The £20–30 Billion Question: Will the UK's Next Budget Hit Your Wealth?
Autumn Budget 2025: Will Wealth Taxes Be the Next Target?
The UK’s Autumn Budget is scheduled for 26 November 2025, deliberately set late in the year to give the Office for Budget Responsibility (OBR) time to validate the government’s tax-raising plans against its spending commitments. If the numbers fail to add up, the risk is stark: financial markets could lose confidence, sending the economy into further decline.
In the November 2024 Budget, the blame for fiscal instability was pinned firmly on the departing Conservative government. But this time, with Labour firmly in charge, who will shoulder responsibility if the sums don’t add up? Will Prime Minister Keir Starmer resort again to his now-familiar refrain: “I didn’t know”?
The £20–30 Billion Question
The challenge is clear. To meet its spending plans, the government must raise between £20–30 billion in new revenue. Yet Labour has pledged not to increase Income Tax, VAT, or National Insurance for working people. That leaves the Treasury with few obvious levers.
As seen in 2024, the government may turn once again to fiscal creep - freezing thresholds, tightening reliefs, and targeting groups less likely to impact voters directly: pensioners, business owners, investors, and expatriates.
But the international policy conversation is moving in a different direction. The new global buzzword is wealth taxation. And the question is whether the UK will follow suit.
What Counts as Wealth?
Definitions vary. In Portugal, the “solidarity wealth tax” applies to incomes over €80,000. Elsewhere, flat-rate taxes are levied on all forms of income, mirroring VAT’s broad reach.
The UK has precedent: in the 1960s, a Labour government introduced Capital Gains Tax (CGT). That levy was increased sharply in November 2024 - by 80%, to a range of 18–24%. A new wealth tax could be the next step.
So, what forms of wealth might be taxed?
Property & Land
Property is always in the crosshairs. Owners already pay council tax, stamp duty on transactions, and CGT on disposals. A modern “wealth tax” could merge these into a flat-rate property tax, abolishing council tax and stamp duty in name but replacing them with an annual levy on property value.
If this coincides with “modernised” property valuations, many owners would find themselves paying more - even if packaged as a fairer, simpler system. Expect allowances to be built in, ensuring the policy is marketed as targeting only the wealthy. In reality, it could creep into middle-class households.
Investment Portfolios
Currently, UK-based investments for expatriates benefit from deferred CGT liabilities, payable only on disposal. Removing this deferral option would deliver a faster flow of tax receipts to the Treasury - without hitting domestic voters immediately.
Pensions
Pensions are another tempting target.
In the November 2024 Budget, Inheritance Tax (IHT) at 40% was extended to personal pension schemes. This broke the long-standing principle that pensions were shielded after a lifetime of contributions.
Government service pensions are already locked into UK taxation and cannot be transferred overseas. The next step could be to apply the same rule to all private pensions, restricting expatriates’ ability to move funds to jurisdictions such as Cyprus - where pension income is taxed at a flat 5%. For a retiree with a £1 million pension pot, that’s a £50,000 annual saving currently available. Closing this door would be sold as “fairness,” but in practice it strips expats of flexibility and significantly increases the UK’s tax take.
Inheritance & Family Wealth
The November 2024 reforms to non-dom rules tied more estates into the UK IHT net. At 40%, this is one of the most punitive inheritance taxes globally.
For now, gifts remain a key planning strategy to mitigate IHT and CGT, but the Treasury could easily tighten these rules. Family trusts remain one of the most effective structures to protect assets - property, pensions, investments, and business shares - from erosion by probate costs and inheritance tax.
Tax Creep: The Common Theme
What unites these measures is not bold new taxation, but incremental tax creep. Each small adjustment - tightened allowances, redefined reliefs, frozen thresholds - delivers billions over time, while allowing the government to claim it has kept its promise not to raise “headline” taxes on working people.
But for property owners, investors, pension savers, and expatriates, the impact will be real and unavoidable.
Conclusion: Preparing for What’s Next
The 2025 Budget could mark the moment wealth taxes officially enter the UK system. Whether through property levies, pension restrictions, or inheritance rule changes, the trend is clear: the government is widening the definition of taxable wealth.
For individuals and families with significant assets, the time to act is now. ProACT Partnership specialises in structuring wealth across borders - helping expatriates and international families protect property, pensions, and investments from fiscal creep, while ensuring compliance.
The government may be focused on plugging its fiscal black hole, but you can still focus on protecting your legacy.
Need help & guidance?
Contact us or book a free review with one of our expatriate experts for help & guidance living or working abroad.
