Morning Note: Market news and our thoughts on the UK Budget.
Market News
The market’s reaction to the UK Budget (see below) was fairly muted – something of a relief for the Chancellor. Although there was some volatility across bond and currency markets following the leak of the contents of the Budget, after its delivery in the House, Sterling strengthened ($1.3235 and €1.1420) and gilt yields fell back. In particular, 30-year yields have fallen from 5.37% to 5.20%.
Global equities were close to erasing their November losses as rising bets for Federal Reserve interest-rate cuts revived markets after a sell-off sparked by worries over frothy AI valuations. US equities rose last night – S&P 500 (+0.7%); Nasdaq (+0.8%). The market is closed today for Thanksgiving. In Asia this morning, markets also rose: Nikkei 225 (+1.0%); Hang Seng (+0.1%); Shanghai Composite (+0.3%). Chip stocks gained on a report China has banned ByteDance from using Nvidia.
The 10-year Treasury yield is a touch below 4%, while gold is trading at $4,160 an ounce. Spot platinum jumped 3% as a new futures contract in China pushed up demand. Brent Crude trades at $62.50 a barrel.
The FTSE 100 is currently little change at 9,669. Stocks trading ex-dividend today include: 3i (1.13%), Imperial Brands (1.25%), Land Securities (3.20%), Marks & Spencer (0.36%), Severn Trent (1.79%).
Source: Bloomberg
Autumn Budget 2025 – Key Takeaways for Savers and Investors
The Autumn Budget didn’t bring shock headline tax rises, but it did make a series of quiet changes that matter if you save, invest, or own property. The Chancellor has largely kept the main income tax, National Insurance and VAT rates where they are. Instead, the focus is on:
Extending existing freezes
Tweaking the rules around pensions
Reducing flexibility for cash ISAs
Raising tax on dividends, savings and property income
Adding a council tax surcharge for higher-value homes
Here’s what that means in plain English.
1. Income tax thresholds stay frozen
The personal allowance and higher-rate thresholds are being held at their current cash levels for several more years, rather than rising with inflation.
What this does:
As pay and pensions increase over time, more of each rise is taxed.
Some people who were just below a band will be pulled into a higher rate simply because of pay rises, not because rates changed.
From a personal finance point of view, it means:
Take-home pay may feel under pressure, even when earnings are going up.
Allowances and tax-efficient wrappers (ISAs, pensions) become more valuable, because more income outside those shelters will be taxed at higher marginal rates.
2. Pensions: salary sacrifice capped
The Budget doesn’t touch basic pension tax relief or the 25% tax-free lump sum. Instead, it tightens the rules on salary sacrifice.
From 2029:
Only the first £2,000 a year of pay that you sacrifice into a pension will avoid National Insurance.
Any pension contributions above that level will no longer attract the same NI saving as today.
What it means:
Pensions are still attractive for long-term saving: you still get income tax relief, and investments grow free of income tax and capital gains tax inside the wrapper.
However, very large salary-sacrifice arrangements become less efficient than they were. It may make sense in future to split new saving more evenly between pensions, ISAs and regular investment accounts, rather than routing everything through payroll.
This sits alongside earlier changes due from 2027 that will bring more unused pension funds and some pension death benefits into the inheritance tax net, so pensions now need to be thought about as part of the estate as well as a retirement income tool.
3. ISAs: less room for tax-free cash
For many everyday savers, the most noticeable change is to cash ISA limits.
From April 2027:
If you are under 65, the amount you can put into a cash ISA each tax year will be capped at £12,000.
The overall ISA allowance remains £20,000, but anything above £12,000 (for under-65s) would need to go into investments rather than cash.
If you are 65 or over, you can still put up to £20,000 into cash ISAs as now.
How to think about it:
Everyone still needs an emergency fund in easy-access cash. That doesn’t change.
For money that is genuinely long-term, being nudged towards stocks and shares ISAs is not necessarily a bad thing for potential returns, but it does mean taking investment risk, so diversification and time horizon matter.
