Autumn Budget 2026: Which Taxes Do the Experts Say Could Be Reformed?

When Chancellor John Healey delivers his first Budget on Wednesday 28 October, he will do so with very little room to manoeuvre. Fiscal headroom has shrunk to around £13 billion, government borrowing costs are at multi-decade highs, and income tax, employee National Insurance, VAT and corporation tax remain ruled out for further rises.

Earlier this month, our Associate Directors James Bacon and Radostina Dencheva hosted our pre-Budget webinar, looking at the backdrop to the Chancellor’s decisions, what is already confirmed, and the areas independent experts have highlighted for reform. Here is a summary of their thoughts.

We’re not in the business of guessing what will be in the red box – and we’d encourage you not to make decisions based on rumours either. Instead, this article looks at where respected bodies such as the Institute for Fiscal Studies (IFS) say there is room to reform the tax system without breaking the government’s manifesto pledge, and raise some of the money needed.

In this article, we cover the tax changes already in force, the taxes experts have identified as candidates for reform ahead of the Autumn Budget 2026, and what this backdrop means for business owners, families and private clients.

The economic backdrop: a Chancellor boxed in

The global backdrop is putting real pressure on the public finances. The Iran conflict pushed Brent crude from $72 to $112 a barrel, and the OECD has named the UK as the hardest-hit major economy. Gilt yields have risen sharply, with 10-year yields at an 18-year high, and debt interest is on course to overtake spending on education. The government must either cut spending or raise taxes. With spending already stretched and the main rates of income tax, employee National Insurance and VAT protected by manifesto pledge, the Chancellor’s options have narrowed to a handful of areas.

Tax changes already announced or in force

Before looking at where experts see room for reform, it’s worth taking stock of what has already changed – and there’s quite a lot of it. These changes are now in force, or are due to come into force soon:

• Business Asset Disposal Relief: rate rose to 18% from April 2026, with a £1 million lifetime limit.
• Agricultural and Business Relief: from April 2026, 100% relief is capped at £2.5 million per person (transferable between spouses), with 50% relief above that. AIM shares now receive 50% relief, outside the cap.
• Employee Ownership Trusts: relief on disposals to an EOT has been halved to 50%.
• Employer National Insurance: 15% since April 2025, with a lower threshold of £5,000.
• Dividend tax: up two percentage points to 10.75% (basic rate) and 35.75% (higher rate) from April 2026.
• Savings and property income: tax rates rise by two percentage points from April 2027.
• Cash ISAs: the annual limit falls to £12,000 for under-65s from April 2027; the overall ISA allowance stays at £20,000.
• Pensions and inheritance tax: from April 2027, unused pension funds fall within the estate for IHT. Where death occurs after 75, beneficiaries may also pay income tax on withdrawals.
• Frozen thresholds: income tax and National Insurance thresholds remain frozen until April 2031.
• High-value property surcharge: a new annual charge on homes worth £2 million or more from April 2028.
• Salary sacrifice: the National Insurance saving on pension salary sacrifice is capped at £2,000 a year from April 2029.

Where experts say there is room for reform

With the biggest taxes protected by the manifesto pledge and much already changed, the areas left open to the Chancellor are narrower. Independent bodies such as the IFS have set out where reform could raise money without breaking that pledge – and, just as importantly, where it could backfire. These are areas of analysis and debate, not predictions of what will be announced.

Capital Gains Tax

• Raising the current rates of 18% and 24% is often discussed, but the Treasury’s own analysis suggests a 10-point rise in the higher rate could lose £3.6 billion rather than raise it. The IFS argues that simply raising rates would discourage saving and investment, and that reforming how gains are taxed should come first. John Healey has reportedly ruled out an equalisation of CGT and income tax rates.
• Removing the CGT ‘uplift’ on death, which the IFS estimates could raise around £2.3 billion a year without changing the rate.
• If rates were to rise significantly, there would be a case for bringing back indexation, so that tax isn’t charged on inflationary gains.

Inheritance Tax

• Abolishing the residence nil rate band (£175,000 per person), which the IFS has highlighted as worth up to £6 billion a year.
• Tighter gifting rules, such as ending taper relief, extending the seven-year window to ten years, or a lifetime cap on gifts.
• A straight increase in the 40% rate is estimated to raise the least – the IFS puts a 1p rise at only around £0.3 billion.

Pensions

• Flat-rate tax relief at 20%, which could raise around £22 billion, though the IFS has warned it would be unfair alongside withdrawals taxed at marginal rates and should be avoided.
• Reform of the 25% tax-free lump sum, which the IFS suggests would spread its benefits more evenly. Historically, past reductions have come with protection for rights already built up.

Property

• Adding higher council tax bands, which would be simple to administer, though the revenue would go to councils rather than the Treasury. The IFS has described council tax as regressive, with bands still based on 1991 valuations.

