Autumn Budget 2025: Strategic Briefing for Finance Leaders

Chancellor Rachel Reeves will deliver her second Autumn Budget on Wednesday, 26 November 2025. The statement will outline the government’s approach to taxation, spending, and borrowing at a time when growth is slowing, inflation remains elevated, and markets are closely watching the government’s fiscal discipline. 

The speech is scheduled to begin at 12:30pm following Prime Minister’s Questions and will be followed by four days of parliamentary debate. While certain measures may take immediate effect, all new policies will require confirmation through the Finance Bill. 

 

The Office for Budget Responsibility and the Institute for Fiscal Studies estimate a shortfall of between £22 and £30 billion in the public finances. The gap reflects weaker productivity, welfare policy reversals, and the government’s decision to retain several social support measures such as the winter fuel payment. 

Reeves has reaffirmed two key fiscal rules: by the end of this Parliament, day-to-day government spending must be funded by tax receipts rather than borrowing, and public debt must be falling as a share of GDP. These rules leave limited room for flexibility and make additional revenue measures or departmental restraint highly likely. 

The Chancellor has publicly confirmed that both tax rises and spending cuts are being considered. She continues to emphasise growth and fiscal credibility, rejecting the idea of an endless cycle of tax increases but acknowledging that some rises may be unavoidable. 
 

The economy has shown signs of fatigue. GDP rose by just 0.1 percent in August following a small contraction in July. Public sector borrowing reached £18 billion in August, the highest level for that month in five years. Inflation remains stubborn at 3.8 percent, still well above the Bank of England’s 2 percent target. 

The Bank of England cut interest rates five times earlier in 2025 but chose to pause in September amid lingering inflationary pressures. The International Monetary Fund expects the UK to be the second-fastest-growing G7 economy in 2025, but also the one with the highest inflation rate in both 2025 and 2026. 

Business confidence remains fragile. The British Chambers of Commerce has warned that any further broad tax rises could be “make or break” for firms already struggling with higher costs and subdued demand. Retail spending has slowed as households adjust to tighter budgets and persistent price pressures. For recent analysis of how fiscal pressures are affecting sterling and business sentiment, see our latest weekly FX roundup.
 

The freeze on income tax thresholds currently set to expire in 2028 may be extended. As wages rise, more workers are pulled into higher tax bands, effectively increasing the overall tax take without changing rates. 

There has also been discussion among policy groups about adjusting the balance between income tax and National Insurance. Some proposals suggest cutting employee National Insurance by 2 pence while increasing income tax by the same amount. This would shift the burden toward groups not currently paying NI, including pensioners, landlords, and the self-employed, although no formal decision has been made. 

Reeves has indicated that targeted measures to support households with energy costs remain under review. Options under discussion include reducing or suspending the 5 percent VAT on household energy bills or removing certain regulatory levies to help lower prices. 

Reform in this area appears to be under active consideration. Possible changes include replacing stamp duty with a new annual property tax or allowing stamp duty payments to be spread across several years. Other reports suggest new council tax bands or a wider overhaul of the system. Landlords could face higher taxes or even National Insurance applied to rental income. A capital gains tax charge on main residences above a certain value has also been mentioned. Any of these measures would primarily affect owners of high-value properties and buy-to-let investors. 

The cash ISA allowance may be reduced from £20,000 to £10,000 to encourage savers to invest in more productive assets. Although this change was paused earlier in the year, it remains on the government’s radar. 

Speculation continues that the 25 percent tax-free lump sum could be reduced or capped. HMRC has issued reminders that pension withdrawals cannot be reversed, meaning that acting before the Budget carries significant risk. Pension tax relief for higher earners is also under review, with the Treasury exploring whether a flat-rate structure would be more sustainable. 

Salary sacrifice arrangements are another potential target. The government is reportedly considering caps on the total amount that can be sacrificed into pensions, limits on National Insurance exemptions of between £2,000 and £5,000, or even the removal of tax and NI reliefs altogether. Such changes could increase revenue but would likely reduce incentives to save, raise administrative costs for employers, and discourage low-carbon benefit schemes such as electric vehicle leasing. 

Business groups have urged restraint on further tax increases. The British Chambers of Commerce has called for reform of business rates, the removal of the energy windfall tax, and greater investment in infrastructure and skills. The Treasury has indicated that it will aim for a balanced approach that protects public services while maintaining competitiveness and growth. 

 The Budget is expected to confirm the Youth Employment Guarantee, which will offer paid placements to young people who have been out of work for 18 months or longer. 
 

The experience of last year’s Budget shows that not all speculation becomes policy. Widely expected changes to pension tax-free cash and tax relief were not implemented. However, inheritance tax was extended to include pension savings, and capital gains tax rates on shares increased, with the basic rate rising from 10 to 18 percent and the higher rate from 20 to 24 percent. 

The lesson for both individuals and businesses is clear. Acting prematurely based on rumour can lead to costly and irreversible decisions, particularly where pensions or asset sales are concerned. 
 

For corporate finance teams, now is the time to model the potential impact of extended tax thresholds and any adjustments to National Insurance on payroll budgets and cash flow. Property exposure and landlord liabilities should be reassessed in anticipation of possible reforms. Salary sacrifice schemes and employee benefit structures should also be reviewed for flexibility ahead of potential rule changes. Companies with investment plans should watch for new capital allowance incentives or infrastructure-related reliefs that may support productivity initiatives. 

For investors and treasury professionals, the Budget is likely to create short-term volatility in both gilt yields and sterling. Fiscal credibility will remain a key driver of market stability. Scenario modelling should continue until the Finance Bill confirms the timing and scope of any measures. 

For households and financial advisers, it remains important to avoid reactive decisions on pensions, ISAs, or investments until official details are released. Any targeted energy support measures should be reviewed carefully for eligibility and start dates. 
 

The Autumn Budget 2025 represents a critical moment for the government’s economic strategy. The Chancellor faces the challenge of maintaining fiscal discipline while supporting growth and managing inflation. Tax rises and selective spending cuts are on the table, but most specifics remain unconfirmed. For broader analysis of how fiscal policy shapes currency markets, see our insights on fiscal policy and central banks.

For now, the most prudent approach is preparation without reaction. CFOs, investors, and policy analysts should focus on scenario planning, liquidity management, and exposure analysis while waiting for clarity from the Treasury and Parliament. The Budget will serve as a key test of the government’s ability to balance credibility, confidence, and competitiveness in a demanding fiscal environment. For businesses managing currency exposure during policy uncertainty, see our comprehensive forward contracts guide.