With a fiscal hole of anywhere up to £30bn to plug, rising government debt, and a ‘smorgasbord’ of potential measures expected from her in her budget speech tomorrow, Chancellor Rachel Reeves has a lot on her plate. Advisers need to be alert to changes in taxes, savings rules, pensions, and investment incentives. IFA Magazine will cover all Budget news and expert analysis throughout the week, starting here, with insights from leading industry experts on what’s at stake.
Advisers can follow all our budget coverage here to make sure they get straight to the detail on IFA Magazine.
Tomorrow’s Budget is shaping up to be one of the most complex in recent years. Rather than a few headline-grabbing tax measures ( we know that hikes to income tax are now off the agenda) advisers should expect a wide array of reforms affecting pensions, ISAs, Capital Gains Tax, property taxes, and more. The so called ‘smorgasbord’ approach. Experts have been sharing with us their views on the potential implications for clients, households, and the wider economy of the various measures under the spotlight, highlighting areas that advisers should keep an eye on. From long-term savings incentives to pension stability, investment culture, property taxation, the bond markets and government revenues, there is a lot for advisers to consider.
As we look ahead to what might be announced in the budget at lunchtime tomorrow, experts from across the industry have been sharing their thinking with us in anticipation of what the Chancellor might have in her red box, and the implications for advisers as follows:
Encouraging saving and investment: Budget reforms to incentivise hard-working individuals and long-term saving are high on the agenda. Andy Butcher, Branch Principal & Chartered Financial Planner at Raymond James Investment Services, says: “Reports of potential reductions to cash ISA limits are deeply concerning and counterproductive. While the intent to encourage investment is laudable, a ‘stick’ approach that penalises diligent savers by pushing more of their hard-earned money into taxable environments will only increase the tax burden on ordinary families and stifle consumption. The UK needs a ‘carrot’, a national educational campaign to demystify investing and clarify that it doesn’t always have to be high-risk. The very name ‘Stocks and Shares ISA’ might be a deterrent, and a rebrand or clearer communication may help encourage broader participation in non-cash assets, boosting national savings without compromising consumption. The relentless chipping away at Capital Gains Tax (CGT) allowances and increases in rates are actively disincentivising investment. Slashing the CGT allowance to a meagre £3,000 creates an unnecessary barrier, forcing individuals with modest gains into complex tax filings. To encourage a savings and investment culture, we need to increase CGT allowances. The previous Budget’s decision to hike CGT rates on entrepreneurs also sends the wrong message. Innovators and small businesses are the heartbeat of our economy, and we must tell them the UK is ‘open for business’. The £1 million allowance should be lifted, or rates reduced, to incentivise the next generation of entrepreneurs to build and grow here.”
Greg B Davies, Head of Behavioural Finance at Oxford Risk, commented: “Recent speculation about restricting Cash ISA allowances misses a more fundamental problem: that these products are behaviourally flawed to begin with. By combining emotional comfort with a tax benefit, people are rewarded for holding onto cash, even when investing that money would serve their long-term needs more effectively.
“The average investor loses 2–3% annually from holding too much cash. This isn’t a knowledge problem; it’s an emotional unwillingness to move from what feels safe to what’s suitable.
“Any policy limiting this psychological crutch will ultimately help investors to escape the trap of short-term comfort over building long-term financial resilience and should be applauded.”
Adam Craggs, Partner and Head of Tax at RPC, adds: “The public are likely to respond to a cash ISA cut in the Budget with a mix of frustration, caution and political scepticism. Savers—particularly older, risk-averse households—may feel penalised, as cash ISAs remain one of the few safe, tax-efficient products available to them. Many already indicate that they would not move into stocks and shares ISAs. Instead, they may shift savings into ordinary accounts, even if that means paying more tax, or they may simply save less. Financial institutions, especially building societies, are also likely to raise concerns that a reduced cash ISA allowance would weaken their deposit base and limit their ability to fund mortgages, with potential knock-on effects for the housing market. Politically, the cut risks being viewed as unfair or poorly targeted—more akin to a stealth tax than a measure to encourage investment. MPs and consumer advocates have questioned whether reducing the allowance would achieve its intended outcome, suggesting it could do more harm than good.”