Options set aside for now

• A land value tax has been ruled out for this cycle, and a wealth tax isn’t currently under consideration. The IFS has also cautioned against an annual wealth tax.
• Lowering the high-value property surcharge threshold from £2 million to £1.5 million, roughly doubling the number of homes caught, mostly in London and the South East.

Why we don’t plan around Budget rumours

Changes to income tax are well understood; changes to narrower taxes are harder to predict. Around 5,000 people pay half of all CGT each year, so even a modest rise could change their investment decisions and raise less than expected.

IHT is politically sensitive, even though only a small proportion of estates pay it. After the recent changes to business relief and pensions, the debate tends to focus on allowances and reliefs rather than the headline rate.

Pensions show the cost of speculation. Ahead of the 2024 Budget, many people withdrew tax-free cash they didn’t need, which often couldn’t be put back and was left in cash. The government may be reluctant to stir that up again.

The bottom line? None of us can know what will change, so it pays not to plan around changes that may never happen.

What the Autumn Budget could mean for business owners

If you own a business, I’d look at this Budget from three angles.

• Costs: The 2024 employer NI changes have now settled. Employee NI is protected by the manifesto pledge; employer NI isn’t, though there’s no indication of a further rise.
• Profit extraction: Any pension changes could shift the best mix of salary, dividends and pension contributions. We still believe employer pension contributions are generally the most tax-efficient way to extract profit, though funds can’t be accessed until minimum pension age (rising to 57 from 2028), so it’s worth reviewing your arrangements regularly.
• Business exit: Recent changes to the tax treatment of Employee Ownership Trust sales and to Business Asset Disposal Relief have already reshaped this area. These changes and the effect they have on the attractiveness of different business exit options should not distract business owners from the core goal of building value within their business to improve future saleability. For more information on this area of planning, see our Three-Year Value Acceleration Programme.

Business owners have already absorbed a lot of change in recent years. Whatever is announced, that’s no reason to take your eye off the ball – keep reviewing your position to make sure of both short-term tax efficiency and long-term value.

What the Autumn Budget could mean for families and private clients

Changing legislation can turn a once-suitable plan on its head. The clearest example is pensions coming into the estate for IHT from April 2027. As Radostina explained in our webinar, a couple with £1.6m in pensions and £2m in other assets might face an IHT bill of around £400,000 today. From April 2027, with nothing else changing, the estate exceeds £2m, the residence nil rate band is lost, and the bill rises to roughly £1.18m – almost three times as much.

Tax wrappers, and the order you draw from them, matter more too. With higher tax on dividends, savings and property income, it’s worth using allowances fully and, where appropriate, favouring stocks and shares ISAs over cash ISAs. In some cases, drawing on pensions before ISAs and GIAs may now be more efficient, reversing previous thinking.

None of these calls for knee-jerk decisions, but it does call for a review. We’ll keep these areas under close watch as part of our clients’ financial planning, and make changes where new legislation means they’re needed.

Autumn Budget 2026: frequently asked questions

When is the Autumn Budget 2026?

Chancellor John Healey will deliver the Autumn Budget on Wednesday 28 October 2026. It will be his first Budget.

Will income tax go up in the Autumn Budget 2026?

Rises to income tax, employee National Insurance, VAT and corporation tax remain ruled out. However, income tax and National Insurance thresholds remain frozen until April 2031.

What has the IFS said about Capital Gains Tax?

The IFS estimates that removing the CGT ‘uplift’ on death could raise around £2.3 billion a year, and argues that simply raising rates would discourage saving and investment. The Treasury’s own analysis suggests a 10-point rise in the higher rate could lose £3.6 billion rather than raise it.

When will pensions be subject to inheritance tax?

From April 2027, unused pension funds fall within the estate for IHT. Where death occurs after 75, beneficiaries may also pay income tax on withdrawals.

Should I take my tax-free cash before the Budget?

Not without advice. Ahead of the 2024 Budget, many people withdrew tax-free cash they didn’t need, which often couldn’t be put back and was left in cash. Historically, past reductions to the tax-free lump sum have come with protection for rights already built up.

Next steps: planning with confidence

Budgets often generate more noise than substance in the run-up, and the best decisions are usually made once the facts are known. My advice is simple: don’t let the headlines rush you. Whatever is announced on the 28^th of October, we will be here to help you understand what it means for you, your family or your business.

You can watch our full pre-Budget webinar on our website. If you would like to talk through your own position, please get in touch or call us on 01603 672777.

We’ll also host a Post-Budget Webinar shortly after 28 October, once we know what was announced.

Written by Alex Meadowcroft
Senior Associate | Chartered Financial Planner

Published: 14 October 2026

Disclaimer: This article is for information only and does not constitute personal financial advice. It reflects our views ahead of the Autumn Budget on 28 October 2026; the reform options discussed reflect published expert commentary and may not be announced. Tax rules can change and their effect depends on individual circumstances. Past performance is not a guide to future performance. The value of an investment can fall as well as rise and is not guaranteed – you may get back less than you paid in. If you would like to speak to one of our Chartered Financial Advisers, please get in touch.