In this week’s Friday Focus, we look to 11 Downing Street as Halloween arrives and anticipation builds for the Autumn Budget. Experts across the sector are encouraging advisers to prepare clients for potential policy shifts while maintaining confidence and perspective amid uncertainty.
Rachel Reeves faces a daunting balancing act. With sluggish growth, higher-than-expected borrowing and rising debt-interest costs eating into fiscal headroom, there’s precious little room for treats. The challenge is how to fill a sizeable black hole in the public finances — plugging gaps left by weaker tax receipts and growing spending pressures — while keeping investors, especially bond markets, onside.
For financial advisers, the question is whether this Budget could end up spooking clients and investors. From potential stealth taxes to shifts in pension and capital gains policy, speculation is already swirling. That’s why we asked a panel of experts for their take on what advisers should be watching out for — and how they can help clients stay calm amid the noise.
First up, Steph Willcox, Head Actuary at Dynamic Planner, is cutting through the ghostly rumours doing the rounds and encouraging advisers to keep their cool — and their clients’ confidence, in check as budget day approaches.
Steph says:
“As the November Budget draws nearer, the headlines are getting louder and so is the potential for anxiety amongst advisers’ clients. But this is precisely the time for advisers to help their clients stay calm and focused on their long-term goals. We know from experience, whether it was the COVID-19 market crash or the Truss mini-budget, that emotional reactions to political or market noise can lead to poor decisions and lasting losses.
“Advisers can add real value now by communicating proactively, reminding clients of their long-term plans, and putting any potential policy changes into context. Budgets often sound more dramatic than they prove to be in practice. By staying calm, informed and connected, advisers can help ensure their clients don’t get spooked by the headlines and instead stay on track towards their all-important financial goals.”
Clare Moffat, pensions and tax expert at Royal London, said:
“Although there has been a great deal of speculation in relation to tax free cash, it seems an unlikely choice when political risk, complexity and how much revenue it raises are considered. Tax free cash is one of the most popular and well-known features of pensions and what happens to that money is normally planned for years. Changing it would be complex and probably involve protections for people with existing entitlements and that could mean that it wouldn’t raise as much revenue.
“Changes to inheritance tax could be more likely. Bringing pensions into the realm of inheritance tax has meant that more clients are looking at gifting, sometimes quite large amounts. Unlimited exemptions like normal expenditure from income could be restricted or disappear completely in the autumn Budget. Although it has been underused in the past, we are having more conversations with advisers about this. Or we might see one annual or lifetime gifting amount. This would reduce complexity but could mean more difficult times for families where elder generations have been helping younger generations on a regular basis or helping towards house purchase.
“Any extension to the freeze on income tax means that more people will start to pay income tax or be pushed into higher bands. That also has implications for savings tax and dividend tax too. The full State Pension next year will be just under the personal allowance and a prolonged freeze will also come as a blow to pensioners who only have the State Pension. Although increases to the State Pension have been welcomed by pensioners, paying tax, when they previously didn’t, or an increase in tax they now need to pay, is not such good news.”
Tom Hawkins, Head of Intermediary Sales and Strategic Partnerships (South), Charles Stanley, is in clear agreement with Dynamic Planner’s Steph Willcox commenting:
“As the Chancellor prepares to deliver her Autumn Budget, advisers should be ready for a mix of speculation and surprise. With fiscal pressures mounting, it’s possible we’ll see measures targeting higher earners, pensions or capital gains, but it’s important not to get swept up in the noise. Advisers can play a crucial role in helping clients focus on long-term planning rather than short-term headlines. Whatever the outcome on 26 November, sound advice, diversification and calm decision-making will remain the best protection against any Budget-day shocks.”
Steven Cameron, Pensions Director at Aegon UK, said:
“No-one, and at the time of writing I believe that includes the Chancellor, knows what will actually be included in the Budget. Pension related, ISAs, income tax, National Insurance, other ‘wealth’ taxes or even the odd penny on ‘cigarettes and alcohol’. With so much speculation and so many possibilities, the only thing I’d feel comfortable predicting is that not all of the potential pension change suggestions will happen. Indeed, there’s a good chance none of them will.
“What is clear is that currently, pensions are the best means of saving for retirement. And for the sake of the nation’s futures, as well as the UK’s growth prospects, it would be a brave Chancellor who did anything to change that.”
Steven Cameron has also written a long piece for us, sharing his thoughts on the raft of changes that the Chancellor could be considering, particular in respect of pensions legislation. You can read Steven’s full analysis here later this morning.
Adam Craggs, Partner and Head of Tax Disputes, Regulatory and Financial Crime at RPC, said:
“In the current economic climate, any additional cost burden on businesses will be difficult to absorb, and the figures being discussed are far from insignificant. These costs risk being passed on to consumers, making life even harder for people already struggling with the cost of living (currently running at 3.8%). More significantly, this move sends the wrong message about how the UK approaches tax policy. Businesses need stability and certainty and a cohesive, long-term tax strategy that supports investment and growth in the UK economy, not ad hoc tax changes introduced simply to fill short-term fiscal gaps.