Stephen McGee, Chief Executive of Scottish Friendly, notes: “The Chancellor has a golden opportunity this week to reset the nation’s attitude to saving and spark a genuine investing culture in the UK. An opportunity I urge her to take. For too long, the country has had a cash mindset that history shows erodes household wealth and deprives UK businesses of vital capital. Cutting the annual cash ISA allowance would be a big, decisive step towards building a US-style long-term investing culture. If the goal is to genuinely change behaviour, the cap ideally needs to be around £8,000. That still gives households enough scope to build a meaningful emergency fund while encouraging those saving larger sums to invest the rest. This is a real lever the Chancellor can pull to boost growth, productivity, and household wealth.”
AJ Bell CEO, Michael Summersgill, says: “Government is right to try and get more people investing, but will miss the opportunity to transform the market unless it ditches some of the ill-conceived ideas currently on the table and takes a more transparent, long-term approach to reform.
“Rather than developing policy in a Whitehall bubble, with scant evidence or real-world knowledge to underpin the debate, it should instead go back to the drawing board. A government Green Paper or independent commission on ISAs, similar to that setup on pensions, would help build evidenced-based consensus on the case for reform and encourage a multi-pronged approach to supporting retail investors, which includes measures like Targeted Support.
“That process must place consumers at the heart of the discussion, aiming to make it as easy as possible for people to save and invest. These behavioural trials show an integrated cash and investing ISA system could remove friction, reduce inertia and help consumers navigate what today looks like a binary choice between cash or investments.”
Patrick Farrell, Chief Investment Officer at Charles Stanley, part of Raymond James Wealth Management Group, comments: “The Chancellor needs to deliver a Goldilocks Budget today – one with just the right balance between supporting growth, preserving fiscal credibility, and not overburdening households or businesses. It’s a tough ask and bond markets could decide Rachel Reeves has served up a dose of cold porridge for taxpayers while not doing enough to tackle a yawning fiscal black hole. If the fiscal measures are considered too tight, as well as choking off growth, we could see political instability, which would be hard for bond markets to stomach. However, anything too expansionary would risk inflation and unsustainable borrowing.”
The fiscal balancing act: Hetal Mehta, Chief Economist at St. James’s Place, highlights the delicate choices facing the Chancellor: “With the Budget tomorrow, the key question is whether the policy dilemmas facing the Chancellor will finally be resolved. Support the economy or balance the books? Break manifesto pledges or break fiscal rules? Keep markets onside or keep voters happy? The economic picture heading into the Budget is mixed: GDP growth has been lacklustre, inflation has remained elevated but below Bank of England fears, and unemployment is rising to 5% in Q3. One critical variable is productivity, which remains below peer nations. Higher borrowing costs, reduced welfare savings, and new employment rights could widen the fiscal gap. Restoring the £9.9bn fiscal headroom seen at the Spring Statement would require tax rises or spending cuts of £20–30bn. The UK tax burden, already on track to reach around 38%—the highest on record—could climb further. No easy fiscal choices remain. This Budget will demand a delicate balancing act, with direct implications for households, markets, and many of our clients.”
Pensions under scrutiny: Andrew Tully, Technical Services Director at Nucleus, says: “It’s a tough environment for pension savers today, and the last thing they need is to feel like they aren’t in control of their retirement savings planning because of government tinkering, uncontrolled speculation and changes to existing rules. Changes to pension tax-free cash withdrawals reportedly being off the table for this year’s budget is welcome news, but without a stable retirement framework the same damaging rumour will continue to drive behaviour ahead of future fiscal events. To help UK adults feel more confident about their financial futures, we need long-term planning in pensions. We cannot be in a position that sees savers make drastic changes to their retirement savings because of rumour and speculation, because they don’t trust that pensions will be left alone.”
Rebecca Williams, a Divisional Lead of Financial Planning at Rathbones, says: “While the government have put rumours of a change to the pension tax free lump sum to bed, speculation over the upfront tax relief on pension contributions remain – as has been the case before various major fiscal events in the past decade.
