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).  

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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. 

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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. 

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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.

Rachel Reeves will not reduce the tax-free pension lump sum allowance in this month’s Budget, officials have confirmed.

The Treasury has ruled out any changes to the amount individuals can withdraw from their pension without paying income tax, following reports of a wave of withdrawals from pension funds.  

Currently, most savers are allowed to take 25% of their pension pot tax-free from the age of 55, up to a maximum of £268,275.

The Chancellor had been considering a cut to the Pension Lump Sum Allowance as a possible way to help fill a gap of up to £30 billion in the public finances.

The Fabian Society, a well-known think tank aligned with Labour, had recommended reducing the tax-free lump sum to £100,000. This was a proposal Ms Reeves also weighed up ahead of last year’s Budget. Torsten Bell, the Pensions Minister, had previously supported lowering the limit to just £40,000.

The Chancellor’s refusal to rule out changes last year led to a sharp rise in pension withdrawals. In 2024-25, savers withdrew more than £70 billion from their retirement pots, an increase of 36% compared to the previous year.

However, Treasury officials have now confirmed to The Telegraph that Ms Reeves will not make any changes to the limit when the Budget is announced on 26 November.

The confirmation comes after reports that many retirees were acting early to access their funds in fear of a potential tax increase.

What is the Lump Sum Allowance?

The Lump Sum Allowance is one of the three new allowances which were introduced following the abolition of the Lifetime Allowance on 5 April 2024.  

In simple terms the Lump Sum Allowance limits the overall amount of tax-free lump sums you can take from your pension funds during your lifetime.  

For most people this lifetime limit is £268,275.

This does not mean you can take all of your pension pot as a tax-free lump sum if it is worth less than £268,275, as there are rules in place that limit the tax-free amount you can receive to either 25% of the value of the pension pot you are crystallising, or £268,275 – whichever is the lower figure.  

If you’re interested in how to manage you pension withdrawals to ensure the best possible outcome for you and your family, we can help. Give us a call on 0333 323 9065 or book a free non-committal initial consultation with a member of our team to find out more.

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

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 (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. 

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?

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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.

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.

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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

A growing number of pension savers are taking action ahead of the Budget in November 2025 as concerns mount that Chancellor Rachel Reeves may target pensions in a bid to raise revenue. The most significant fear being a reduction—or even scrapping—of the 25% tax-free lump sum.

New figures from the Financial Conduct Authority (FCA) showed that £70bn was withdrawn from pension pots in the tax year 2024/2025 which was an increase of 36% on the previous tax year. But it was tax free cash that saw the biggest jump in withdrawals, with £18.3bn withdrawn, up 62% on the previous year. While some are taking early action as part of planned retirement or inheritance strategies, others may be reacting to speculation and that may carry its own risks.

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So, what’s really happening, and what should pension savers consider before making any, potentially rash, decisions?

Is 25% tax-free cash under threat?

One of the most cherished benefits of pension saving is the ability to withdraw 25% of your pension pot tax-free from the age of 55 (rising to 57 from April 2028). This feature is often a key part of retirement planning, offering a welcome financial boost in early retirement years.

However, there has been much speculation in the media that this benefit could be in the Chancellor’s sights. Given the growing cost pressures on the Treasury and the need to balance the books, the Government may see this as a politically tolerable way to raise funds, especially if positioned as a move to make the system “fairer” or to close “tax loopholes.”

Some rumours have hinted that the allowance could be capped or means-tested, while others believe it could be scrapped altogether for higher earners. Though nothing has been confirmed, it has been enough to make many savers act early.

Why are people withdrawing pension money now?

A major driver of this accelerated activity is likely inheritance tax planning. Many people have used pensions as estate planning vehicles because, under current rules, unused defined contribution pensions can often be passed on to beneficiaries tax-free if the saver dies before age 75 (and pre-2027), or at their beneficiaries’ marginal income tax rate after that age.

Whilst pensions were not designed to be passed on tax-free, this became a feature only with the pension freedoms introduced in 2015. It would appear that the Government now sees this an unintended generosity hence changing the rules from April 2027.  

Major factors potentially driving this trend:

• ‘Lock in’ current rules: By taking their tax-free cash early, even if they didn’t need the money immediately.
• Support for adult children: In a cost-of-living crisis, many parents are using their pension pots to help their children buy homes, support education, clear debts, or simply get by.
• Impending legislation: Known changes are coming in April 2027 that will bring most pensions into a person's estate for inheritance tax purposes making their longer-term benefit less tax efficient, as such some are accelerating inheritance tax planning through gifting.  
• Desire to see the benefits: More people may be choosing to gift during their lifetime to witness the impact their money can have, rather than waiting until after death.

