The latest Budget brought news that many savers were expecting, although it still won’t be welcomed by many. The cash ISA allowance is set to be reduced, but that’s not the only change coming down the line for savers.  

What has been announced?

First, the cash ISA allowance will drop to £12,000 from April 2027, which does at least give savers a chance to make the most of this valuable allowance until then.  

However, savers aged 65 and over will still be able to use the full ISA allowance for their cash savings. This will be a relief, as we know that many older savers prefer cash as they look to reduce the volatility of their investments and savings in retirement.

And just to be clear, it’s only the cash ISA allowance that is to be cut. The overall ISA allowance remains at £20,000, but anyone under 65 who wants to make use of the full amount will need to put the remaining £8,000 into investments rather than cash.

The cut to the cash ISA allowance isn’t the only change coming. It was also announced that tax paid on savings interest will rise by 2% - again from April 2027. This means basic-rate taxpayers will pay 22%, higher-rate taxpayers will pay 42% and additional-rate taxpayers will pay 47% on interest earned outside an ISA. This is a double blow that could see many people paying more tax on their hard-earned savings at a time when every penny counts.

The Personal Savings Allowance (PSA) will still be in place for basic and higher-rate taxpayers, allowing some interest to be earned tax-free outside an ISA. Basic-rate taxpayers get an allowance of £1,000 each year, while higher-rate taxpayers get £500, but additional-rate taxpayers do not receive any allowance at all.  

With the best savings rates around 4.50%, even a basic-rate taxpayer will use up their entire allowance with a deposit of just over £22,000, which shows that it isn’t only the really wealthy who will feel the impact of these changes.

What can savers do to soften the blow?

As savers have until April 2027 until the changes to the cash ISA allowance come into force, there is time to take action.

It sounds obvious, but of course the first thing to do is to make sure you use your ISA allowance in full before the changes take place. And it makes sense to do this as soon as possible in the tax year. Why pay tax on your savings all year when you needn’t!

It is also worth looking at any older ISAs you may have. Rates have improved recently, as there is far more competition between providers at the moment. Many people leave their money with their high street bank, assuming they are earning a fair rate, but this is often not the case. If your ISA is lagging behind the market, it may be worth transferring it. The only thing to watch out for is fixed-term ISAs, which usually carry penalties if you try to move them before they mature, so it is worth checking the numbers before making a decision.

National Savings & Investments (NS&I) Premium Bonds could also play a part in your savings strategy, especially for anyone who pays tax on interest. Winnings are tax-free, and while there is no guaranteed return, the current prize fund rate of 3.60% is equivalent to a 4.50% return for basic-rate taxpayers, 6% for higher-rate taxpayers and 6.55% for additional-rate taxpayers if they held a normal taxable savings account paying interest. No standard savings accounts currently offer anything close to that for higher or additional-rate taxpayers.  

Of course, you could win less than this or even nothing, although the latter is highly unlikely if you have a larger holding in Premium Bonds.

How will these changes affect savers?

Currently the best 1-year fixed rate bond is paying 4.50% AER, whilst the top 1-year ISA is paying 4.30%. On the face of it, this would suggest that you’ll get back less if you use the ISA, but if you are a taxpayer and already fully utilising your Personal Savings Allowance, then this cut to the ISA allowance will have a painful impact, as the bond rate of 4.50% will fall to 3.51% for basic rate taxpayers and 2.61% for higher rate taxpayers!

Under the current rules and the rates currently available, putting £20,000 into a top-paying ISA at 4.30% would earn £860 in tax-free interest. After the allowance is cut, a basic-rate taxpayer would be limited to earning £516 tax-free on £12,000, with the remaining £8,000 earning £280.80 in the current best fixed rate bond paying 4.5% after the deduction of tax. This brings the total return down to £796.80. For a higher-rate taxpayer, the same scenario would see the total fall to £724.80.

While many savers will probably be worried about these changes, being aware of them as soon as possible makes it much easier to plan. Making full use of your cash ISA allowance now, checking the rates on your existing accounts and considering options such as Premium Bonds can all help keep more of your interest out of the taxman’s reach. 

Arrange your free initial consultation

Rates correct as at 28/11/2025.

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate cash or tax advice. 

Chancellor Rachel Reeves gave her second Budget speech on 26 November 2025. After much worry and speculation, there were thankfully no changes announced to the rules around pension tax relief and tax-free cash (pension commencement lump sums). However, there are going to be changes to the salary sacrifice rules for pension contributions - from April 2029, only the first £2,000 per annum of sacrificed salary will be exempt from employer and employee National Insurance (NI).  

Arrange your free initial consultation

Other announcements included an increase in the rates of income tax on dividends, property and savings income by 2 percentage points (some changes from April 2026 and some from April 2027) and a freezing of the income tax bands in England, Wales and Northern Ireland for a further three tax years until April 2031.

From April 2027, changes will be made to the ISA allowance so that only the over 65s will be able to place the full £20,000 into Cash ISAs (capped at £12,000 into Cash ISAs for the under 65s).

TPO Partner, David Dodgson, appeared on BBC Money Box Live on budget day, sharing his thoughts on the Chancellor's statement.

Listen now on BBC Sounds

We have summarised the main points of the Budget below, along with a reminder of various changes from April 2026 that we were already aware of. Further guidance will be published as necessary and as more detail becomes available. 

Pensions

Salary sacrifice  

From April 2029, anyone sacrificing more than £2,000 per tax year for employer pension contributions won’t save NI on the excess. Employers will also pay NI on any excess.

Such contributions still receive income tax relief as they would if made via a different method such as relief at source.

State pension

The triple lock means the new state pension and basic state pension are expected to increase by 4.8% in April 2026. This will mean a full new state pension figure of £241.30 per week and a full basic state pension of £184.90 per week. The government has committed to maintaining the triple lock for the duration of this Parliament.

Restrictions will be introduced on the making of Class 2 voluntary NI (VNICs) to achieve state pension for those living overseas by increasing the initial residency or contributions requirement for VNICs to 10 years. The government is also launching a wider review of VNICs, with a call for evidence to be published in the new year.