“With more responsibility falling on individuals to build a sufficient pension pot, it’s vital that people are encouraged to save and invest for their future so they can enjoy a comfortable retirement from their own resources. Further reductions in pension tax relief risk undermining this goal.”
Alexandra Loydon, Group Advice Director at St. James’s Place, adds: “Constant changes to pension rules undermine the very goal the Government and regulators are pushing for – boosting long-term investing and closing the UK’s investment gap. You can’t build confidence in a system that keeps shifting under people’s feet. Salary sacrifice is one of the few ways that helps people save more for retirement and restricting it risks discouraging contributions at precisely the wrong time. We’ve also seen how speculation around tax-free cash can push people into withdrawing money unnecessarily, often against their long-term interests. Rumours and uncertainty can be just as damaging as actual policy changes because they drive poor decisions and weaken confidence in saving for retirement.”
Wealth and taxation: Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, warns: “Tomorrow’s Budget is likely to include another significant round of additional tax increases such as a ‘Mansion Tax’ alongside potentially further tinkering with the Inheritance Tax (IHT) and Capital Gains Tax regimes that will fall on the wealthy. Unfortunately, such measures do little to support the UK’s standing as a competitive and appealing jurisdiction for wealth. With the country’s top 1% of taxpayers contributing to a third of all tax revenue, policymakers must work harder to stem the outflow of the wealth community and get the UK back to becoming an attractive destination for wealth. In the meantime, given the expected myriad of tax changes, we expect to see continued levels of high demand for financial advisers to support long-term financial planning.”
Jack Fletcher-Price, equity analyst at Morningstar, explains the potential impact of property measures: “The mansion tax has the potential to slow down transactions above the threshold, as logically owners would defer moving in the hope it will be repealed by a later Government. The changes to council tax bands is probably overdue, but it will further undermine trust in this Government given they promised not to do this in the run up to the election.”
Mark Campbell, Head of Wealth at Isio, adds: “If there is one clear and obvious trend in the world of personal finances it is that pre-Budget mania and speculation is increasing. More than ever, the Treasury has leaked policies and tested the water with ideas that we can be almost certain will never come to pass. As we’ve seen with previous Budgets, the effects of this are very damaging. People make short-term decisions based on speculation and rumours. This year, we have seen changes to income tax, pension tax relief, salary sacrifice, and inheritance tax (IHT) mooted in public. We know from previous Budgets that there is a good chance that many of these will not make the cut. With perhaps the biggest change for many years set to come into effect in April 2027 when IHT applies to defined contribution pensions, it is more important than ever to have a robust plan in place. Endless speculation damages trust at the worst possible time.”
Innovation and competitiveness: Justin Arnesan, principal, EAP Innovation Funding at Ryan, says: “A meaningful pro-innovation budget needs to update existing reliefs, so they reflect where modern IP value actually sits. The UK should widen the 100% full expensing regime so that the purchase of patents, licences, and software can qualify just like plant and machinery. At the same time, the R&D rules need to remove the overseas restriction on R&D activities. If the innovation supports a UK entity, it should be claimable, irrespective of geography. Innovation is global by nature, and the UK government should enable, not limit, collaboration that drives growth. These are small technical fixes, but they would make the UK materially more competitive overnight, and they do not require major new spend.”
Gilt markets and interest rates: Matthew Amis, Investment Director – Rates Management, at Aberdeen Investments, explains: “Chancellor Reeves could still positively surprise the gilt market on Wednesday. Having stepped back from income tax hikes, the market noise may yet be behind us – but Reeves has one trick left. The one rabbit out of the hat could be the extent of the inflation busting measures. If Chancellor Reeves can materially lower inflation, then this could spark the Bank of England’s imagination when it comes to rate cuts in 2026. The obvious risk to Reeves and the gilt market is that front-loaded costs to lowering inflation are paid for with a collage of backloaded tax hikes. Any material increase in gilt issuance in the coming years will not be well received.”
