Johnston Carmichael’s tax experts have advised that everyone, from working people to pensioners, will contribute following the UK’s Autumn Budget – with businesses bearing the brunt.
Following weeks of speculation, Chancellor Rachel Reeves unveiled her Budget amid further disarray after the Office for Budget Responsibility (OBR) published its report early in error.
The Budget is set to raise almost £26bn and included specific funds for devolved governments, with an additional £370m for the Northern Ireland executive, £505m for the Welsh government and £820m for the Scottish government.
Alex Docherty, Partner and Head of Private Client Tax, said, “The Chancellor said everyone would contribute – and they will. The National Minimum Wage is rising, providing a helping hand to the lowest paid, but many other working individuals will pay more income tax as a result of the three-year freeze and at the same time will pay National Insurance Contributions in due course on salary sacrifice pension contributions over £2,000. This also impacts employers – it is suspected that many businesses will lower the amount they pay into retirement funds.”
The introduction of a £2,000 annual cap on relief for pension salary sacrifice represents the second largest revenue raising measure announced in the Autumn Budget. It’s estimated to raise around £4.7bn, second only to the additional revenue generated by the freezing of income tax thresholds out to 2030/31.
Alex questioned growing taxes on business owners seeking to exit their businesses as part of succession planning. She said, “Even though there were hopes the inheritance tax-free £1m allowance for trading businesses would rise, the changes coming into play for IHT that were announced last year remain largely unchanged, and Employee Ownership Trust relief is being slashed by half; who should owners pass their business on to now and how much will they have to pass on as taxes increase?”
While the pension triple lock has been protected, Alex said that pensioners will also pay their way.
She said, “Those who have retired will pay more tax on their savings and if based in England could also be hit by the mansion tax if they are sitting on high value properties. We’ll see in January if Scotland will follow suit. The property market is also likely to be disrupted by the 2% increase in property income tax rates from 6 April 2027. The Chancellor faced tough choices to balance the books – but it will be tough to get both the working people she promised to protect and businesses behind her Budget.”
Johnston Carmichael’s tax specialists are taking part in a free webinar on 3 December. Alex Docherty will be joined by John McAuslin, Partner and Head of Corporate Tax and David Ward, Partner and Head of Specialist Taxes, as they delve into the detail behind the headlines. To register, visit: https://us02web.zoom.us/webinar/register/2317641687805/WN_EPPU6IhATKKsZcu8N5RDvQ
For additional analysis of the 2025 Autumn Budget, visit: The Budget Hub | UK & Scottish Budget Breakdowns | Johnston Carmichael | Johnston Carmichael.