Changes will be made from 2027 to avoid those whose sole income is the state pension having to pay small amounts of income tax through Simple Assessment (which will become increasingly likely as the state pension increases, and the personal allowance remains frozen).  

Pension Protection Fund / Financial Assistance Scheme

The government will introduce payment of inflation increases on pre-97 pensions to PPF and Financial Assistance Scheme (FAS) members of up to 2.5 per cent. This would apply to those members whose original schemes provided for indexation on pre-97 pensions. The move would broadly align pre-97 indexation rules with those already in place for post-97 pensions for PPF and FAS members.

Investments

Individual Savings Accounts (ISAs)

From April 2027, changes will be made to the ISA allowance so that only the over 65s will be able to place the full £20,000 into Cash ISAs. Those under 65 are capped at £12,000 into Cash ISAs with the balance having to be placed in other ISA types if they wish to make use of the full allowance.

 The annual subscription limits all remain at their current levels in 2026/27, i.e.

• £20,000 ISA
• £4,000 Lifetime ISA
• £9,000 Junior ISA (and Child Trust Fund)

Lifetime ISA

Consultation to take place early next year on replacing the Lifetime ISA (LISA) with a new product for first-time buyers.

Enterprise Investment Scheme and Venture Capital Trust 

Changes to be introduced in Finance Bill 2025-26 to take effect from 6 April 2026:  

• The Income Tax relief that can be claimed by an individual investing in Venture Capital Trust (VCT) to reduce to 20% from the current rate of 30%
• The gross assets requirement that a company must not exceed for the Enterprise Investment Scheme (EIS) and VCT to increase to £30 million (from £15 million) immediately before the issue of the shares or securities, and £35 million (from £16 million) immediately after the issue
• The annual investment limit that companies can raise to increase to £10 million (from £5 million) and for knowledge-intensive companies to £20 million (from £10 million)The company’s lifetime investment limit to increase to £24 million (from £12 million) and for knowledge-intensive companies to £40 million (from £20 million)

The increases to the annual, lifetime and gross asset limits apply only to qualifying companies that are not registered in Northern Ireland trading in goods or the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity. These companies will remain eligible for the current scheme limits.

EIS and VCTs are higher risk investments and they are not suitable for all investors. There is a chance that all of your capital could be at risk and you should not invest into these types of plans without seeking advice.

Enterprise Management Incentive (EMI) scheme

The measure will amend provisions for some of the limits relating to the EMI scheme. For eligible companies, the changes that will apply to EMI contracts granted on or after 6 April 2026 are the limit on:

• Company options will be increased from £3 million to £6 million
• Gross assets will be increased from £30 million to £120 million
• The number of employees will be increased from 250 employees to 500 employees

Taxation

Income tax

Income tax bands in England, Wales and N. Ireland have been frozen for a further three tax years to April 2031 (had already been frozen to April 2028).

All income tax rates and bands remain at their current levels in 2026/27 apart from as outlined below.  

Changes to tax rates for property, savings & dividend income

• Tax on dividend income will increase by 2 percentage points. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75% from April 2026. The additional rate will remain unchanged at 39.35%. The £500 dividend allowance remains in place.  
• Tax on savings income will increase by 2 percentage points across all bands. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027. The starting rate band and personal savings allowance remain unchanged.
• The government is creating separate tax rates for property income (any income from letting land and buildings). From April 2027, the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. Finance cost relief will be provided at the separate property basic rate (22%). The £1,000 property allowance and Rent a Room Scheme remain in place.

The way individuals report and pay tax on property, savings and dividend income will remain the same – it is only the rates of tax charged that will change. The income tax ordering rules will be changed from April 2027 so that the Personal Allowance will be deducted against employment, trading or pension income first.

The changes to property income rates will apply in England, Wales and Northern Ireland. The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers in their fiscal frameworks. The changes to dividend and savings income rates will apply UK-wide as these rates are reserved.

Tax and NI thresholds

• No increases to the headline rates of income tax (see above regarding future rates for savings/dividend/property income), National Insurance contributions (NICs) or VAT
• Income tax thresholds and the equivalent NICs thresholds for employees and self-employed frozen at current levels for a further three years from April 2028 to April 2031
• NI Secondary Threshold frozen at its current level from April 2028 to April 2031
• Plan 2 student loan repayment threshold will be frozen at its 2026/27 level for three years from April 2027

National Living Wage

National Living Wage will increase by 4.1% to £12.71 per hour for eligible workers aged 21 and over.  

Capital gains tax

The annual exemption remains at £3,000 (a maximum of £1,500 for discretionary/interest in possession trusts – shared between all settlor’s trusts subject to a minimum of £300 per trust).

CGT rates remain as they currently are:

• 18% for any taxable gain that doesn’t fall above the basic rate band when added to income and 24% on any gain (or part of gain) that falls above the basic rate band when added to income
• Unused personal allowance can’t be used for capital gains
• Discretionary/interest in possession trustees and personal representatives pay at the higher rates (24%)

Inheritance tax  

In an improvement to the Business and Agricultural Relief changes from next April, the £1 million limit on 100% Business and Agricultural Relief will be transferable between spouses if unused on first death (including where first death was before 6 April 2026).

Capping inheritance tax trust charges for former non-UK domicile residents - this measure introduces a cap on relevant property inheritance tax charges for trusts which held excluded property at 30 October 2024. The relevant property charges are capped at £5 million over each 10 year cycle.

Anti-avoidance measures for non-long-term UK residents and trusts - this measure will look-through non-UK companies or similar bodies to treat UK agricultural land and buildings as situated in the UK for inheritance tax purposes. It also provides that where a settlor ceases to be a long-term UK resident, there will be an Inheritance Tax charge if there is a later change in situs of their trust assets.

Also, Inheritance Tax charity exemption will be restricted to gifts made directly to UK charities and registered clubs and excluded from gifts to trusts which are not registered as UK charities or clubs.

