The Autumn Budget 2025

On 26 November, the Chancellor of the Exchequer, Rachel Reeves addressed Parliament to set out the details of the Autumn Budget. Much media speculation had preceded the announcement, suggesting that tax-hikes would inevitably be needed to plug a gap in government revenues resulting from poorer-than-expected economic growth forecasts.

In the event, perhaps the most notable news was that income tax and National Insurance rates would remain unchanged, albeit the thresholds for allowances would be frozen for a further three years. They will extend now to 2031. This means that as earnings gradually rise, existing tax rates will apply to an ever-increasing proportion of people’s incomes.

For investors, there were two significant announcements. One was a +2 percentage-point increase in taxation on property rental income. From April 2027, this will mean that the basic, higher and additional rates will rise to 22%, 42% and 47% respectively. The OBR and several industry commentators have predicted that landlords are likely pass these costs on in the form of higher rents.

The other measure that will directly affect parts of the property market was the High Value Council Tax Surcharge: a new tax on houses in England worth more than £2 million. From 2028, such properties will be subject to an annual surcharge, which will range from £2,500 to a maximum of £7,500 for homes worth £5 million or more. This has the potential to dampen market appeal in prime markets and, because a higher proportion of high-value homes are located in the South East, it could also lead to a widening of the existing North-South divide. In other words, it makes it more likely that capital growth rates will stay higher in the UK’s more affordable markets, where most properties will remain unaffected by the new surcharge.

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