Stealth not wealth taxes – what does the Budget mean for you and the economy?
Stealth not wealth taxes
What does the Budget mean for you and the economy?
Despite better-than-expected economic forecasts, the Autumn Budget on 26 November 2025 delivered the widely trailed “smorgasbord” of tax increases, totalling £26 billion. While some of the more dramatic measures feared by private wealth clients, such as exit taxes, changes to lifetime gifting rules, reductions to (pension) tax-free cash amounts or capital gains tax rises did not materialise; the Budget still contained more than 40 separate tax raising mechanisms. This reflects the Government’s attempt to remain within its manifesto commitments (though opinions differ on this), while avoiding politically difficult spending cuts. It may not be quite death by a thousand taxes, but the proliferation of differing income tax rates pushes us ever further away from tax simplification!
The poor reception of last year’s Budget and concerns over deteriorating public finances, largely due to limited spending discipline, contributed to unhelpful levels of speculation over the past few months. After such a build-up the actual response from markets was subdued although the unintended consequences are yet to be known! Sterling strengthened marginally and gilt yields edged lower, indicating a modest vote of confidence from investors lending to the UK Government. Nevertheless, doubts persist about the ability to control spending and address structural challenges, particularly the growing fiscal pressures associated with an ageing population and the challenges that lie ahead. If the UK today had the demographic profile of 2005, public finances would be around £50bn a year stronger. Looking ahead to 2045, the demographic shift is expected to cost a further £80–90bn annually. These are profound, structural changes confronting all developed economies.
From an economic perspective, the Budget is likely to ease inflationary pressures through 2026, supported by freezes on rail fares and a reduction in energy costs (through various green levies removed from household bills). This environment may allow the Bank of England to consider further interest rate cuts.
The Government has postponed substantial fiscal consolidation until 2028 and beyond. While this may support short-term growth, the combination of higher near-term government spending and deferred tax increases limits fiscal flexibility should unforeseen challenges arise in the coming years.
Politically, with the major tax increases delayed, there is no guarantee that every policy announced will be implemented. The temptation to offer good news and lower taxes ahead of a General Election will be impossible to resist. The current consensus suggests that the Chancellor now has sufficient fiscal headroom, but political stability may be tested by the May 2026 elections.
Key Changes and Commentary
Income Tax
The freeze on personal income tax thresholds has been extended to the 2030/31 tax year. From April 2027, tax rates on property and savings income will rise by 2%, moving to 22% (basic rate), 42% (higher rate) and 47% (additional rate). These changes do not apply to property income in Scotland, and discussions with Scotland and Wales are expected on the future approach to devolved rates.
For dividend income, the basic and higher rates will rise by 2% from April 2026, increasing to 10.75% and 35.75% respectively. The additional rate remains unchanged at 39.35%.
Our view
Most individuals will continue to manage the impact of frozen thresholds through simple planning strategies such as pension contributions and ensuring income generating assets are held tax-efficiently. Whilst it is tempting to make investment decisions based on the difference between income and capital gains taxes, good financial planning aims to make sure those decisions are first and foremost an investment decision.
ISA Reform
From April 2027, the cash ISA allowance will reduce to £12,000, with the remaining £8,000 reserved for stocks and shares ISAs. Savers aged 65 and over will retain the full £20,000 cash allowance.
Our view
Although the Chancellor highlighted valid points around excessive risk aversion when announcing the changes, the proposals do introduce additional complexity to the ISA landscape and risks increased confusion for savers and higher compliance burdens for providers.
Pensions – Salary Sacrifice
From 6 April 2029, salary-sacrificed pension contributions above £2,000 per year will be subject to both employer and employee National Insurance. Employer contributions made outside salary-sacrifice arrangements remain exempt.
Our view
There is no immediate impact, and the Government has said they will be sharing further guidance on next steps before April 2029. Uncertainty remains whether contractually exchanging higher employer pension contributions in lieu of salary are in or out of scope or whether the minimum contributions under the auto-enrolment obligations will be used as a threshold to determine an acceptable level of employer contribution. One presumes the former but this is one that employers will need to review when the guidance is issued. For individuals, reviewing how and if they should maximise reliefs is still a matter of course for almost all those who are still able to contribute to pensions.