IHT thresholds to be fixed at their current levels for one further tax year to April 2031, as shown below:  

• Nil-Rate Band (NRB) at £325,000
• Residence Nil-Rate Band (RNRB) at £175,000
• RNRB taper, starting at £2 million
• combined £1 million allowance for 100% APR and Business Property Relief (BPR) relief

Previously announced changes:  

The government is implementing previously announced reforms to taxes on wealth and assets including:

• From 6 April 2026, the CGT rate for Business Asset Disposal Relief and Investors’ Relief will increase to match the main lower rate at 18%
• From 6 April 2026, the government will reform agricultural property relief and business property relief
• From 6 April 2026, the government will introduce a revised tax regime for carried interest which sits wholly within the income tax framework
• From 6 April 2027, the government is removing the opportunity for individuals to use pensions as a vehicle for IHT planning by bringing unspent pots into the scope of IHT

Internationally mobile individuals

The government is to make changes to the way internationally mobile individuals are taxed, closing loopholes and capping relevant property trust charges payable by certain trusts. Further details are to follow.

New mileage tax on electric cars

A new 3p charge per mile on electric cars.

Universal credit

The two-child benefit cap is to be abolished from April 2026.

Employee ownership trusts (EOT)

The 100% relief from capital gains tax on businesses sold to Employee Ownership Trusts will be reduced to 50%.

High value council tax surcharge HVCTS (‘Mansion tax’)

From April 2028, a council tax surcharge will apply to properties worth more than £2m in 2026. This will be £2,500 for properties worth £2m-£2.5m rising in bands to a maximum of £7,500 for homes valued at over £5m. Charges will increase in line with CPI inflation each year from 2029 onwards. Homeowners, rather than occupiers, will be liable to the surcharge and will continue to pay their existing Council Tax alongside the surcharge.  

GOV.UK : High Value Council Tax Surcharge

Stamp duty

From 27 November 2025, there is an exemption from the 0.5% Stamp Duty Reserve Tax (SDRT) charge on agreements to transfer securities of a company whose shares are newly listed on a UK regulated market.

The exemption will apply for a 3-year period from the listing of the company’s shares.  

Tax Support for Entrepreneurs

A Call for Evidence has been published seeking views on the effectiveness of existing tax incentives, and the wider tax system, for business founders and scaling firms, and how the UK can better support these companies to start, scale and stay in the UK. The Call for Evidence will close on 28 February.

If you’d like to know how the budget may impact your financial plans, why not get in touch and speak to one of our advisers today for a free initial consultation. 

Arrange your free initial consultation

The Financial Conduct Authority (FCA) does not regulate estate planning or tax advice.

This article is intended as information only and does not constitute financial advice.  

The information contained in this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. 

Rachel Reeves’s long-awaited budget arrived earlier than expected, as it was published by the Office for Budget Responsibility an hour before it was supposed to be delivered in Parliament, leading to unprecedented scenes in the House of Commons.

The key changes were:

•  Frozen tax bandings 

  Having already been frozen from 2021until 2028, there were rumours of an extension until 2030, but in fact the freeze was extended for three further years to 2031.  The impact of this over a decade will be significant as was explored in this recent article from The Times to which The Private Office were pleased to contribute. 

•  A 2% increase on Dividend, Savings and Rental Income Tax

  Dividend tax rates will increase from 8.75% and 33.75% to 10.75% and 35.75% respectively for basic and higher rate taxpayers with effect from April 2026.  Additional rate dividend tax will remain unchanged at 39.35%

  Savings and Property income tax will increase from 20%, 40% and 45% to 22%, 42% and 47% for basic, higher and additional rate taxpayers with effect from April 2027.

• The Cash ISA allowance will be limited to £12,000 with effect from April 2027 for under 65s 

  This had been widely rumoured, but investors will be pleased to see the Stocks & Shares ISA remaining at £20,000 and for the over 65s they can still use the cash ISA allowance in full.

• Salary sacrifice on pension contributions

  With effect from April 2029, there will be a limit of £2,000 p.a. for pension contributions being paid directly into workers’ pensions, thereby saving national insurance being paid on the income. However, investors will be pleased to see tax relief on pension contributions remaining unchanged.

• A mansion Tax on homes worth over £2,000,000 

  This will be set at a rate of £2,500 for homes valued at over £2m, rising to £7,500 for homes valued at over £5m and will come into effect in 2028 .

• Agricultural and Business Property Relief threshold of £1m can be transferred between spouses if unused on death

  This will have been welcomed by Business Owners and Farmers as assets will no longer need to be passed to children on first death to take advantage of the additional Agricultural and Business Property relief, though many may have already changed their Wills to reflect the previous rules so further planning may now be required.

• Failed pre-1997 pensions that have entered the Pension Protection Fund (PPF)

  Individuals will benefit from indexation in a boost for those who lost out when their scheme failed.

•  Infected Blood Compensation Scheme 

  The government has confirmed that compensation will be relieved from Inheritance Tax. This has caused a great deal of distress over the years to a number of families so this will be a welcome change.

• Tax relief on Venture Capital Trust (VCT) investments reduced from 30% to 20% from April 2026  

  The government says this will better balance the amount of upfront tax relief offered compared to EIS investments, where dividend relief is not available. 

TPO Partner, David Dodgson, appeared on BBC Money Box Live on budget day, sharing his thoughts on the Chancellor's statement.

Listen now on BBC Sounds

As well as the above changes, it is important to acknowledge the following areas that did not change despite strong rumours prior to the budget:

• Income Tax rates
• Pension contribution tax relief
• Pension tax free cash
• Capital Gains Tax rates

At the time of writing, Bond markets appear to have digested the budget relatively well, with Gilt rates remaining broadly unchanged.

In summary, after months of speculation, many of the rumoured changes did not materialise, but the combination of further frozen income tax bandings, increases to dividend, saving and property income tax and reduced cash ISA allowances, will make planning more important than ever.  Many of the upcoming changes will take effect at different times, so there will be opportunities to limit the impact of the changes through careful planning over the coming years.  Pensions remain attractive from a tax relief perspective and Stocks and Shares ISAs remain a tax efficient way of saving.  