Property taxes: Ingrid McCleave, a partner and tax specialist at DMH Stallard, says: “I hope that if Rachel Reeves goes ahead and abolishes stamp duty land tax, as suggested she might do, the fact that people have already paid stamp duty land tax when they purchased their home, is reflected in some form of tax credit or tax relief against whatever alternative tax she brings in to replace it. Although the abolition of SDLT benefits new purchasers, its replacement is likely to unfairly disadvantage people that have retained their home and have no intention to purchase a new home, having already paid between 2% and 12% SDLT on the value of their home, when they purchased it.”
Tax receipts and fiscal drag: Tom Goddard of Blick Rothenberg notes that advisers should be alert to potential changes in income tax, thresholds, and gifting rules amid rising tax receipts and continued fiscal drag. “Revenues from all major tax streams are consistently rising and will continue to do so,” he said. “Instead, the Chancellor should focus on addressing the UK’s weak growth forecasts.” VAT receipts are also up, though more modestly, reinforcing the picture of resilient overall revenues. As Tom notes, “If the UK economy experiences some real growth, tax takings will naturally rise. Encouraging investment through tax policies that reward success and don’t punish it should be at the top of the batting order.”
Property under the microscope
Rathbones’ economists estimate that abolishing SDLT could boost housing market activity by 25%, equivalent to more than 300,000 additional transactions per year.
With mansion tax & council tax on the agenda, Rathbones’ economists estimate that abolishing SDLT could result in more than 300,000 additional housing transactions per year, an increase of over 25%. This is based on a detailed academic assessment of the impact of SDLT on household mobility and the official statistics on housing transactions.
Oliver Jones, Head of Asset Allocation at Rathbones, says: “Housing is the least mobile form of wealth, making property taxes hard to dodge and attractive to policymakers. But not all property taxes are equal. Levies like stamp duty, which make moving home costly, are among the most damaging. When people can’t relocate to affordable housing, businesses struggle to find workers. Growth in innovation hubs such as Cambridge has been stifled by limited housing supply.
“Policymakers should therefore look for ways to remove and replace, not increase, taxes on property transactions.”
Commenting on the SDLT possibilities, Ingrid McCleave, a partner and tax specialist at city law firm DMH Stallard, said: “I hope that if Rachel Reeves goes ahead and abolishes stamp duty land tax, as suggested she might do, the fact that people have already paid stamp duty land tax when they purchased their home, is reflected in some form of tax credit or tax relief against whatever alternative tax she brings in to replace it.
“Although the abolition of SDLT benefits new purchasers, its replacement is likely to unfairly disadvantage people that have retained their home and have no intention to purchase a new home, having already paid between 2% and 12% SDLT on the value of their home, when they purchased it.”
Nathan Emerson, CEO at Propertymark comments: “The upcoming Autumn Budget is a key opportunity for the UK Government to help boost confidence and stability within the economy, with housing playing a fundamental factor for future growth.
“With much speculation of a potential overhaul regarding Stamp Duty for those in England and Northern Ireland, it is important that any new vision brings enhanced levels of flexibility for those approaching the buying and selling process. At this point, it is important to consider any such proposals with a sense of caution until all aspects are fully understood.
“Any changes should ideally focus on creating a more fluid system that provides geographical fairness, brings greater stability within the marketplace, encourages people to consider properties that are appropriate to their needs, as well inspire and support first-time buyers on their long-term property journey.
“For those who rent, although we are starting to see early signs of rental inflation gradually slowing down, there is still immense upward pressure for consumers each month.
“Across the last year, many landlords have seen increased overheads in the form of taxation and compliance demands due to incoming regulation, such as the Renters’ Right Act, and the need to meet future energy efficiency standards, for example. Ultimately, it would be encouraging to see the UK Government taking a close look at various burdens on landlords and offering proactive support to encourage long-term investment in high quality housing.”
Paula Higgins, CEO of HomeOwners Alliance, championing homeowners and those who aspire to own, says: “This Budget process has been chaotic. Six months of public brainstorming has drained confidence from the housing market, paralysing activity and leaving homeowners anxious. The housing market thrives on confidence and it’s clear to us that confidence has been the silent casualty.”