Inheritance Tax (“IHT”) – Business Property Relief (“BPR”) and Agricultural Property Relief (“APR”)
Unused portions of the £1 million BPR/APR allowance will now be transferable between spouses or civil partners, aligning the relief with the treatment of the standard nil-rate IHT band.
Our view
Although this change does not alter the broader challenge posed by extending IHT to qualifying business and agricultural assets, it is welcome news and streamlines planning to some extent for those affected.
Venture Capital Trusts (VCTs) & Enterprise Investment Schemes (EIS)
The Government plans to “reengineer” VCT and EIS schemes to support companies not only at early stage but throughout their growth. Annual and lifetime company limits will rise significantly, with higher thresholds for knowledge-intensive companies. As from April 2026, the rate of VCT income tax relief will reduce from 30% to 20%.
Our view
Expanding the range of qualifying companies is a positive development that will widen investment opportunities. However, the reduction in VCT relief is unhelpful for those who had moved to funding VCTs due to lack of tax relief on pension contributions. It is also unhelpful for those more recently moving to a pension drawdown strategy in light of the changes to IHT on unused pension funds. The justification that VCTs involve “lower risk” due to later-stage investing is not one we share given the considerable overlap between VCT and EIS portfolios.
Property Taxes
From April 2028, a new annual surcharge will apply to properties valued above £2 million, ranging from £2,500 up to £7,500 for homes worth £5 million or more.
Our view
A revaluation of council tax bands may be overdue, but how this new surcharge evolves remains to be seen. A detailed consultation in early 2026 will consider support schemes, reliefs, exemptions and the treatment of complex ownership structures including trusts and corporate vehicles. As a result of the policy we would expect some friction in the housing market (the OBR has factored in lower stamp duty receipts), as buyers and sellers face uncertainty around price thresholds. The Government is expecting to raise £400m up to 2031 from the surcharge, but one does have to question the value of such a policy especially as the UK, even prior to this measure, is reported to have the highest property taxes in the OECD.
Capital Gains Tax – Employee Ownership Trusts (EOTs) / Share Exchanges
While there were no changes to headline CGT rates, relief for disposals to EOTs will be reduced from 100% to 50% for transactions on or after 26 November 2025. The Chancellor also announced revisions to CGT anti-avoidance rules relating to share exchanges.
Our view
EOTs have been increasing popular to the extent that the cost of the relief has significantly exceeded original expectations. Reducing the relief means that an effective capital gains tax of 12% will apply immediately on disposals to an EOT. The circumstances to benefit from EOTs are relatively restrictive but for those that do, 12% remains a discount on the main rate of CGT. Changes to the anti-avoidance provisions regarding share exchanges may affect some forms of planning for business owners but we await further detail.
Excluded Property Trusts
Trusts settled by formerly non-domiciled individuals before 30 October 2024 will now be subject to a £5 million cap on 10-yearly IHT charges, effective retrospectively from 6 April 2025.
Our view
Capping the 10-year charge is a surprising development given the Government’s broader stance and rhetoric on the non-dom regime. It will be a benefit only to very large trusts, but following some high-profile announcements it may reflect an acknowledgement that the Government miscalculated the number of non-doms departing the UK following the recent reforms.contact.
What next?
Over the coming days and weeks, we will focus on evaluating what these changes mean for clients and monitoring any further details as they emerge. While immediate action is unlikely to be necessary, there may be steps to consider before the end of the tax year.
Prior to making any decisions we recommend you speak to your Client Partner or Wealth Planner, or contact us here.
Artorius does not provide tax advice. The information provided reflects our understanding at time of writing, 28th November 2025, and is subject to change. It should not be construed as advice and is produced for information purposes only.
Artorius Wealth Management Limited is authorised and regulated by the Financial Conduct Authority (‘FCA’) (firm reference number 677055) in the conduct of its investment services. Artorius is a trading name of Artorius Wealth Management Limited.
Artorius provides this information in good faith and believes it to be accurate, however we do not warrant its completeness and accuracy and do not accept any liability for any errors or omissions, nor for any actions taken based on the contents of this brochure. We may update this information at any time and without notice.
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