If you’d like to discuss the impact of the budget on your finances, why not get in touch to speak to one of our advisers. We’re offering everyone with £100,000 in savings, investments or pension a free financial review worth £500. 

Arrange your free initial consultation

The Financial Conduct Authority (FCA) does not regulate estate planning or tax advice.

This article is intended as information only and does not constitute financial advice.  

The opinions shared in this article are solely those of the individual and they do not necessarily reflect those of The Private Office.

The information contained in this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

After much anticipation, the Financial Services Compensation Scene (FSCS) has announced an update to their deposit protection limit, marking the first increase to the limit in eight years.  

The amount of money a customer can have protected in the event that a UK bank, building society or credit union fails will increase to £120,000 next month, offering a boost to savers across the country.

The updated deposit protection limit, which represents a 41% rise from the current £85,000 cap, comes into effect on 1 December 2025 and is higher than originally expected.

The initial plan was to raise the protected amount to £110,000. However, this is one of the few areas where consumers appear to be gaining from the fact that UK inflation, which currently sits at 3.8%, remains well above the Bank of England’s 2% target.

In announcing the change, the Bank of England’s regulatory body, the Prudential Regulation Authority, said the proposed £110,000 limit had been revised upwards “in light of consultation feedback and to reflect the latest inflation data”.

What is the deposit protection scheme?

The FSCS protects 100% of the first £85,000 you have saved (£120,000 after 1 December 2025), per UK-regulated financial institution (not per account). So in simple terms, if your bank were to fail, the FSCS aims to get any savings up to this amount back to you within seven working days.

Aside from protecting funds, the FSCS was created to prevent ‘bank runs’ - where many depositors attempt to withdraw their funds at the same time. No bank has enough liquidity to pay/repay all its deposits at once, so if someone thinks other depositors might withdraw soon, it is rational for them to do it first as a kind of pre-emptive measure, which can lead to a cascade of withdrawals that results in a ‘bank run’. The existence of deposit protection – like an insurance scheme - serves to break this reasoning.

Since the £85,000 FSCS limit was set in 2017, consumer prices have increased more than 40%, meaning the same £85,000 buys a lot less. Moreover, the total amount of bank deposits has broadly doubled since 2017. The FSCS hopes that the limit increase to £120,000 will better represent current value.  
 
Understanding what kind of protections are available to you is key to proper financial planning. With the uncertainty in the global economy right now, it’s more important than ever to seek financial planning advice to help safeguard your future.  

If you want to find out more, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our chartered advisers to find out how we can help. 

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. The Financial Conduct Authority (FCA) does not regulate cash advice.

National Savings & Investments (NS&I) made an unexpected move at the end of last week, announcing increases to its Guaranteed Growth and Guaranteed Income Bonds (also known as British Savings Bonds). This announcement came the day after the Bank of England voted to keep the base rate at 4%, despite earlier speculation that a cut might be on the cards.

These surprise increases could suggest that NS&I has seen higher than anticipated withdrawals recently, putting them at risk of undershooting their Net Financing Target. This target represents the amount the institution must raise on behalf of the Government, taking into account both money in and money out. For the current tax year, NS&I has been targeted with raising £12 billion (with a leeway of £4 billion either way).

The most up to date figures that are available show that the state-owned bank delivered £2.5 billion of Net Financing to the Government in the first quarter of the tax year (April to June 2025). If they were to continue at that rate, whilst they would deliver within the leeway, it would be less than the target. So perhaps this move is with the hope of not only encouraging new savers but retaining their loyal customers too.

Good news for some, frustration for others

Whilst unexpected, these rate hikes will be welcome news, especially for those who have funds maturing now. But it will be a bitter blow to the thousands who initially opened the market leading 1-year bond paying 6.20% AER which was available from 30th August 2023 until early October that year. Many of those will have rolled their funds over as previous issues matured, but for those who reinvested between 2nd September 2025 until now, they would have committed to the lower rates that were previously available.

Here’s how the new British Savings Bond rates compare to the previous issues: 

The 5-year bond has seen the biggest rise, with a 0.31 percentage point increase. 

Can I take my interest out each year? 

You can choose to have your interest paid out monthly or at the end of the term – and this can be important to remember if you pay tax on your savings. With the longer-term bonds, if you choose the latter, although the interest is added to your bond annually so that you can enjoy compounded interest each year, it will not be accessible until maturity.  

The reason this could be significant is because if all the interest is deemed to have been received in one year rather than spread over the term of the bond, it could mean a larger tax bill, as you can’t spread the interest over the term of the bond and therefore utilise the  Personal Savings Allowance (PSA) each year. 

You can’t roll over any unused PSA, so if you don’t utilise it all in one year, but you earn more than the allowance in the following year, that’s tough luck. You’ll still owe tax on any interest over the allowance for that individual tax year.

For many customers, this may not have too much of an impact, especially if you are already using your PSA. But it’s important to be aware.

And let’s not forget that for some, it could mean that they are pushed into a higher or the highest tax bracket for that year.

Are these new rates competitive?

These new rates are far more competitive, especially when compared to the better-known high street banks. However, you can find higher returns elsewhere, particularly if you are happy to look beyond the high street names. For example, someone depositing £50,000 for 12 months could earn £2,100 (before the deduction of tax) with NS&I, or £2,250 with the best online 1-year bond with Investec bank which is paying 4.50% AER.

Of course interest rates change regularly, so to check what the best rates are, take a look at our Best Buy tables.

Why would savers stick with NS&I?

There will of course always be savers who value the unique security that comes with NS&I, as well as the comfort of familiarity. All funds deposited with the state-owned bank is protected in full by HM Treasury, regardless of the amount. You can deposit up to £1 million into each issue of the British Savings Bonds. For those with larger cash sums, that reassurance can outweigh the lower rates.

But for the majority of savers, where balances are below the £85,000 covered by the Financial Services Compensation Scheme, sticking with NS&I is unlikely to deliver the best outcome.

