as part of someone’s estate and into the scope of inheritance tax from April 2027 – which could impact many landlords.

Looking ahead to the 2025 Autumn Budget, one of the ways the Treasury could raise revenue is by reducing the £325,000 inheritance tax threshold. 

This threshold, which is the point at which people start paying inheritance tax, has been the same since 2009. HMRC estimates that currently only four per cent of estates pay inheritance tax. 

A lower threshold would mean a higher number of people would need to pay inheritance tax at 40 per cent, which could help to boost government funding.

Alternatively, the government could increase the 40 per cent inheritance tax rate. This wouldn’t impact the number of people who pay inheritance tax, but it would mean higher bills for those that do.

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