Andrew Hubbard’s Reaction: Autumn Budget 2025

So, would it be Milk Shakes, Mansions or Millionaires? After the most chaotic period of softening us up for Budget annoucements that I have experienced in my 40 plus years in the tax profession I was waiting to hear at last from the Chancellor on what she was going to announce. But of course we got it all in advance thanks to an extraordinary blunder by whoever was managing the OBR’s website.

So we knew some of the main features of the Budget before the Chancellor had even stood up. The freezing of the personal tax allowances and thresholds was hardly a surprise, though the extension to three rather than two years hadn’t been predicted. Similarly, the mansion tax, imposing a surcharge on properties worth over £2m was expected. But there were some unexpected measures such as the extensive increase in taxes on rental income, savings and dividends, which was explained as a means of reducing the tax gap between earned and unearned income, in other words not a tax on ‘working people’.  The reduction in writing allowance for capital allowances hadn’t been predicted, nor had the reduced capital gains rate for disposals to Employee Ownership Trusts[EOT]. The EOT regime has been widely regarded as a successful way of enabling business owners to pass businesses to their employees so this change is rather a surprise.

Early on the Chancellor made a series of commitments for reform to the taxation of entrepreneurs and investment. The tax rules here are hugely complicated and a rethink of the approach is welcome – though it will take some time before any changes come into force. Similarly the measures to reduce the ability to save NIC though salary sacrifice arrangements for pension contributions will not come into effect until 2029. When it does come in the measure is predicted to raise £4.7 bn – one of the largest single figures in the Budget statement.

The Chancellor made a strong declaration of her commitment to root out tax fraud, avoidance, and failure to pay tax which is due and payable. How this will work in practice remains to be seen – so often changes in this area create as many problems as they solve. And the new settlement opportunity for those still to settle liabilities arising from the loan charge will need careful consideration: will this, as the Chancellor predicted, finally draw a line under this long-standing issue?

The pressure on Rachel Reeves to deliver a Budget which will put the public finances in a more secure state while still winning the support of her party must have been immense. The pre-release of the OBR report will have made things much worse for her. I thought that she came though the ordeal well and has secured her position for the longer term. But, as ever, the small print may well bring some surprises and - as I write this - my colleagues are already pouring over the detail. As always it will take a day or two before the full implications of the announcements start to sink in. However, for the moment, I suspect Ms Reeves sat down with a sense of relief that we can now start talking about real tax changes rather than endlessly speculating about what might happen.

Andrew Hubbard
Editor in Chief