Cash platforms are another valuable option for those with more than the FSCS limit. They allow you to manage savings across multiple banks with just one login, often making it easier to stay within protection limits and to switch between products when better rates become available. This can be especially useful for those with larger cash holdings who want both convenience and competitive returns.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning.

Rachel Reeves will deliver her second budget on 26th November 2025, and with speculation mounting regarding the potential changes, it can be hard to cut through the noise and make good decisions about what action to take, and importantly, not to take. 

What is likely to be in the Autumn Budget?

Speculation has been rife about potential changes in a number of areas, so what might these changes look like?

Arrange your free initial consultation

Pensions

As has been the case in previous years, a reduction in individuals’ tax free cash entitlements is rumoured once again to be in the Autumn 2025 budget.  These rumours have been fuelled by reports that Pensions Minister Torsten Bell, who in 2019 had stated that the tax free lump sum should be limited to £40,000, had been appointed as a key aid for the Chancellor ahead of the budget.  However, while a change is of course possible, it is important to note that:

• When tax free cash has been reduced before (by reductions to the then Lifetime Allowance), protections (such as Fixed Protection 2012, 2014 and 2016) were put in place to ensure individuals who had already built up pension savings were not disadvantaged.
• The current Labour government previously tried to reinstate the Lifetime Allowance, which the previous Conservative government had scrapped.  However, the government abandoned these plans when they realised it was unworkable to exclude Doctors (who had been retiring due to the high tax rates they were subjected to through a combination of the lifetime allowance and the annual allowance) from the Lifetime Allowance tax charge.  Having now finalised legislation around the Lump Sum Allowance, a further change affecting Doctors’ pensions could prove very unpopular.
• Pension legislation notoriously takes months or years to finalise, as was the case with the recent Lump Sum Allowance (LSA) changes and as is currently the case with the legislation which will bring pensions into scope for inheritance tax from April 2027.  This could indicate any reduction may come into force at a given date in future, rather than with immediate effect.

To make a change ‘overnight’ would be administratively difficult for pension providers.

Capital Gains Tax (CGT) 

Despite the administrative issues associated with implementing an overnight change as outlined above, one change that was brought in with immediate effect in last year’s budget was an increase in the main rate of capital gains tax from 10% to 18% for basic rate tax payers and 20% to 24% for higher rate tax payers.  These increases weren’t as substantial as some thought they would be, so there is the possibility of further increases.  However, there are question marks over how much revenue such an increase would actually raise given individuals can simply choose to stop selling their assets.

Inheritance Tax (IHT)

This is the area that saw arguably the biggest changes in the 2024 budget with:

• Pensions brought into scope for inheritance tax purposes from April 2027
• Business Relief and Agricultural Relief limited to £1m per person and 50% of the full rate thereafter
• AIM shares Inheritance Tax Relief limited to 50% of the full rate   

The government may see the estimated £5.5 trillion of wealth that is expected to be passed down from ‘Baby Boomers’ over the next two decades (known as the ‘Great Wealth Transfer’) as a target for additional taxation. This could include a tax on gifting (currently gifting to individuals is unlimited if the donor lives 7 years from the date of the gift) or a reduction in the tax free allowances available on death (for example the removal of the Residence Nil Rate Band – RNRB).  For this reason, those considering making a gift in the not too distant future could consider making the gift before the budget, though only if the implications of this on their overall financial situation are fully understood.   

ISAs 

There are rumours that there will be a reduction to the Cash ISA allowance. However, a cut to the Stocks and Shares ISA allowance is perhaps less likely given Reeves spoke positively about Stocks and Shares ISAs in her Mansion House speech in July.

Salary Sacrifice

This is the ability for employees’ pension contributions to be paid directly into their workplace pensions, reducing both employer and employee national insurance contributions.  Limiting or removing the ability to do this could raise significant revenue for the government without them needing to renege on their manifesto commitment not to increase tax on working people (income tax, national insurance or VAT).

Other rumours 

Other recent rumours include: 

• An increase in tax with a corresponding reduction in National Insurance.  This could in theory raise revenue without raising tax on ‘working people’, with landlords and pensioners instead footing the bill.
• A further freezing of income tax bandings.  Though this is described by many as a stealth tax as it means more and more individuals will move into higher tax bandings over time, these have been frozen since 2021/22 until 2028 and an extension of this freeze to 2029/30 could raise an estimated £7bn p.a.
• A tax on Limited Liability Partnerships (LLPs) favoured by Solicitors, Accountants and Doctors, as such arrangements allow individuals to be self-employed and not subject to employer’s national insurance contributions.
• A windfall tax on banks, though the Chief Executive of Lloyds Banking Group Chalie Nunn argued this would impact banks’ ability to lend.

An increase in gambling taxes, though the Chairman of Betfred Fred Done has stated all its shops on UK high streets could close if the rumoured changes were implemented. 

When does the Autumn budget take effect? 

Though the budget will take place on 26th November 2025, most changes are expecting to come into effect from the next tax year on 6 April 2026 and beyond.

What can you do to protect your wealth?

In an environment where taxes are increasing, it is becoming more and more important to:

Utilise the various tax allowances that are available to you and your family, for example:

• Your ISA allowances
• Your pension contribution allowances
• Your capital gains tax, savings and dividend allowances
• Your personal income tax allowance.

Have a plan in place with diversified sources of income and investments.  This way you can adapt your plan as a result of any changes in the budget.

In summary, it is clear that the state of public finances mean taxes will need to increase in the upcoming budget and Labour’s manifesto commitment not to increase tax on ‘people working’ has led to mounting speculation that changes will be made to a number of different areas. These headlines are usually followed by a quote from a leader within the industry in question stating how the tax increase would be devastating for that industry and how the government should look elsewhere. As Private Eye’s headline from September rightly stated: ‘Raise taxes for other people’, agrees everyone, so some difficult decisions will need to be made.

To consider the potential impact of the budget on your overall financial situation, please get in touch or contact your TPO Adviser. 

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning or tax advice. 

The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). 

The value of your investments (any income derived from them) can go down as well as up, so you could get back less than you invested.  This could also have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.