The HMRC crackdown: Watch out for re-contributions

However, pension savers must tread carefully. HMRC have confirmed that they are now targeting people who have withdrawn pension funds and then tried to re-contribute the money. This often happens when people access cash “just in case” and later realise they didn’t need it.

HMRC is treating these “recycling” activities as unauthorised payments, and in some cases is issuing penalties of up to 70% of the amount re-contributed.

This crackdown should act as a serious warning: pension planning must be done properly and ideally with advice. Knee-jerk decisions based on speculation or panic can come at a very high price.

So, should you withdraw your tax-free cash now?

Plan, don’t panic, is the key. The temptation to act quickly in light of Budget rumours is understandable but the best outcomes come from measured, strategic financial planning, not reacting to headlines.

Yes, the landscape may change. But making major pension decisions without understanding the long-term impact could create bigger problems down the line, particularly if HMRC penalties counteract any tax saving you set out to achieve. The smarter move? Review your financial and estate plan now, not later. If you’ve already been considering gifting or restructuring your assets, this could be the right time. Equally if you were planning to take your tax-free cash soon, anyway, now could be a good time. But don’t make a move based on speculation and what might happen. Ideally, speak to a qualified financial adviser who understands your full situation.

Because while Budget speculation may be out of our control, how we plan for our financial future isn’t.

Inheritance planning tips

If you're considering how to manage your pension and reduce your estate for IHT purposes, here are a few strategies to consider:

1. Use spouse exemptions: Transfers between spouses are free from IHT. Consider aligning pension and estate planning as a couple.
2. Gift excess income: Regular gifts from excess income (not just capital) can be IHT-free if documented properly and as part of a regular pattern
3. Use other allowances: Don’t overlook the £3,000 annual gifting exemption or small gift allowances.
4. Lifetime gifting: Gifts survive the 7-year rule for IHT purposes if you live long enough, so starting earlier has advantages.
5. Consider life insurance: A whole-of-life policy written in trust can provide a tax-free lump sum on death to help cover an IHT bill.
6. Don’t rely solely on pensions: A balanced approach using ISAs, property, other tax incentivised products, and trusts may be more resilient against future rule changes.

For this any many more tips on how we can improve you and your family’s financial future, why not get in touch for free initial consultation.  

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

The value of your Investments and the income derived from them can fall as well as rise and you may get back less than you originally invested.

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.

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

HM Revenue & Customs (HMRC) has warned savers not to act impulsively with pension withdrawals ahead of the upcoming November Budget.

This message is aimed at those savers who might look to take advantage of the 30-day cooling-off periods to request withdrawals but with the option of putting them back again within 30 days, should the Budget leave the current rules unchanged.

Now HMRC have said pensioners who took out their lump sum after December 5 2024 and put the money back in, within the 30 days, could be pursued by the tax man with each cash reviewed on a "case-by-case" basis.

They clarified that once a tax-free lump sum has been paid, it cannot be reversed, even if the cancellation period is still open.

In its latest update, HMRC has reiterated that these 30-day windows do not provide any tax exemptions, meaning those who took and then returned their tax-free lump sums since December 5 last year are potentially facing charges of 55% in most cases, and up to 70% in others.

“Once lump sums are paid, the associated tax consequences (including the use of the individual’s lump sum allowance and lump sum death benefit allowance) cannot be undone, even if the payment is returned or cancellation rights are exercised” said HMRC. 

62% rise in those accessing tax free cash lump sum?

Most pension savers have the option of withdrawing up to 25% of their pension, tax free. Many pensioners choose to take a lump sum to clear mortgages or help children with university costs, but after reports last year that Chancellor Rachel Reeves was considering reducing the tax-free allowance to £100,000, many savers rushed to access their money early, with tax-free pension lump sum withdrawals rising significantly amid fears this allowance could be reduced or scrapped completely.  

Figures from the Financial Conduct Authority (FCA) show pension withdrawals rose by nearly £20 billion in the 2024/25 tax year compared with the previous year.

The amount of money withdrawn from pensions jumped by almost 36% in 2024/25, with savers taking out £70.9bn compared to £52.2bn the previous year, according to the FCA’s latest Retirement Income Market Data. Of this, £18.3bn was tax-free cash, an increase of 62% on the £11.3bn the previous year.

The latest data showed that just shy of one million pension plans (961,575) were accessed for the first time during the year, up 8.6% on the amount accessed in 2023/24.  

Figure 1: Pots over £250k taken into drawdown, Source: FCA, 2025

The FCA data also showed that the number of pensions being accessed without regulated advice had grown, with only 30.6% of pension plans accessed for the first time in 2024/25 being taken with regulated advice, slightly down from 30.9% the previous year.