“On inheritance tax proposals, the Chancellor must face reality. For millions, the Bank of Mum and Dad is the step up to homeownership. Restricting gifting won’t level the playing field – it will pull the ladder up and lock more young people out of owning a home. Our recent research shows 54% of homeowners with adult children have or expect to help them buy; half wish they could do more; and one in four already feels guilty they can’t. This proposal will make this situation worse.”
“If a mansion tax is introduced, in the form of a 1% levy on properties worth at least £2 million, with an annual charge of 1% of the amount over that threshold, there must be a long lead-in time. Homes are people’s security, often their pension. Many people have prioritised owning a home over all else and are asset-rich and income-poor; they would struggle to afford a sudden new annual charge. A ‘mansion tax’ also hits ordinary family homes in London and the South East far more than the rest of the UK.”
“On proposals to hike council tax for bands F, G and H, homeowners feel like sitting ducks. Homeowners in those bands are already paying significant amounts, and any further tax hikes risk punishing people whose incomes haven’t kept pace with property values, hitting families who are asset-rich but cash-poor.”
“Most importantly, any attempt to raise council tax or introduce a mansion tax cannot be fair without a full, nationwide revaluation of homes. Council tax bands are still based on 1991 values. Trying to bolt new charges onto a 34-year-old valuation system risks huge distortions — punishing some households purely because their area has risen in value or they have invested in their home, while others with equally valuable homes escape. If the government wants fairness, it must first face up to the need to revalue the vast majority of the housing stock.”
“We welcome plans to replace Stamp Duty. We’ve campaigned scrapping stamp duty for over a decade because it’s a tax on aspiration and movement. But any replacement must be consulted on properly, with winners and losers clearly understood, so people can plan their finances. This toxic cycle of SDLT fiddling, with tweaks, holidays, exemptions etc with all the unintended consequences, needs to stop.”
Our clear ask to the Chancellor is this: homeowners need stability, predictability and fairness. That means a full and transparent consultation on any changes to property taxation; a long-term, consistent framework that households can plan around; and if the government wants a fairer system, it must start with a modern revaluation rather than layering new taxes onto an outdated one. The country needs a housing tax strategy — not more policy made on the hoof.”
Damien Druce, COO of Black & White Bridging, said: “I think the Budget is going to be a colossal, missed opportunity. We need reform of our welfare system and its ballooning bill. The welfare state was intended to be a safety net for people who found themselves in difficulties – or to provide help for those unable to work because of disability. I was brought up in poverty on a council estate. All of my life I’ve strived for more based on hard work, not hand-outs. I think the idea that living on benefits might become a way of life for generations of workless people would have been anathema to William Beveridge, the architect of the welfare state.
“But rather than reforming welfare entitlements and cutting the country’s spending, Ms. Reeves is set to scrap the two-child benefit cap, costing the country an additional £3bn. Labour MPs have already scuppered an earlier attempt to reform Personal Independence Payments.
“Given the Chancellor wants to cut debt, that means the country needs to raise more via taxes – and without an increase in income tax, that will mean raising more money from property.
“Instead, Ms Reeves should have been looking to reduce welfare spending – saving billions, keeping taxes down and boosting growth. Sadly, that would require vision, political will and leadership. Which is something that Ms Reeves does not appear to possess.”
In conclusion
Tomorrow’s Budget promises to be a complex balancing act, with measures affecting taxes, pensions, savings, property, and business incentives all under the spotlight. For advisers, the key challenge is separating speculation from concrete policy and understanding the potential implications for clients’ long-term financial plans. From encouraging a genuine savings and investment culture to maintaining pension stability and supporting economic growth, the choices made by the Chancellor will ripple across households, markets, and businesses alike.
Right throughout the week, IFA Magazine will continue to bring real-time analysis, expert insight, and practical takeaways for advisers navigating the Budget’s outcomes. In a year of fiscal pressures and a smorgasbord of potential reforms, staying informed and proactive will be more important than ever.
![[UNS] celebrate](https://ifamagazine.com/wp-content/uploads/wordpress-popular-posts/801986-featured-300x200.webp)
