Author: David Thurlow
Chartered Financial Planner and Investment Manager - Member of the Investment Committee
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Published: November 2025
Budgets used to be tightly guarded secrets with the occasional leak before the big day and always a “rabbit” pulled out of the Chancellor’s red box to surprise us all. Not so this year when the leaks started in early summer and became a flood as we approached Budget Day. It was somehow fitting that the Office of Budget Responsibility accidentally released its analysis of the Budget – including all the major policy announcements – almost half an hour before the Chancellor started to speak.
In our previous blog, we suggested that the cash ISA allowance could be reduced to £12,000 and this turned out to be the case, albeit not until April 2027 and only for the under 65s. A review of Lifetime ISAs was also announced, with the intention of replacing them with something simpler. Why do I always get nervous when government talks about simplification?
We also referred to persistent leaks that salary sacrifice could be restricted to £2,000 and again, this was announced. Here though, implementation is not until April 2029 so if using this valuable tool to bolster pension contributions, there is still time.
There is also still time to make VCT contributions with 30% income tax relief, but not for long as tax relief is to be reduced to 20% from April 2026, a stealth measure tucked away in the supporting documentation.
The Budget was as notable for some of the announcements that were not made as for some that were – no changes to the pension tax free lump sum, Capital Gains Tax rates or Inheritance Tax gifting rules. The only change to Inheritance Tax was positive, allowing the £1 million tax free Business/Agricultural relief allowance to be transferred to the spouse on the first death.
Other announcements were less positive, with tax thresholds now frozen solid until 2031, tax on dividends increased by 2% (2026) and tax on rental income and savings income increased by the same percentage (2027). The long-threatened mansion tax finally appeared in the form of a surcharge of £2,500-£7,500 for the largest houses from 2028.
As we trailed, a mileage tax has been included for electric cars, but not until 2028 to give the government time to work out how on earth they can police this. Nevertheless, it is hardly an incentive to go electric.
Amongst the main losers were those who like a flutter, with remote gaming duty increasing from 21% to 40% from April 2026 and a remote general betting duty introduced of 25% from the same date. I won’t be betting on anything any time soon. Except horseracing. Our friends in Newmarket will be relieved that the racing industry has been exempted from these increases.
Bingo lovers fare even better as bingo duty has been abolished, so Gala and Mecca will be expecting full houses from April.
Fuel duties are frozen until September 2026 but then increased four times up until April 2027! As expected, tobacco duties are increased immediately, but alcohol duties are not increased until February. Merry Christmas everyone!!
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