If you have been using large cash ISAs as a long-term home for significant sums, it’s a prompt to review whether some of that role should now be played by investment ISAs or other low-risk options, and how much cash you really need tax-free.
4. Dividends, savings and property income
As widely expected, the Budget raises the tax rates on dividends, savings income and property income by a small amount.
Over the next few years:
Dividend tax rates at each band will be 2 percentage points higher than they are today.
Tax on interest and other “unearned” income will also rise.
Tax on rental profits will move up in line with these changes.
For someone who:
Draws dividends from a business,
Relies on a taxable income portfolio, or
Has one or more rental properties,
this means that the net income after tax from those sources will fall a little, even if the underlying investments perform as before.
It doesn’t mean those routes are suddenly unattractive, but it does underline the value of:
Making full use of ISA and pension allowances where you can
Thinking about “asset location” – what type of investment you hold in which wrapper
Considering whether you can spread income sensibly across family members with unused allowances.
5. Property: a new surcharge for higher-value homes
The other notable change for personal finances is a new council tax surcharge on more expensive homes, widely described as a “mansion levy”.
From April 2028:
A new High Value Council Tax Surcharge will apply to homes worth over £2 million.
The surcharge is structured in four price bands, starting at £2,500 a year for properties valued between £2 million and £2.5 million, and rising to £7,500 a year for homes worth £5 million or more.
It is on top of existing council tax and is planned to increase each year in line with inflation.
Alongside:
A 2-percentage-point increase in tax on property income (rental profits) from 2027, and
Existing limits on mortgage interest relief,
this all increases the cost of holding more expensive property, particularly where it is heavily mortgaged or part of a buy-to-let portfolio.
It doesn’t force immediate decisions, but it is a sensible moment to:
Check how much of your overall wealth is tied up in UK residential property.
Compare the after-tax, after-cost return from property with what similar capital might achieve in a diversified investment portfolio.
6. Inheritance and longer-term planning
This Budget didn’t rewrite inheritance tax, but it continues a pattern:
The main inheritance tax allowances are still frozen, so more estates will be caught as property and investment values continue to increase.
Previously announced changes will bring many pension pots closer to the IHT net from 2027.
For many households, especially those with a reasonable home and a decent level of savings, it’s a reminder that:
Inheritance tax is increasingly a mainstream issue, not just one for very large estates.
Retirement planning and estate planning now need to be looked at together, not in isolation.
7. What to do next – in practical terms
You don’t need to tear up your plans, but it’s worth a short, focused review over the coming months:
List where your income comes from
Salary or self-employment
Dividends
Savings and investments
Property
Pensions
Then note where the Budget has increased the tax drag – that’s where small adjustments can have the biggest effect.
Check your use of ISA and pensions allowances.
Are you making use of both partners’ allowances where relevant?
Do you need to adjust plans for cash ISAs from 2027 if you’re under 65?
Does your mix of pension, ISA and taxable saving still make sense given the cap on NI-free salary sacrifice and the coming pension/IHT changes?
Review property in your mix
Look at expected net rental income after tax and costs.
Factor in the future council tax surcharge if you own a higher-value home.
Consider whether your overall financial plan is too dependent on one asset class and one country.
Join up retirement and inheritance planning
If pensions may form part of your estate from 2027, think about how and when you plan to draw them.
Consider simple steps such as using allowances across the family, regular gifting within your means, and making sure wills and nominations are up to date.
The Autumn Budget 2025 doesn’t rewrite the rules of personal finance, but it does tilt them. For savers and investors, the main message is:
make full use of the tax shelters that are still available,
be deliberate about where and how you hold your money, and
check that your long-term plans still work under the rules that are now on the way. Top of Form
If you’d like to understand what the Autumn Budget means for your own savings, investments and long-term plans, now is a good time to take stock. Whether you want a quick sense-check or a more detailed review of pensions, ISAs, portfolios and personal finances, the team can help you work through the numbers and your options in a clear, practical way.
