The widely anticipated Autumn Budget 2025 delivered a series of measures set to reshape the financial landscape. In an attempt to balance Britain’s fiscal gap with Labour party promises, the Chancellor avoided any headline-grabbing rate hikes. Threshold freezes and targeted increases on investment and property income represents a significant shift that will directly impact individuals, investors, landlords, and high-net-worth clients.
Inheritance Tax (IHT)
Nil-rate bands are to remain frozen until at least April 2031. Other reliefs such as Agricultural Property Relief (APR) and Business Property Relief (BPR) are also to remain at their current levels. These reliefs are vital because they can reduce the value of qualifying agricultural or business assets by up to 100% for IHT purposes. An IHT silver lining of the Budget is that unused APR and BPR allowances can now be transferred between spouses or civil partners, similar to the way the standard nil-rate band and residence nil-rate band already work. This creates greater flexibility, potentially reducing pressure to restructure ownership to maximise reliefs.
The lack of uplift to thresholds means IHT will hit harder in the coming years, particularly for estates with high levels of property wealth or appreciating business assets. However, the ability to transfer APR and BPR between spouses/civil partners offers a welcome planning opportunity — one that could help families preserve more of their business or agricultural assets across generations.
Tax Threshold Freezes: Fiscal Drag Tightens its Grip:
One of the most consequential – though subtle – measures is the continued freeze on income-tax thresholds. The personal allowance and higher-rate threshold will remain unchanged until 2030/31. Even in the absence of explicit rate increases, salary increments, bonus growth, or inflation-aligned pay rises will push more individuals into higher bands, reducing real take-home income over time. The result: a long-term squeeze on disposable income, particularly for middle-to-high earners and those approaching higher-rate status.
Dividend Tax Rises: A Blow to Investors and Business Owners
From April 2026, dividend tax rates will rise by 2 percentage points across all bands meaning investors, company directors, and retirees who rely on dividend streams will suffer a direct hit. Dividends have long been a tax-efficient method of extracting profit for private company owners, but these changes will significantly erode this as a possibility.
Savings Income Taxed More Heavily
Interest earned on savings accounts will also attract an additional 2% tax from April 2027. This reduces return on traditional savings products at a time when inflation has already eroded cash value.
Pension Salary-Sacrifice Cap: A Major Shift for Retirement Planning
For years, salary sacrifice has been one of the most efficient tools for retirement planning, especially for high earners. From April 2029, however, only the first £2,000 of sacrificed salary will benefit from the National Insurance advantage. This change limits one of the most valuable tax-planning mechanisms available.
For many high-net-worth individuals, pensions have become a preferred tool for long-term wealth transfer due to their favourable tax treatment and the ability to leave benefits free of IHT in certain scenarios. From 2027 onward, that advantage will be significantly reduced as unused pension funds will be included in a deceased’s estate for IHT purposes, with personal representatives responsible for paying the IHT. In specific circumstances, beneficiaries may request that the pension scheme administrator pays the tax liability directly to HMRC, easing the administrative and cash-flow burden on the estate, but this will not be the standard position.
Existing retirement models will need to be revisited to reflect the reduced sheltering potential of pension arrangements and the fact that their role as an IHT-efficient legacy tool will be considerably constrained.
Property Income Tax Increase & ‘Mansion Tax’
The High Value Council Tax Surcharge, coined ‘Mansion Tax’ will apply to homes in England valued at £2 million or more with a surcharge beginning in April 2028. This annual levy is in addition to council tax, meaning homeowners will bear its burden. Landlords and property investors are also in the firing line as beginning in April 2027, rental income will be taxed at rates 2 percentage points higher than today. This could force difficult choices regarding the ownership of property, impacting the market and inheritance decisions.
Overall Impact on the Private Client Sector
These measures represent a wide sweep tightening of the tax environment for individuals with investment income, rental income, or complex financial arrangements. Although the Budget avoids explicit, across-the-board tax rises, its cumulative effect is significant. For private clients, the big freeze means the message is clear: proactive planning has never been more essential.
The coming years will reward those who optimise their structures and income streams — and penalise those who maintain outdated strategies. The sector must now adapt to a more interventionist and revenue-focused tax regime, with long-term implications for investment behaviour, property markets, and personal wealth planning.