Most parents hope to give their children a solid financial foundation for the future, and there are many ways to do so. The best approach depends on how much access you want your child to have to the money, and the level of risk you are comfortable with.

With changes to Inheritance Tax (IHT) on pensions due in April 2027, grandparents may wish to consider gifting to their loved ones now to help reduce future tax liabilities.

Arrange your free initial consultation

Starting early can make a remarkable difference to a child’s long-term finances. For instance:

£9,000 per year saved into a Junior ISA (JISA) could be worth £266,000 at age 18 – or £1.8 million if left untouched until age 57.

In addition, regular pension payments of £2,880 a year from birth until age 18 could grow into a pension pot of more than £737,000 at age 57, from a total contribution of £51,000. 

Junior ISA

If parents or grandparents were to save £9,000 a year into a Junior ISA (JISA) for an eligible child, assuming growth of 5% per annum, by age 18 that child could have a tax-free lump sum of nearly £266,000 (please see Table 1 below).

If they then transferred their JISA funds into an adult ISA at 18 and left it until retirement, it could grow to almost £1.8 million by age 57 (please see Table 1 below).

All this comes from an initial investment of £162,000 over 18 years, showing the power of compounding. 

Don’t forget about pensions 

For those concerned that a child might spend their savings too soon, contributing to a pension can be a good alternative. The funds cannot be accessed until age 57 (assuming no change to current legislation).

Even if the child has no income, pension contributions still qualify for basic rate tax relief on total contributions of up to £3,600 per year.

This can be an achievable option for many families. A maximum gross contribution of £3,600 each year until age 18 costs £2,880 net annually (£51,840 over 18 years), with the government adding £720 in tax relief each year (£12,960 in total).

Assuming 5% growth until age 57, and even with no further contributions after 18, the pension could still reach £737,000 (please see Table 1 below).

That comes from just £51,840 in net contributions.

When the child begins making their own pension payments, assuming they contribute 5% of a £30,000 salary from age 30, with matching employer contributions, that could add another £168,450 over 27 years (please see Table 1 below).

The total pension at age 57 could then exceed £905,000. Combined with the JISA/ISA investment, that amounts to around £2.69 million.

Even allowing for inflation reducing returns by 2% a year, this would still equate to more than £1 million in today’s money at age 57.

Table of Calculations 1, assuming 5% growth - not inflation adjusted

Total at age 57: ISA (£1,782,465) + Pensions (£905,573) = £2,688,038

While these sums appear substantial, inflation will inevitably reduce purchasing power over time. Even assuming a 3% growth rate (allowing for 2% inflation), your child could still receive a significant sum at age 57.

In our example, the future value of £2,688,038 after 57 years would be worth the equivalent of £1,097,888 today, if inflation reduces real value by 2% each year (assuming a growth rate of 5%).

Table of Calculations 2, assuming 3% growth (so allowing for 2% inflation)

Total at age 57: ISA (£687,409) + Pensions (£410,479) = £1,097,888

How the upcoming changes to inherited pensions could encourage earlier gifting

With the announcement of new rules on inherited pensions, many people who had planned to leave their pension pots to children or grandchildren free of IHT are reconsidering their options. The changes take effect from April 2027, but families are already exploring alternatives.

One approach is to start gifting sooner. For example, a grandparent could draw from their pension and pay directly into a grandchild’s stakeholder pension. This reduces the size of their own pension – and therefore the value of their estate potentially subject to IHT if the pension were not passed to a spouse.

If these contributions are made from regular surplus income, they may qualify as an “exempt transfer from normal expenditure out of income” under current IHT rules. This means the gifts are immediately outside the estate, without the need to survive seven years as required for larger lump-sum gifts.

There is, however, a balance to consider. The grandparent may pay income tax on the pension withdrawal, potentially at 40% or 45% depending on their marginal rate. But the grandchild receives 20% tax relief on the pension contribution, which helps to offset that cost, whether they are a minor with no earnings or an adult with taxable income.

From an intergenerational planning point of view, this can be a highly efficient way to pass wealth down the family while reducing future IHT exposure. The funds are outside the estate (either immediately if classed as an “exempt transfer from normal expenditure out of income” or after seven years if a potentially exempt transfer) and continue to grow tax efficiently in the grandchild’s pension.

Furthermore, if the contribution is made directly into the pension of an adult child who is a higher or additional rate taxpayer, the child can also claim higher or additional rate tax relief on those contributions.

Can I afford to give money away now?

It is natural to worry about whether you can afford to start gifting sooner rather than later – and this is an important question.

This is where sound financial advice makes all the difference. Cashflow planning allows you to map out your future goals for yourself and your family, helping you visualise what is realistic and achievable. It creates a personalised plan with scenarios to support sensible decision-making – like a financial crystal ball. 

Final Comments

There are many ways to support your children financially throughout their lives, but saving for their retirement removes a significant burden. It might seem unusual to think about retirement savings when your child is still a baby, but investing early and allowing time for growth in equity markets can make an enormous difference to their financial security later on.

The financial pressures facing younger generations – from high education costs to expensive housing – often make it difficult to save for retirement early in life.

In time, they are likely to make their own and their employer’s contributions, which could help them retire earlier and enjoy more time with family and friends. It’s a wonderful gift to give a child. 

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning, tax or trust advice.

Investment returns are not guaranteed, and you may get back less than you originally invested. 

When is the Autumn Budget? 

As we head into the final months of the year, attention is turning towards one of the key economic milestones, the Autumn Budget. Scheduled for 26th November this year, the Budget is an essential part of the financial calendar, not just for policymakers and economists, but for households, businesses and advisers to understand the direction of travel.

Arrange your free initial consultation

While every Budget matters, the stakes feel especially high this year. The economic outlook remains uncertain, government borrowing costs have rocketed, and a growing number of taxpayers are already feeling the pain from continued frozen allowances and the changes announced in last year's Budget.

So, what exactly is the Autumn Budget for, and why is it such an important event? 