“The Chancellor is likely to deploy a combination of threshold manipulations, relief-modifications, and sector-specific levies, rather than across-the-board rate increases. We are likely to see more stealth than spectacle, with taxpayers facing subtle but significant tax measures.
“She is expected to rely on quieter revenue-raisers, notably threshold manipulations that push more earners into higher tax band. Reform of wealth-tax levers, such as capital gains and inheritance tax look increasingly likely, alongside possible adjustments to employer-side costs like national insurance and pension reliefs. Targeted levies on sectors such as finance, energy and gambling are also on the table.
“These measures may help close the fiscal gap, but they risk adding pressure to businesses and households already grappling with inflation and weak economic growth. Now is the time for individuals and businesses to stress-test their tax positions, from income and payroll exposure to estate, pension, and investment planning.”
Commenting on how the property sector is fully in ‘wait and see’ mode ahead of the budget, Daniel Austin, CEO and co-founder at ASK Partners, said:
“With the budget looming, the property market remains in ‘wait and see’ mode. Buyers are pausing, and developers are holding back amid uncertainty over potential tax changes and the wider economic outlook. While the Bank of England’s decision to hold interest rates provides some comfort, persistently high borrowing costs and a lack of policy clarity continue to stifle momentum. The proposed reduction of the affordable housing requirement to 20%, alongside a fast-tracked planning route, is a welcome step that could improve scheme viability in London. Yet for many developers, even this lower threshold may not be enough to make projects financially viable, given ongoing pressures from high construction costs, tighter debt markets, and uncertain exit values.
“Easing planning constraints and offering temporary relief on levies can help get stalled sites moving, but the challenge extends beyond supply. The government must also act to stimulate demand, through measures such as supporting first-time buyers, reforming stamp duty, and incentivising domestic purchasers to buy off-plan. To truly unlock housing delivery, both developers and buyers need compelling reasons to commit. Without measures to boost demand as well as supply, the capital risks continued under-delivery despite well-intentioned reforms.”
Kate Toumazi, CEO of Insignis, said:
“The Chancellor’s proposals to overhaul tax-free ISAs, including potentially cutting the allowance from £20,000 to £10,000, risk losing sight of why many people hold wealth in cash.
“At Insignis, we see first-hand that for many savers, cash is not about fear or ignorance of the stock market. It provides flexibility for major life events, supports longer-term planning including addressing sequencing risks in retirement, and offers reassurance in uncertain economic times.
Framing the debate as ‘cash bad, equities good’ is, at best, a blunt instrument and is unlikely to encourage savers to put more of their money into stocks – nor facilitate a wider culture of investing. The conversation needs to reflect the nuances of savers’ diverse life stages and risk appetites.”
Rachael Griffin, tax and financial planning expert at Quilter, said:
“The ISA system has been one of Britain’s biggest success stories, helping millions save and invest tax-efficiently. But constant tweaks have made it more complex and harder to navigate. Now is the time to simplify and strengthen the regime, not add new layers of complexity.
“Encouraging investment in UK businesses is a positive ambition, but structural reforms — such as requiring part of investments to be held in British companies — risk confusing savers and undermining confidence in one of the country’s most trusted products. A behavioural approach, focused on education and confidence-building, would be far more effective in getting more people to invest for the long term.
“At the same time, the government should modernise outdated gifting rules to reflect modern family life. The £3,000 annual gifting exemption hasn’t changed in over 40 years; raising it would make the system fairer, help families support younger generations, and put more capital to work in the economy. Simplifying ISAs and modernising gifting would both go a long way in rebuilding confidence and promoting intergenerational fairness.”
Alexander Marcham, Managing Director at Alvarez & Marsal Tax, said:
“Though the Chancellor has been forthright in her intention to impose further taxes on the wealthy, there has not been a clear commitment to any specifics. There have, however, been rather clear signposts about options actively being considered in the form of restrictions of current uncapped reliefs or exemptions, e.g. Capital Gains Tax relief on primary residences, or uncapped IHT-free gifts under the “Potentially Exempt Transfer” regime. Both those changes could likely be introduced with fairly minimal legislative changes, though would leave some crucial questions to be answered. Taxpayers would therefore do well to think about the timing of any transactions that are currently in the pipeline, particularly if they have control of the of this under a current known tax environment. Ultimately, this is proving to be a very significant distraction for entrepreneurs and is causing business-owners to make critical decisions that will have a long term impact on the economy. For instance, family businesses employ around 40% of the UK’s workforce. Assuming that an entrepreneur can fund very significant tax bills without impacting the underlying business is a huge gamble.”
