What should we expect in the Budget on 26 November?

Again, tax rises are a given, we know there is a black hole running to billions that the Chancellor of the Exchequer needs to recover. I said it last year, and I say it again, the big question is ‘where the money will come from?’

So, we expect tax rises but where are those rises expected to be?

Income tax

The Labour manifesto was clear that they wouldn’t touch Income Tax or National Insurance, but they found a loophole before (by raising employer’s National Insurance) and rumour has it that they have found another loophole to exploit.

For a long time our government have wanted to impose National Insurance on to landlords but achieving that in practice is very difficult to do. So instead, to get the same result, it is speculated that National Insurance will be cut by 2% and replaced with an increase by the same amount in Income Tax.

If the Government does this, they would be keeping their promise not to take money away from workers, provided that any changes are applied consistently across all tax brackets. However, if they instead impose a 2% increase on all tax bands—raising the additional rate to 47%—then, unless National Insurance is also reduced so that the higher 2% rate becomes zero, higher earners would still face an overall increase in their tax burden.

Another consequence of this move is that they would also increase the tax on pensioners as well as landlords since pensioners do not pay National Insurance.

There is also concern that dividend tax rates could be further increased.

VAT

The UK has one of the higher thresholds for VAT compared to other countries in Europe. It has been acknowledged that the VAT threshold is a source of tax losses that add to the tax gap, as businesses either legitimately or illegally avoid the compulsory VAT threshold. There are thousands of businesses that have income just under the VAT threshold, and the number of businesses dramatically drops for turnover above that number.

Making Tax Digital (MTD) also comes in for income tax from April 2026 with a threshold of £50,000 initially, meaning businesses that are not VAT registered under self assessment will be required to prepare and file quarterly accounts. Speculation therefore is that the threshold may be reduced in line with the Making Tax Digital thresholds, and potentially therefore reduced again from April 2027 to £30,000.

Capital Gains Tax

We saw a rise in the rates last year but not to the extent that had been rumoured, as it had been predicted that the rates would be raised to be in line with income tax.

I would be surprised if there isn’t some further change to capital gains tax, such as scrapping Principal Private Residence Relief or increasing the rates, but as yet I haven’t heard any rumours.

Inheritance Tax

There were massive changes for inheritance tax last year and one can only hope that they are done tampering with it, but as one of the only taxes that they didn’t profess to retain in their manifesto I would say it is still at risk.

SDLT

We might be in for a rise in Stamp Duty Land Tax on property transactions, but they may hold off on that in favour of a Property Tax replacing SDLT that is being considered, payable by the seller rather than the purchaser and only payable on homes over £500k. We don’t know if they are moving ahead with this, as it remains in discussion. It would be impossible for a new tax to be introduced immediately as it will need legislation, so we would expect a Property Tax to come in from April 2026, if they did proceed.

Pensions

Last year it was thought that pension tax relief would be affected, but the government didn’t follow through with that change, but they imposed inheritance tax (from 2027) on pension pots instead.

Those speculated changes from last year could well come this time around. It was thought that tax relief from the higher rates of tax would be reduced to a flat rate of 30% to collect more cash from higher earners.

Transfer Pricing

A consultation ran earlier this year on transfer pricing and diverted profits tax in the UK, looking at reforming the taxes. We may see some changes resulting from that consultation process which closed in Summer 2025.

R&D tax credits

We hope(!) that we have reached a stable position after numerous changes in the last few years, further significant changes are not expected.

There is a possibility that Patent Box could be scrapped since it is rarely used and would not affect very many companies.

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