If you’re concerned about the Budget or simply want to discuss the best way to plan for your retirement, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our qualified and regulated financial advisers to find out how we might be able to help you.

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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 estate planning or tax advice.

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 (and any income from them) can go down as well as up which would 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. 

The UK tax authority is increasing scrutiny of pension tax relief claims made by higher earners in an effort to “protect taxpayers’ money,” as part of a broader initiative to boost revenue collection.

HM Revenue & Customs (HMRC) announced on Thursday that starting September 1st, it has “lowered the threshold” at which claimants must provide evidence to support their pension tax relief requests. In addition, claims can no longer be made by phone and must instead be submitted online or by post.

Last year, the Labour government pledged an additional £555 million annually in HMRC funding, aiming to generate an extra £5 billion in yearly tax revenue by the end of this parliament.

HMRC said it is reducing the evidence threshold for personal pension tax relief claims following a review that found “many claims below the current evidence threshold were incorrect.” The move, it said, is intended to “protect taxpayers’ money.”

Each year, around 80,000 personal pension relief claims are submitted. HMRC’s review of claims under £10,000 showed that one in three required the claimant to amend the amount claimed.

What is pension tax relief?

Pension tax relief is a government incentive that helps you save more efficiently for retirement by reducing the tax you pay on your pension contributions. When you pay into a pension, some of the money that would have gone to HMRC is instead added to your pension pot.  

If you're a basic-rate taxpayer (20%), contributing £80 means the government tops it up with £20, so £100 goes into your pension. Higher-rate taxpayers (40%) and additional-rate taxpayers (45%) can claim back even more through their self-assessment tax return, reducing the real cost of saving even further. It’s one of the most tax-efficient ways to build your retirement fund.

Tax relief is often financially beneficial, but it is important to remember that there are limits and restrictions. For more information, check out our article on how to be tax efficient with your pension contributions.  

What’s changed?

HMRC has made a few changes to claims for tax relief on personal pension contributions which came into effect on 1st September. Below are some of the key changes.

• All pay as you earn (PAYE) claims for pension tax relief must be made online or by post and must be supported by evidence from the pension provider or employer.
• HMRC will not accept claims made via the telephone.  
• All claims must be made using HMRC’s online service or by letter; and all claimants need to provide evidence in support of their claim.  

Prior to 1 September 2025, only those claimants who met the conditions set out in HMRC’s guidance were required to provide evidence. The evidence required is a letter or statement from the pension provider or a payslip from the employer showing:

• The claimant’s full name;
• Details of the pension contributions paid and the tax year they relate to; and
• Where the claim relates to a workplace pension, that the claimant received 20% tax relief automatically from their employer.  
• Evidence needs to be provided for each tax year that a claim is made for.  

For more information please read further on gov.uk.  

If you want to find out more about how you can make the most your pension tax reliefs and allowances, 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 might be able to help you.

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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 planning or tax advice.

Millions of pensioners across the UK are expected to receive a state pension rise of 4.7% next April, a figure that exceeds inflation and could place further strain on public finances just as Chancellor Rachel Reeves considers potential tax increases in the upcoming Autumn Budget. 

Labour has pledged to maintain the state pension triple lock, which ensures payments rise each year by whichever is highest out of 2.5%, inflation in September, or average earnings growth over the three months to July.

New data released this week shows that average weekly earnings, including bonuses, were 4.7% higher between May and July compared to the same period last year. With September’s inflation figure currently sitting at 3.8%, experts believe the earnings growth measure will set next year’s state pension increase.

The Government will confirm the final uplift ahead of the Budget, but Work and Pensions Secretary Pat McFadden reiterated Labour’s commitment to the triple lock on Tuesday.

“That’s a commitment from the Labour government to the UK’s pensioners,” he said. “It’s something that we said we’d do at the election and something that we will keep to.”

The confirmation that the triple lock will be upheld has come as a relief to many as there had been rumours that it might be abandoned as another part of Labour’s tax campaign.

The ‘Triple Lock’ explained

The ‘triple lock’ refers to a well-known state pensions policy that ensures state pensions rise every year by either the average earnings growth, inflation (as measured by the Consumer Prices Index) or a flat 2.5% - whichever is highest that year, hence the name ‘triple’ lock.

It was designed in principle to make sure that state pension value would always have the best growth outcome each year for pensioners. The guarantee that the highest of the three will be what pensions grow against ensures that savers have three layers of protection against inflation, hence the name ‘triple lock’. This is incredibly important in maintaining a level of healthy financial security for those relying on their pensions, as it guarantees growth irrespective of how volatile the economy becomes.

If you want to find out more about retirement planning, 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 might be able to help you.

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.

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 (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. 

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.

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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.

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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.