Our usual summary of the Budget and how it is likely to affect our clients is very short this year: there is little to say.
General outlook
Quotations from Robert Shrimsley in the FT: “The thwarted statement of a thwarted government” and Martin Wolf on the same page: “Healey fiddles while the UK stagnates” sum it up well. There were many measures announced, almost all of trivial significance in the larger scheme of things.
Personal finance
Investment Income
The only measure of wide significance is the doubling of Rachel Reeves imposition of extra tax on savings income and property rental income from 2% to 4% from next April, making the lower rate on these 24% and the top rate 49%. Fortunately, most savings income for our clients is protected by the investments being held in ISAs and Pension Funds and when the latter starts to be drawn it qualifies as earnings so not subject to this addition.
ISAs
The new limit to cash held in ISAs has been removed and the associated anti-avoidance measures, including the proposed tax charge on interest earned on cash held within Stocks & Shares ISAs, are also expected to be withdrawn. We are awaiting updated HMRC guidance/legislation confirming the detailed position.
This simplifies them but does away with one potentially beneficial effect it might have had, encouraging investment into real assets instead of cash. All our clients will be aware of our view of the relative merits of Cash and Investments in the medium/long term: Cash is useful for short term liquidity, not growth or inflation protection. Other limits remain unchanged.
Entrepreneur’s Relief
This now comes under different names and there is further fiddling with the detail and more jargon to absorb for those to whom it may be relevant: please let us know if you would like to discuss this.
Fiscal drag
This is of course always with us and is steadily increasing as measures announced in previous budgets start to take effect without adjustment. Virtually all tax thresholds are remaining fixed while inflation at 3-4%pa makes the liabilities more and more painful, on taxes on both income and capital.
Earlier collection of tax from the self-employed
This process is related and has been ongoing for more than a year but the increasing benefit to HMRC forms a significant element of the Budget calculations.
Other missing announcements
As trailed last week, there has been no change to Capital Gains Tax after last year’s increase.
There is no further mitigation of the disastrous imposition of Inheritance tax on businesses or pension funds.
Future prospects
Not strictly part of the Budget, but announced in the same week by HMRC, are further steps to improve “tax compliance”. We have no issue with all citizens paying the correct amount of tax, however excessive it may be, but the extent to which HMRC now proposes to investigate the financial affairs of “the wealthy” is new. They are defined as those with income in excess of £200k pa and/or assets of more than £2 million. This is separate from the “billionaire’s” investigation which apparently involves assigning each of them a personal tax collector which should help to accelerate their departure from these shores.
Summary
This is perhaps best left to Paul Johnson in The Times today: “Healey’s can got an almighty kicking (down the road)”
To view a more detailed commentary, click here.
If there are any matters you would like to discuss in relation to the Budget, or any aspect of your financial planning, then please do not hesitate to get in touch.
This note is intended as a summary only and should not be regarded as a specific or personal recommendation. The Financial Conduct Authority does not regulate tax advice.
Certain measures remain potentially subject to change until enacted into legislation.
All details are believed to be correct at the time of writing (29 October 2026)