PwC previews the UK Autumn Budget 2026

Jake Finney, Senior Economist, PwC UK said: 

“This is a government with big ambitions, but limited room for manoeuvre. Its manifesto commitments, fiscal rules and a difficult economic backdrop will constrain what they can achieve in this Autumn Budget.  

“The Chancellor’s first task will be to rebuild the fiscal headroom. Our estimates suggest that movements in bond yields and interest rates have roughly halved the buffer to around £14 billion, before accounting for other changes in the outlook. The Chancellor may be tempted to follow his predecessors and run with a smaller buffer, but that risks forcing him back for further repair work at the Spring Statement.  

“That points to a Budget about buying time: doing enough to shore up the public finances for now, while leaving the bigger choices for later.”

Wealth tax   

Will Dowsett, Tax Partner, PwC UK, said:  

“Capital gains tax remains one of the most closely watched issues heading into the Budget. Full alignment with income tax rates would potentially generate substantial revenue but is unlikely given the scale of revenue disruption it could cause. A significant increase like this could be softened through reintroducing indexation relief, which takes inflation into account, or tapering the rate to reward longer term investment. While a more modest increase in the higher rate is plausible, caution will be needed as CGT increases have historically triggered behavioural shifts that blunt potential revenue gains. 

“The broad concept of linking inheritance tax to social care funding has cross-party appeal but more likely to be a focus of a later fiscal event. We may see a change to the High Value Council Tax Surcharge, or 'mansion tax', which is due to take effect in April 2028 and was designed as a tiered annual flat fee for homes worth £2 million or more.  That threshold could be lowered to £1.5 million, doubling the amount of properties affected, and a potential introduction of non-resident premiums, in the form of a surcharge for overseas buyers. Any such move would see homeowners in London and the South East the most heavily impacted, and potential for a fiscal drag effect if not linked to property inflation.”

Christine Cairns, Tax Partner, PwC UK, said:  

"The Chancellor has reiterated that they will stick to the manifesto pledge of no income tax rises, additionally income tax thresholds will remain frozen, locked in place until April 2031. This would indicate the public can expect no income tax rises this time, but the fiscal drag from the threshold freeze is sizable, estimated by the OBR to raise over £55 billion in 2030/31. 

"Adding a new 50p (50%) band for higher earners would be possible, potentially structured as an additional band which would technically avoid breaching the manifesto lock on existing rates. However, it would receive backlash and the 50p income tax experiment between 2010 and 2013 sparked some behavioural change and raised only one-third of the revenue initially expected. 

"A ‘good news’ option would be to raise the personal allowance (frozen at £12,570 since 2022), to £15,000+, a move supported by unions but it would be financially difficult due to cost. 

"The UK has the lowest percentage of total wealth tied up in investments in the G7, so there is a good argument to encourage savings habits towards investments. Steps were made in the last Budget introducing new rules from the 2027/28 tax-year limiting the amount under-65s can put away in a cash ISA to £12,000 each year, but any additional measures to boost investment, particularly within the UK would be welcome by business."

Rachel Taylor, Government and Health Industries Leader, PwC UK, said: 

“It’s likely that we’ll see the Chancellor take a significant step towards fiscal devolution. The anticipated roadmap setting out how mayors and strategic authorities will receive a larger share of locally generated tax revenues, including income tax, will start the shift towards regional ownership. The roadmap is expected set out a phased approach to greater tax retention and revenue-sharing rather than an immediate wholesale replacement of grant funding.  

“Our research shows that the barriers faced by local authorities vary widely, including access to jobs, services, and housing, as well as health and crime, and they rarely follow neat regional lines. Delivering good growth in every postcode will require local leaders to have the flexibility to focus resources where they can make the biggest difference.”

Business rates 

Phil Vernon, Head of Business Rates, PwC UK, said:  

“A full overhaul of business rates looks unlikely in this Budget, but a rebalancing is very much in play. The most probable measures are continued relief for retail, hospitality and leisure, an extension of the Small Business Rates Relief regime, and more targeted help for smaller community venues such as pubs and music spaces. To help fund this, the Chancellor may target reliefs currently available to ‘anti-social’ premises such as vape shops, and introduce a new surcharge on large distribution warehouses, a move that would land squarely on major online retailers and logistics operators.  

"There would be a trade-off here - supporting embattled town centres by shifting cost onto sectors seen as more resilient. Whether that improves the underlying competitiveness of the property tax system, rather than simply redistributing the burden, remains an open question.   

"There could be a devolution dimension to this. Mayors could be given a direct allocation of business rates revenue from 2027, tying local growth incentives more closely to regional decision-making."