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The FTSE 100 continues to climb to record highs. But with the government reportedly considering massive tax hikes in the upcoming UK Autumn Budget, some investors are starting to get nervous.
If the speculated windfall taxes, property taxes, National Insurance hikes, and changes to business rates all prove to be true, UK stocks could be in for a wild ride. Here’s how this all might affect FTSE 100 shares, according to history.
What to expect
Throughout recent history, the Autumn Budget often sees stocks of all sizes experience a spike in volatility. This is particularly prevalent if the changes to fiscal policy have a significant adverse impact on consumer and business confidence.
Yet, historically, this volatility almost never lasts. In fact, it often reverses within a few days once the dust settles. And for large multi-nationals who generate the bulk of their revenue outside the UK, they often don’t see much impact at all. But in 2025, things might be a little different.
If the rumours are anything to go by, significant tax rises are inbound. If that’s true, it could result in a more substantial market reaction, particularly since UK shares are trading at record valuations. And companies tied to consumer spending, like the retail and hospitality industries, along with those operating in real estate and banking sectors, could be the most exposed.
How to prepare
It’s important to note that until the Budget is actually released, investors can only speculate. And it could be that the news headlines are all wrong and something completely unexpected might emerge on 26 November.
But let’s assume the worse. Which FTSE 100 stocks are most likely to outperform in a higher tax environment? Historically, the answer has often been healthcare giants like AstraZeneca (LSE:AZN).
Opportunities in big pharma
As a global enterprise, AstraZeneca’s far less sensitive to UK-specific tax policies. At the same time, demand for life-saving drugs doesn’t change during periods of fiscal tightening or economic slowdowns. This can result in a historically resilient performance that can continue to surge on the release of new blockbuster drugs.
Looking at AstraZeneca in 2025, the business continues to impress. Its latest results beat expectations, delivering 12% top-line growth paired with a 14% bump in underlying earnings driven by strong performance within its oncology and rare diseases portfolio. And combining this with new international partnerships, promising clinical trial results, and a streak of regulatory wins, there’s a lot to like about this business, regardless of the Autumn Budget.
Of course, no investment’s ever without risk. Several of its key drug patents are coming close to expiration. That means rival generic manufacturers like Hikma Pharmaceuticals will be free to swoop in, make their own version and massively undercut AstraZeneca’s pricing.
This may not be a problem if the firm’s new medicines can offset the loss in revenue. Positive trial results are certainly a reassuring sign of a strong pipeline. But whether these can be brought to market in time is a critical point of uncertainty.
Nevertheless, with a stellar track record of innovation, taking a closer look at this FTSE 100 stock might be a prudent long-term move. And it’s not the only stock I’ve got my eye on.
