Autumn Budget 2025

Pressures to close a £35bn fiscal gap are real – but how these choices are made will shape regional competitiveness, business confidence and investment for years.

Policy Context: A Budget Built on Limited Options

With the Chancellor needing to raise £35bn, the Government’s tax levers are narrowing.

Partner Sean Drury comments:

The tax policies left to the Government would disproportionately affect London, which accounts for between 20-25% of the UK’s economy.

That imbalance sets the backdrop for a Budget where broad-based rises risk uneven outcomes – and where London, as the UK’s largest economic engine, stands most exposed.

Property Taxes: London’s Heavy Concentration of High-Value Homes

London has currently 300,000 band G properties, which is three times the UK average and 75,000 band H properties, which accounts for 50% of all band H properties. This proposal would mean Londoners paying over £1.4bn more in property taxes per year – by far the largest share of anywhere in the UK.

Why such a skew? The UK’s property bands have not been updated since 1991 – a year when London property values had dipped following a crash. Since then, average London house prices have increased sevenfold. Without targeted relief, thousands of ordinary family homes could be pushed into higher tax brackets.

This means many London properties could fall within the ‘new’ band G and band H following a revaluation, unless a targeted tax relief was put in place to recognise the higher costs in the Capital.

LLPs and Employment: A Major Talent Pipeline Under Pressure

Another rumoured change – the extension of Class 1 National Insurance Contributions to LLP members could hit professional services firms particularly hard.

London has a significant number of LLP’s whose members would have to absorb this additional 15% cost… it could cost up to £2bn, impacting directly on profits and their ability to hire, especially graduates where they are amongst the country’s largest employers.

Such a shift risks tightening already pressured margins, dampening recruitment and affecting one of London’s largest pipelines of entry-level jobs.

Electric Vehicles and Green Policy: Penalising Early Adopters

The press release highlights that roughly 20% of all new EVs in the UK are registered in London – a reflection of ULEZ policies, congestion considerations and the city’s suitability for smaller EV models.

The proposed changes to the taxation of Electronic Vehicles also disproportionately impacts London… This expanding market is driven by a number of green policies such as ULEZ and the suitability of urban driving to the smaller EV market.

Policies designed to accelerate decarbonisation could become counterproductive if early-adopter markets are faced with additional tax burdens.

Financial Services: A Sector London and the UK Cannot Afford to Lose

Financial services generate over 50% of their UK economic output from London. They are globally mobile and sensitive to regulatory and tax shifts.

Potential increases in taxation targeted at the sector and any increases or change to the ‘banking’ levy could cause further economic disruption and lead to firms looking abroad for less punitive tax regimes.

If London becomes less competitive, the risk isn’t just reduced tax receipts – it’s the relocation of entire business units.

The Bigger Picture: Disproportionate Pressure on the Capital

Sean summarises:

Overall, this is a bleak forecast for London, unless common sense prevails the Chancellor recognises that ‘asset wealth’ does not necessarily translate in lots of spare income available to pay significant tax rises. There is a recognition that tax will need to rise, but London should not be disproportionately affected.

The challenge for policymakers is balancing fiscal responsibility with regional fairness and economic competitiveness. London’s shoulders are broad – but not limitless.

What Businesses and Individuals Should Consider Next

For businesses

Scenario-plan for higher employment taxes, particularly LLPs, and assess cost impacts on hiring and partner remuneration.

Review property-related exposures, including the implications of potential rebanding for business premises or employee housing support.

Evaluate sector-specific risks, especially for financial services, real estate, and EV-dependent industries.

Assess location strategy – could future tax policy influence where teams or operations are based?

For individuals

Understand your property band and likely revaluation outcomes, especially in high-growth London boroughs.

Consider the cost impact of owning or moving to an EV in light of evolving tax rules.

Review long-term financial planning, including potential rises in council tax, NI, or sector-specific taxes that may affect income.

Would you like to know more?

If you’d like to discuss the above, please speak to your usual Blick Rothenberg contact or Sean using the form below.