Understanding the Budget’s role 

The Autumn Budget is the government’s main opportunity each year to set out its plans for taxation, public spending and economic strategy. It’s when the Chancellor outlines how the government will raise and allocate money in the year ahead, usually supported by economic forecasts from the Office for Budget Responsibility (OBR).

These forecasts cover everything from inflation and interest rates to borrowing, debt levels, and projected economic growth, all of which shape the decisions being made in the Budget itself.

The Autumn Budget is often accompanied by a Spending Review, which sets departmental budgets for the medium term, though not necessarily every year. In contrast, the Spring Statement, usually delivered in March, tends to be lighter, more of an economic update than a full fiscal event, though it can include policy changes when needed.

In recent years, the Autumn Budget has become the main fiscal moment of the year. The Spring Statement, while still useful, is generally more reflective in tone. Some recent commentary has suggested that the government may be considering a move to just one formal fiscal event per year, but as of now, the current two-event framework remains firmly in place. 

Raising revenue by stealth 

One of the most effective tools for raising revenue in recent times has been the simple decision to freeze tax thresholds and allowances, rather than increase them in line with inflation. This is often referred to as “fiscal drag” or stealth tax.

The concept is straightforward. When income tax thresholds stay fixed, but wages rise, even modestly, more people are pulled into higher tax bands. Likewise, with allowances reduced for capital gains or frozen for inheritance tax, for example, more estates and investments gains become taxable over time.

These quiet changes can bring in billions in additional revenue without altering headline tax rates, and they’ve become a central part of the government’s fiscal approach. The freeze on the personal allowance and higher-rate income tax threshold began in 2021 and is currently extended to at least 2028, with rumours this could be further extended in the coming Budget.  

For financial planning, this makes the Autumn Budget a critical event. It’s not just about new taxes or reliefs being introduced or withdrawn; it’s about understanding how existing policies evolve by, some cases, staying exactly the same.

How will the Autumn Budget affect me?

With the Autumn Budget fast approaching, attention is turning to what the Chancellor might announce this time around.

While nothing is confirmed, early speculation includes: 

• An extension of existing tax band freezes, particularly income tax and inheritance tax thresholds
• Restrictions on pension tax reliefs or changes to contribution limits
• Restrictions on the tax-free cash available from pensions, though it is important to remember when the tax-free lump sum has been reduced before, protections were put in place to ensure individuals who had already built up savings in their pensions were not disadvantaged.
• Property tax reforms, potentially around stamp duty or council tax
• ISA reforms, possible reduction in the Cash ISA allowance 

This is purely speculation at this point so it’s advisable not to make rash decisions before knowing exactly what the outcome will be. However, given the current economic environment, including sluggish growth and high debt interest costs, the government has limited room to manoeuvre, so sadly it’s wise to be prepared. Potentially, if there were financial decisions you were planning to make anyway, that could possibly be impacted by the Budget, now could be the time to make them. 

How we can help 

Whether you're a business owner, investor, retiree or employee, the Autumn Budget can affect you in ways both obvious and subtle. Whether through active policy changes or passive revenue generation via fiscal drag.

We’re following developments closely now and in the run-up to November’s announcement. We’ll be keeping these pages updated with the latest news, including on the day of the Budget with a full run down of all the announcements

In the meantime, if you’re concerned in anyway how the Budget may affect your finances, why not get in touch and see if we can help. 

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning, tax or trust advice.

FAQs

Question: We are selling our home and moving into a flat until we find our next house. We’ll have around £835k to find a home for in the meantime. We’ll need access to all of this when we buy and we don’t know when that will be - plus as we have some expensive storage costs, we would like monthly interest.

Answer: As you’ll be buying another property in the not-too-distant future, the most important things to consider when deciding where to put the proceeds from your house sale are access to your money and the security of your capital. 

Because you don’t know exactly when you’ll need the funds, it wouldn’t make sense to tie them up in a fixed-term account. With most fixed-rate bonds, you can’t access your money until maturity, and while a handful of providers may allow early withdrawal, it’s rare and usually comes with a hefty interest penalty. For your circumstances, an easy access savings account or a short-notice account is likely to be far more appropriate. 

Another key point is protection. Normally, the Financial Services Compensation Scheme (FSCS) covers up to £85,000 per person, per banking licence – so with £835,000 you’d usually need to spread your savings across multiple providers to ensure everything is fully protected. If the money is in joint names, you can place up to £170,000 with each provider. 

However, as this is the sale of your main residence, you should benefit from a special feature called ‘FSCS Temporary High Balance Protection’. This gives you up to £1 million of protection per person, per authorised bank or building society, for six months from the date you receive the funds. It’s designed precisely for situations like yours, providing peace of mind while you search for your next property.

On the question of monthly interest, while many providers pay annually, there are options that pay monthly – worth checking before you apply, especially if you’d like the income to help cover your storage costs. At the time of writing, the most competitive easy access accounts pay over 4% AER, though some come with balance limits. For example, Charter Savings Bank pays 4.11% monthly interest (4.19% AER if left to compound) on balances up to £1 million, however Cahoot’s Simple Saver pays a little more – 4.31% gross monthly (4.40% AER) – but it’s capped at £500,000.

To see the current top rates, take a look at our Best Buy tables.

Notice accounts can sometimes pay a little more, but they require you to give advance notice (say, 30, 60 or 90 days) before making a withdrawal. The top-paying monthly income shorter notice account at the time of writing is with app-only Prosper which is offering a 65 day notice account (via GB Bank), offering 4.42% monthly (4.52% AER), but withdrawals require 65 days’ notice – and remember that you cannot access your capital unless you have given that notice, so for the small amount of extra interest, the worry of not being able to access your cash when you need it is probably not worth it.

Once the six-month temporary protection period ends, you’ll need to think about longer-term protection. One option is to split your funds into around five joint accounts to stay within FSCS limits. Alternatively, for simplicity, you could consider NS&I Income Bonds. This account offers monthly interest at 3.36% (3.30% AER), and because NS&I is backed by HM Treasury, your money is 100% secure regardless of your balance. While the rate is lower than the very best on the market, you could hold up to £1 million per person in one place without the hassle of spreading across multiple banks.

