With a reported £20 billion black hole to plug, the Chancellor has been clear: the country must pay up, especially those who can shoulder the burden most.
Press speculation suggests that wealthy homeowners, landlords, high-earning professionals, affluent retirees and entrepreneurs are firmly in scope. The government needs to balance the books and the wealth tied up in property, pensions and investments makes for a tempting target.
Property and landlords
Property remains politically charged. A new annual levy on high-value homes, or even an extension of capital gains tax (CGT) to main residences above a certain threshold, would mark a key shift in how we tax housing wealth. Landlords could also see higher effective taxes if National Insurance is applied to rental income or mortgage relief is restricted further.
Those with second homes or property portfolios face shrinking returns, and families hoping to pass on homes may see their inheritance tax (IHT) bills rise. For many, property has long been their pension – a dependable asset that could now become costlier to hold or transfer.
High earners and business owners
Press speculation suggests pensions are firmly in the Chancellor’s sights. The 25% tax-free lump sum could be capped, and salary-sacrifice arrangements tightened. With frozen income tax thresholds, more earners will quietly drift into higher tax bands – a stealth increase that raises revenue without changing rates.
For company directors, consultants and professionals, these moves could reduce incentives to save and invest. Business owners may also worry about potential changes to Business Asset Disposal Relief, which helps entrepreneurs sell or retire from their businesses more tax-efficiently.
Even modest tax increases could strain SME cashflow, potentially leading to demand for restructuring. Changes to tax reliefs and capital distribution rules may make solvent exits, such as Members’ Voluntary Liquidations, more expensive, requiring directors to reassess exit strategies early.
Affluent retirees and savers
Rumours abound about a possible cut in the annual ISA allowance from £20,000 to £12,000, which would be the first such reduction in decades. Savers who rely on ISAs for tax-free interest or dividends could find their options narrowed. Combined with the inclusion of pensions in the IHT regime from 2027, the traditional “safe havens” for wealth are becoming less secure.
Investors and succession planning
Rising CGT rates or alignment with income tax could significantly increase the cost of realising gains. If the government also removes the “base-cost uplift” - the rule that resets an asset’s value at death, creating a tax saving if beneficiaries decide to sell - families could face paying CGT and IHT on the same asset.
Those planning to sell investments, gift assets, or transfer family wealth should consider timing carefully. Acting before the Budget might preserve current allowances and reliefs.
Plan, don’t panic
None of these measures are confirmed, but the direction of travel is clear: those with accumulated wealth are being asked to shoulder more of the fiscal burden.
Now is the time to review plans. Homeowners should assess ownership structures; professionals and retirees should revisit pension and ISA strategies; and families engaged in inter-generational planning should check that wills, trusts and gifts remain effective.
Tax rules change, but good planning endures. Getting ahead can make an important difference between simply paying tax and paying it wisely.
At Thorntons, our specialist team is highly experienced in advising individuals, families, and business owners on how best to navigate change. To discuss asset and succession planning, get in touch with us on 03330 430150.