Jon Greer, Head of Retirement Policy at Quilter, said:
“This Budget is a chance for the government to move from firefighting to future-proofing. The UK tax system has become a web of complexity after years of short-term fixes, and each new Budget tends to add yet more layers. To break that cycle, the government should establish an independent Tax Policy Commission to provide long-term oversight, simplify existing rules, and assess the impact of new measures before they are introduced.
“The abolition of the Office of Tax Simplification was meant to embed simplification within government, but since then we’ve seen little progress — and several examples of rushed policymaking leading to confusion. A standing Tax Policy Commission would help ensure new rules are designed with clarity, fairness, and stability in mind, boosting both confidence and economic growth.”
He added:
“The triple lock has served pensioners well, but it was designed for a different economic era. With costs rising rapidly, it’s time to explore a more sustainable alternative that still provides predictability and fairness. Linking the State Pension to a fixed proportion of average earnings, with an inflation safeguard for tougher years, would deliver long-term stability while keeping pension spending sustainable.
“The triple lock shouldn’t be a political trap — it should be a policy that provides confidence, balances intergenerational fairness, and supports fiscal responsibility. Reforming it thoughtfully now is far better than being forced into abrupt change later.”
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, said:
“Statistically, the tax you’re most likely to be worried about rising in the Budget is income tax, and thanks to frozen thresholds, this is nailed on. Unfortunately, VAT is the second biggest worry, and inflation means you’ll automatically be handing over more money to the taxman there too. Worries around pensions have also risen up the ranks for higher earners, so it’s worth understanding what can be done before any changes are announced.”
Malvee Vaja, Financial Planner at Rathbones, said:
“For individuals planning for retirement, the proposed changes to pension tax relief could mean significantly lower pension pots; it could even mean many rejecting pensions entirely for their retirement saving. We’re hearing from many higher earners anxious about this and reconsidering how much they save, potentially leaving themselves, and future generations, less secure in retirement.
“At a time when the onus is increasingly on individuals to build up a big enough pension pot, people should be incentivised to save and invest for later life so they can live well from their own resources. There is a risk that further cuts in pension savings relief will achieve the opposite.
Harriet Guevara, Chief Savings Officer at Nottingham Building Society, said:
“We understand the government’s ambition to promote a stronger investing culture in the UK, but cuts to the Cash ISA allowance is the wrong lever to pull. Cash ISAs remain one of the few straightforward, low-risk tools that help people build financial security, particularly during periods of economic uncertainty.”
Laith Khalaf, head of investment analysis at AJ Bell, comments:
“The looming Budget has so far failed to spark a dash for Cash ISAs, according to the latest set of figures released by the Bank of England. Despite warnings that the Chancellor may seek to cut the annual allowance, savers only sheltered £2.4 billion in Cash ISAs in September, the same amount as in August, and down from £3.5 billion in the same month last year.
“For many people a laissez-faire attitude probably makes sense. The vast majority of Cash ISA savers don’t use the full £20,000 allowance, and may therefore be unperturbed by the prospect of a reduction, even quite a dramatic one. It may also be that Cash ISA savers are more concerned with rates rather than the allowance, with the average interest paid on variable rate Cash ISAs falling to 2% in September, down from a peak of 3.4% in October 2023 (Source: Bank of England, excluding conditional bonuses).
“Then again, money also seems to be flowing into instant access accounts paying unimpressive rates of interest. Bank data shows savers put £5.8 billion into these accounts in September, the highest level this year, despite accounts paying only 1.8% on average. Perhaps this speaks to a preference for highly accessible cash, irrespective of rate or tax status.
“As we get nearer to the Budget, the klaxons warning about the Cash ISA allowance will probably get more shrill, and we may therefore see more buying now while stocks last. On the face of it there’s a similarity here with people taking their pension tax-free cash out ahead of the Budget, in case the Chancellor clamps down on it.
“However taking tax-free cash out of a pension is irreversible, and removes it from a tax shelter where it grows free from income and capital gains tax. By contrast, money paid into a Cash ISA can be taken out at any time, or transferred to a Stocks and Shares ISA, and actually keeps the taxman at bay. The motivation behind these two activities might be the same fiscal event, but the outcomes are very different.”
The Association of Investment Companies (AIC) has called on Chancellor Rachel Reeves to take bold action in her upcoming Budget to foster an investment culture in the UK.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said:“Creating an investment culture won’t happen overnight. It needs to be built on understanding and trust, with a real push to improve financial literacy – which for too long has fallen between government departments.
“We have set out three measures the Chancellor should adopt in her Budget, all with limited cost to the Treasury. Now is the time for bold action and we hope that the Chancellor will use her November Budget to deliver just that.”
The AIC has outlined it’s key Budget proposals on boosting an investment culture with suggested changes to ISAs, stamp duty and VCTs.