Another option, if you really don’t have any idea when you might need the money, is to consider is a cash savings platform, which can provide a simple and efficient way to spread your funds across multiple competitive accounts while earning attractive interest rates.

A platform such as Savers Hub, powered by Insignis, allows you to open, manage, and switch between a range of high-interest savings accounts through a single, secure log-in. This approach not only offers flexibility and control but also ensures that your cash remains easily accessible while working effectively for you.

Why not see how much you could be earning by requesting a free no obligation illustration today.

Request your free illustration

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate cash or tax advice.

Rates correct as at 23/09/25.

The terms advice and guidance are often used interchangeably when it comes to financial matters, but in reality, they are very different. And in today’s fast-changing financial landscape, understanding this difference is essential.

Since the introduction of the Pension Freedoms in 2015, individuals have had greater control over how and when they access their defined contribution (DC) pension pots. In response, the government established services to offer free, impartial guidance aiming to help people aged 50+ understand their options and avoid costly mistakes.

Arrange your free initial consultation

One such service is the MoneyHelper platform, provided by the Money and Pensions Service (MaPS), previously known as Pension Wise. The idea was (and still is) to ensure people receive basic, unbiased information before making decisions about their retirement income.

As UK Pensions Minister Guy Opperman put it, “We will introduce new provisions requiring trustees of occupational pension schemes to nudge members to appropriate guidance when they seek to access their pension through the pension freedoms.”

This “nudge” while helpful, begs the question: is general guidance really enough when you're making decisions about what could be hundreds of thousands of pounds of lifetime savings?

What’s the difference between guidance and advice?

Guidance

Guidance is all about information rather than recommendations that are specifically tailored to your situation. It helps you better understand the options available, but the responsibility to decide and act lies entirely with you.

Government services like MoneyHelper for example, or your pension provider’s website may offer generalised content, online tools, or telephone support to guide you through the basics of pensions, investments, or budgeting.

In fact, anyone, including friends or colleagues, can technically give “guidance”. But remember, they aren’t liable for the outcome, and you're not protected if things go wrong.

What you won’t get from guidance:

• Personalised recommendations
• Product suggestions
• A risk assessment of your circumstances
• A regulated professional who is accountable for their advice

Advice

Advice, by contrast, is personal, specific, and regulated. When you take financial advice, you're working with a qualified and authorised Financial Adviser who assesses your entire financial situation, whether that be your goals, risk tolerance or future plans, then recommends a course of action tailored to you.

You’re also protected. Advisers are regulated by the Financial Conduct Authority (FCA) and must adhere to strict standards. If something goes wrong, you may have access to the Financial Ombudsman Service and Financial Services Compensation Scheme.

What about the cost? And is it worth it?

Guidance is usually free and is offered by government-backed services or your pension/investment provider, for example. It’s a good starting point, especially if you just want to understand your options or educate yourself.

Advice, however, is a paid professional service, and like any other expert service, the cost reflects the time and complexity involved.

There are two main types of advisers:

• Independent Financial Advisers (IFAs), who offer whole-of-market advice across a full range of products and providers. All our advisers at The Private Office are Independent Financial Advisers.
• Restricted Advisers, who are limited in the scope of advice they can give, often tied to a particular provider or product range.

Choosing the right type of adviser can significantly impact your financial outcomes. Independent advice means you're more likely to get the best solution for you rather than for the adviser’s institution. 

The rise and possible risks of AI in financial guidance

A key change in the advice landscape is the increasing use of Artificial Intelligence (AI), particularly Large Language Models (LLMs) like ChatGPT and other advanced systems. 

Using LLMs as a substitute for regulated financial advice carries several risks. To be balanced, however, on one hand, there are benefits, including speed, ease of access and lower (or no) cost. But the pitfalls are real and therefore need to be carefully considered.

Here are some of the potential risks:

1. Inaccuracy & outdated / partial information
   LLMs may rely on data that is not fully up to date, or doesn’t reflect recent regulatory, tax or product changes. They also generate plausible‑sounding but false or misleading information, known as hallucinations, from time to time.
2. Lack of holistic view
   AI tools typically only see what you tell them. They can’t pick up life‑events you haven’t mentioned, emotional preferences, long‑term goals, or unexpected future needs. A human adviser can ask probing follow‑up questions to uncover things you may not have thought to tell them.
3. No regulatory protection
   Advice from AI tools is not regulated in the way financial advice from an FCA‑authorised adviser is. If things go wrong, there is no ombudsman to make claims, no compensation scheme, and no requirement that those giving the advice act in your “best interests.”
4. Overconfidence & misplaced trust
   Because LLMs are good at generating fluent, confident text, people may overestimate their reliability.
5. Potential for financial loss
   Applying generic or inappropriate advice could cost money e.g. picking wrong investment vehicles or mismanaging tax implications.

The value of advice is still stronger than ever 

It can often be a daunting task for individuals to think about their financial futures. Working with a qualified financial adviser can help to alleviate the burden of worry, become better educated on their finances and receive actionable advice on how to improve their situations.

An update to the International Longevity Centre’s research showed the long-term value of advice:

• Advised individuals can be up to 24% better off after a decade compared to those who don’t take advice.
• The benefits are especially strong for those with modest wealth, proving that advice isn't just for the wealthy.
• Those who seek advice regularly (e.g. annually) see even stronger outcomes over time. 

In Summary – Guidance vs Advice

You get what you pay for, and when it comes to your lifetime savings and financial future, that advice could make all the difference.

Start with a free, no-obligation consultation

If you’re thinking about the next stage in your financial journey and want trusted, independent advice, get in touch to arrange your free consultation with a qualified adviser. 

At The Private Office, we offer chartered, independent, whole-of-market advice, recognised as the gold standard in the industry. If you have £100,000 or more in pensions, savings or investments, you can start with a free initial consultation (worth £500) with one of our regulated Financial Advisers.

 Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate tax advice or cashflow modelling.