By Jason Ashley, Associate Adviser, November 2025
Setting the Scene
Every Budget arrives against a complex economic backdrop, and this year is no exception. Before diving into the detail, it is worth briefly setting the context.
Over the past decade, UK economic growth has been modest. Since the 2008 financial crisis, annual GDP growth has often struggled to rise much above 1 per cent, and the last few years have been particularly subdued. Inflation has also remained higher than policymakers would like, putting pressure on household budgets and complicating the Bank of England’s task of maintaining price stability.
Consumer confidence has followed a similar path. It weakened after the Brexit referendum and fell further during the 2022 cost-of-living shock. Lower confidence tends to restrain spending, slowing growth and placing additional pressure on public finances.
At the same time, the government has committed not to raise Income Tax, National Insurance or VAT. These self-imposed constraints limit the most straightforward ways of raising revenue. As a result, this Budget focuses more heavily on wealth and investment-related taxes, alongside some targeted support for households.
Overall tax receipts are expected to rise in the coming years, lifting the tax take to around 38 per cent of GDP by 2030/31. This is higher than the UK’s recent historical norm, though still below many comparable European economies, where tax revenues are closer to 40 per cent of GDP.
Against that backdrop, the more useful question is not whether the Budget is “good” or “bad”, but what it actually changes for you. Below, we focus on the areas most relevant to Oak Four clients.
Savings and Investment Allowances
What changed
From April 2027, the Cash ISA limit for those under age 65 will fall from £20,000 to £12,000.
The overall ISA allowance remains £20,000, but under-65s will only be able to hold £12,000 of this in cash; the remainder must be invested.
Savers aged 65 and over will retain access to the full £20,000 Cash ISA allowance.
Transfers from Stocks and Shares ISAs into Cash ISAs will no longer be permitted from April 2027.
New rules will apply to long-term cash held within investment ISAs for savers under 65.
A consultation is expected on replacing the Lifetime ISA with a simpler product for first-time buyers.
What this means for you
Clients under 65 who currently make full use of the Cash ISA allowance will need to invest a larger proportion of their ISA contributions from 2027 onwards to benefit fully from the £20,000 limit.
Those already investing through Stocks and Shares ISAs are likely to be less affected.
For clients who prefer holding significant cash balances, careful structuring of savings outside the ISA wrapper will become increasingly important.
Despite these changes, ISAs remain a highly valuable planning tool. The direction of travel is clear: policy is increasingly encouraging younger savers to invest rather than hold large, long-term cash balances.
Taxation of Income and Investment Returns
What changed
Dividend tax rates will rise by 2 percentage points from April 2026.
Tax on savings income will increase by 2 percentage points from April 2027.
Property income will be taxed under separate income bands from 2027, aligned with the new savings income structure.
Finance cost relief for landlords will apply at the basic property rate.
Income Tax and National Insurance thresholds will remain frozen until 2031.
What this means for you
Dividends held outside ISAs and pensions will become more heavily taxed from 2026.
Savings interest and rental income will face higher taxation from 2027.
Frozen thresholds will continue to pull more individuals into higher tax bands over time, even without real increases in income.
Together, these changes reinforce the importance of:
Making full use of ISA and pension allowances
Managing how and where income is generated
Reviewing your tax position regularly, rather than reactively
Pensions and Retirement Planning
What changed
No changes were made to the Annual Allowance, Money Purchase Annual Allowance or tapered Annual Allowance.
Pension tax relief and tax-free cash rules remain unchanged.
From 2029, National Insurance relief on salary sacrifice into pensions will be capped at the first £2,000 of contributions each year.
What this means for you
For most clients, pension and retirement strategies remain largely unaffected by this Budget.
Those making substantial salary sacrifice contributions may see reduced National Insurance savings from 2029, though pensions will remain highly attractive from a tax and planning perspective.
For clients approaching or already in retirement, this Budget is more of a checkpoint than a call for major change.
Property and Inheritance
What changed
Property income will be taxed under separate bands from 2027.
A new high-value council tax surcharge will apply from 2028 to homes in England valued above £2 million.
There were no changes to Stamp Duty, Capital Gains Tax on property, or inheritance tax thresholds.
What this means for you
Personally held rental property becomes slightly less tax-efficient at the margin.
High-value homeowners may face higher annual property costs.
These measures do not demand immediate action, but they do warrant inclusion in longer-term financial planning discussions, particularly around the role property plays within a wider portfolio.
Household Finances
What changed
The two-child limit for the child element of Universal Credit will be removed in 2026.
The National Living Wage will rise by 4.1 per cent.
Average household energy bills are expected to fall modestly from April 2026.
What this means for you
While these measures will not significantly affect most Oak Four clients directly, they shape the broader economic environment in which long-term planning takes place.
Inflation and frozen tax thresholds are likely to remain the more meaningful influences on household finances over time.
Business Owners and Directors
What changed
No changes to Corporation Tax or employer National Insurance structures.
Higher taxation of dividends, savings income and property income will affect directors extracting income personally.
The salary sacrifice National Insurance relief cap applies from 2029.
What this means for you
Business owners should continue to:
Balance salary, dividends and pension contributions carefully
Make effective use of employer pension funding
Maintain flexibility in anticipation of future tax changes
Nothing in this Budget requires immediate restructuring, but it will influence longer-term planning decisions.
Inheritance Tax and Legacy Planning
What changed
No changes were made to inheritance tax thresholds or reliefs.
The Budget’s emphasis on taxing wealth and investment income has increased speculation about future IHT reform.
What this means for you
More families will drift into the inheritance tax net over time due to frozen thresholds and asset growth.
Early, proactive planning remains essential. This may include reviewing wills, considering gifting strategies and trusts, and ensuring estate planning aligns with your own lifetime financial needs.
A Final Thought – Steering Clear of the Noise
Ahead of this Budget, there was widespread speculation that pension tax-free cash might be reduced or abolished. Some unadvised savers acted on these rumours and made irreversible pension withdrawals, only for the changes never to materialise.
Our view was that such drastic changes were unlikely. Clients who waited avoided unnecessary decisions driven by headlines rather than evidence.
We cannot promise perfect foresight. What we can promise is a steady, considered approach: helping clients make calm, informed decisions based on facts, not noise.
If you would like to discuss how any of these measures affect your own financial plan, we would be very happy to talk this through with you.