Preparing for the 2025 Autumn Budget

What’s Changing and What You Should Do

The Chancellor faces a growing fiscal challenge in the budget in November. With estimates of a £20 billion shortfall in public finances, avoiding tax rises in areas beyond Income Tax, NI, and VAT (as pledged in the Labour manifesto) may be difficult.

What We Know & What’s Likely to Change

Area	What We Know	What is Speculated or Under Review
ISAs (Individual Savings Accounts)	The annual ISA allowance for 2025-26 remains £20,000 for adults.	There is speculation of reducing the cash ISA portion or limiting the distinction between Cash vs Stocks & Shares ISA allocations.
Pensions & Pension Reliefs	From 6 April 2027, most unused defined contribution (DC) pensions will be brought into the inheritance tax (IHT) net.	Possible changes being discussed include lowering the tax-free lump sum (Pension Commencement Lump Sum), limiting or standardising pension tax relief (particularly for higher rate taxpayers).
Inheritance Tax (IHT)	Unused pension funds to be treated as part of the estate for IHT purposes from April 2027. Death in service benefits from registered pension schemes will be out of scope from 6 April 2027.	Potential changes include tightening lifetime gifting rules (adding caps or extensions to the exemption period), revising the taper relief, adjusting property-related reliefs.
Capital Gains Tax (CGT)	No confirmed announcements yet for 2025, but changes are under speculation.	Possibilities include higher CGT rates for certain assets (e.g., second homes), lower CGT annual exemption, aligning CGT more closely with Income Tax.

Key Statistics to Be Aware Of:

In the 2023/24 tax year, Cash ISA subscriptions rose to about £69.5 billion, up nearly 67% from the previous year.
The ISA market value for adult ISAs stood at £872 billion at the end of 2023/24, up around 20.1% from 2022/23.
The estimated Exchequer cost of tax relief for ISAs in 2024/25 is about £9.4 billion.
The annual ISA limit remains £20,000 for 2025/26.

What You Can Do Now

Maximise Your ISA Contributions
With the ISA allowance confirmed at £20,000, use it — especially if speculated changes might reduce portions of it
Review Pension Plans
Given the confirmed inclusion of unused pensions in IHT from 2027, check whether your pension-saving strategy still fits your estate planning goals.
Use Lifetime Gift Exemptions
Current gifting rules — the annual exemption (£3,000/year per donor) etc. — are still in place. But potential caps or changes may be introduced. Acting now, where feasible, may lock in some tax planning advantages.
Stress-Test Your Portfolio & Planning Assumptions
Run different scenarios: what if CGT (Capital Gains Tax) increases; what if pension relief is curtailed; what if ISA allowances are reduced. Use those to build flexible strategies.

Our Perspective

Where changes are speculative, we factor these into longer-term “what if” scenarios rather than making drastic moves prematurely. Our focus is on balancing growth, tax efficiency, and risk, with clear gap analysis (what’s required vs what’s likely) so clients know where they stand whatever the Budget brings.

Final Thoughts

The 2025 Autumn Budget is shaping up to bring real changes — some confirmed, others still under discussion. While Income Tax, NI, and VAT are politically sensitive and ostensibly protected, other areas like pensions, ISA rules, IHT, CGT and gifting are under active consideration.

Want to make sure your financial plan weathers the policy shifts?

Let Thrive Financial Planning review your plans with you, running both current and potential future rules, to protect your income, estate, and legacy.