As we await the UK Chancellor Rachel Reeves to present her 2025 UK Budget in Parliament tomorrow, November 26th, numerous leaks are already circulating online which have the air of authenticity, even though the Government has so far maintained strict secrecy on the matter.
The following leaks are now almost certain:
Mansion Tax
This will constitute a separate levy beginning at approximately £4,000 per year and is expected to rise in line with increases in property value. The maximum charges have not yet been specified. More than 100,000 properties homes worth more than £2mn will be affected, the vast majority of them in London and the south-east (if the levy kicked in at only £1.5mn, it would affect just under 300,000 homes). As the calculation is based on gross value, owners with high leverage may be disproportionately impacted. Furthermore, because the charge is not income-based, older individuals residing in larger homes may face difficulties in meeting the cost.
Property Revaluation
To facilitate the new regime (Mansion Tax), Reeves will announce a revaluation of properties in the top three council tax bands: F, G and H. It is the first time such a revaluation has taken place since 1991. This will catch approximately 2.4mn properties.
The implications for the council tax bills of those affected remain unclear, though they are unlikely to be favourable. Implementation is expected to take until 2028.
National Insurance on Landlords
Proposals have also emerged calling for a wider group of landlords to be brought into the National Insurance system. At present, individuals for whom letting property is not their primary source of income may pay no NI. The Resolution Foundation think tank has recommended that all landlords be required to pay NI at a basic rate of 20%, with a further 8% applied to property earnings exceeding £50,270 annually.
Income Tax
According to government sources, Reeves has decided not to raise income tax rates. However, speculation remains that the Chancellor could extend a freeze on income tax and NI thresholds beyond the planned 2028-29 deadline.
Pensions
The Chancellor intends to generate approximately £2bn by curbing a tax relief on pension contributions. Reeves is considering a £2,000 ceiling on the amount employees may contribute to their pensions via salary-sacrifice arrangements without paying National Insurance. At present, no such limit exists. Contributions exceeding this threshold would attract NI liabilities for both employees and employers.
Electric Vehicles Tax
The Chancellor is evaluating a potential new tax on electric vehicles (EVs) as a means of compensating for reduced fuel duty revenues resulting from the shift away from petrol and diesel cars. EV drivers may face a charge of 3p per mile on top of other applicable road taxes.
ISA
The chancellor is said to be considering a reduction in the tax-free limit for cash Individual Savings Accounts (ISAs). According to reports, Reeves may lower the annual allowance from £20,000 to £12,000