28 Nov Budget 2025 – What it means for you

Following months of speculation, the Budget announcements were far less severe than many rumours had suggested. Here are the key points that matter most for your financial planning:

What Didn’t Happen

• Tax-free pension lump sums remain unchanged. This is a rumour that has circulated for many years and once again proved unfounded.

• Income Tax rates were not increased—although changes elsewhere will still affect how much tax you pay.

• Cash ISAs have not been abolished, though the allowance for under‑65s will reduce in future years.

• Many changes will be phased in over several years, giving time to plan.

Stealth Tax Rises – What You Need to Know

The most significant announcement was the further extension of the freeze on Income Tax and National Insurance thresholds—first frozen in 2021 and now scheduled to remain unchanged until 2031.

This continues a trend where other allowances have not increased for many years some of these are:

• Inheritance Tax: Nil Rate Band (£325,000 since 2009), Annual Gift Exemption (£3,000 since 1981), Small Gift Exemption (£250 since 1981)

• Maximum Pension Tax-Free Lump Sum: £268,275 (since 2024)

• Personal Allowance taper applying once income exceeds £100,000 (unchanged since 2010)

These freezes appear to be the preferred method of increasing tax revenue and mean more people will gradually pay higher levels of tax. Our role is to help ensure your finances remain as tax‑efficient as possible while still aligning with your long-term objectives.

Other Key Announcements Affecting Financial Planning

(Effective from 6 April in the year stated)

• State Pension to increase by 4.8% in 2026

• Dividend tax rates to rise by 2p from 2026

• Property and savings income tax rates to increase by 2p from 2027

• Cash ISA allowance for under‑65s to reduce to £12,000 per year from 2027

• “Mansion Tax” for homes valued above £2 million from 2027

• Consultation on a Lifetime ISA replacement – details to follow

• Salary sacrifice arrangements to attract National Insurance from 2029

• Venture Capital Trust (VCT) income tax relief to reduce from 30% to 20% from 2026

Opportunities and Next Steps

While several measures will gradually increase tax liabilities, early planning can help minimise the impact. Areas we will continue to focus on include:

• Optimising pension contributions

• Making full use of allowances while they remain available both when saving and taking income.

• Reviewing investment wrappers (ISAs, pensions, bonds, etc.)

• Considering intergenerational planning opportunities

• Evaluating the impact of property‑related changes

We expect to pick up these themes with you at your annual review, but if you wish to discuss at an earlier point please contact your adviser.

Kind Regards
Paul Richardson BA (Hons), FPFS, Cert SMP
Chartered Financial Planner
Financial Planning Director
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​​Risk Warnings

• The value of an investment and the income from it could go down as well as up.
• All investing is subject to risk, including the possible loss of the money you invest.
• Past performance is not a reliable indicator of future results.
• Diversification does not ensure a profit or protect against a loss.
• Please remember that all investments involve some risk. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income
• This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice as at 28th November 2025. You are recommended to seek competent professional advice before taking any action.