UK Raises Taxes On Savings, Property And Earners – The Main Points

Tom Burroughes

27 November 2025

UK finance minister – aka Chancellor of the Exchequer – Rachel Reeves hiked taxes by up to £26 billion ($34.3 billion) by 2029-30 in her Autumn Budget address yesterday. The Labour minister, who has been criticised for how the pre-Budget process unfolded amidst a torrent of leaks, tightened screws on earners, savers and owners of high-value property. (See wealth managers' reactions.)

The hope is that the tax haul will give international bond markets assurance that debt is being brought under control. What might threaten that outcome is if the government, even with a large parliamentary majority, cannot get millions of adults off welfare and into work.

As far as this news service viewed it, the wealth management industry, which tends to be relatively neutral in its language, was generally angry about the direction of policy – with some exceptions. There are worries that Reeves’ tax hikes on dividends, for example, will hurt small firms, or that higher income tax burdens via freezing thresholds will stifle work and enterprise.

In the background is a concern that the UK is suffering from weak growth, low real investment, sticky inflation and weak productivity. Unless these problems are resolved, the country will fall into a “doom-loop” of deteriorating public finances, calls for higher tax, and sluggish growth.

Reeves’ freezes in tax thresholds will result in 780,000 more basic-rate, 920,000 more higher-rate, and 4,000 more additional-rate income taxpayers in 2029/30, accounting for an added £8 billion in revenue. The freeze will extend for three years to 2030/31. Other personal tax changes include £4.7 billion through charging National Insurance on salary-sacrificed pension contributions, and £2.1 billion through increasing tax rates on dividends, property and savings income by two percentage points.

There will be a so-called “mansion tax” – an annual charge of £2,500 for properties worth more than £2 million and £7,500 for properties worth more than £5 million. While such a tax might not levy much revenue, it is seen as a way for Reeves to pacify the more Leftwing members of the Labour Party. Earlier in the year, she was thwarted in her attempt to cut welfare bills by backbench MPs. A concern is that those who bought homes decades ago and have seen values rise will struggle to pay the levy, triggering a rush of sales that could affect the rest of the property market.

The budget got off to a poor start yesterday after details of Office for Budget Responsibility (OBR) forecasts were leaked ahead of Reeves’ speech. As a result, reactions to the contents came out before Reeves began her speech in the House of Commons. The organisation will investigate the leak.

In one of the more positive moves, Reeves said new listings on the London Stock Market – currently suffering from low IPOs – will enjoy a three-year “holiday” from stamp duty tax.

There were sighs of relief about inheritance tax (IHT). The £1 million allowance for 100 per cent Business Relief (or Agricultural Property Relief) can now be passed to a surviving spouse or civil partner, even if the first death happened before the rule change.

Regarding the tax treatment of resident non-doms (that status is due to be abolished and replaced by this government with a residency-based regime), Reeves proposed to cap inheritance tax charges for trusts at £5 million over a 10-year cycle. That was seen as a way to ameliorate some of the tax hit to non-doms on their assets in relation to IHT.