What next? Your post-Budget financial planning

With the Autumn Budget 2025 now published — and changes set to roll out over the coming years — UK taxpayers face a steadily rising tax burden. The combination of frozen thresholds, tighter pension rules, increased taxation on savings and property, and new levies on high-value homes means that sound financial planning is more important than ever.

Following on from our previous article, here we outline practical steps to consider following the Budget. Though aimed primarily at UK residents, some points are relevant for British expats or overseas residents. See our earlier report for non-UK residents for more on this.

Six key areas following the Autumn Budget 2025

1. The impact of frozen tax thresholds: can you reduce tax on earnings?

With income-tax thresholds now frozen until 2031, more people will be pulled into higher tax bands as earnings rise. This means you may be paying more tax in real terms, even if the headline rates haven’t changed.

What to consider:

• One effective way of reducing the tax bill on your salary is to increase your pension contributions. Pensions grow free from UK income and Capital Gains Tax, making them particularly worthwhile for higher and additional-rate taxpayers. This will remain true even after changes to National Insurance relief on pension contributions made through ‘salary sacrifice’ (more on this below). In theory, you can pay 100 per cent of your earnings, up to £60,000, into a pension and benefit from tax relief. Additional rules apply to those earning over £260,000.
• For some people, it may be appropriate to bring forward income before thresholds bite further.
• These factors are particularly relevant to those with salaries close to £100,000. At this tipping point, your £12,750 tax-free allowance is gradually reduced, until it becomes non-existent at £125,140. In this salary bracket, earners pay tax at a marginal rate of 60%, so 60p for each extra £1 they earn.

2. ISAs: adapting to the reduced cash ISA allowance

The £20,000 overall ISA allowance remains the same, but under-65s can only pay £12,000 per year into a cash ISA, instead of the whole £20,000.

Planning points:

• If you wish to increase your cash reserves, you can make use of your existing cash ISA limit prior to the new rules in April 2027.
• After that, you may wish to increase your payments into Stocks and Shares ISAs.
• If married or in a civil partnership, it may make sense to share savings so you can both take advantage of your full ISAs and tax-free allowances.

3. Pensions: new rules affecting higher earners

Salary sacrifice schemes allow employees to give up a portion of salary and receive alternative benefits, such as pension contributions, instead. These payments are free of income tax and National Insurance. From April 2029, only the first £2,000 will be exempt from National Insurance. This is a significant change for higher earners. However, many people expected the Autumn Budget to make changes to the 25% tax-free lump sum – where the over 55s can take 25% of their pension tax free. This did not materialise, preserving a key tax benefit.

Planning considerations:

• Where possible, increase payments into a pension through a salary sacrifice scheme prior to April 2029.
• Looking ahead to when the rules change, consider whether it will still be efficient to sacrifice income above the cap. Bear in mind that contributions will still be free from income tax and Capital Gains Tax.
• Take stock of employer pension incentives or matching schemes, which can offer attractive terms.
• Reassess the balance between pensions and other assets for retirement income.
• Consider alternative tax-efficient wrappers such as ISAs.

4. Property and investment income: higher taxes ahead

When your income rises above a tax threshold, it can also affect the rate of Capital Gains Tax (CGT) and dividend tax you pay. From April 2027, taxes on savings income and property income rise by 2 percentage points across all bands. From April 2026, tax on dividends will rise by 2 percent for all but higher-rate taxpayers.

Practical steps:

• Make full use of ISA allowances to shelter income-producing assets.
• For those with large, unwrapped portfolios, explore phased Bed-and-ISA transfers, or placing investments within a Self-Invested Personal Pension (SIPP).
• Investment bonds are also a tax-efficient alternative to holding unwrapped portfolios. They offer tax-deferred growth, 5% annual withdrawals without immediate tax, and planning flexibility through top-slicing relief and trust options.  Thus, helping investors manage rising tax burdens smartly.
• Those who own investment properties will want to reassess likely costs and returns as changes come into effect over the coming years. This is especially true for those who own properties valued at £2 million plus who will be subject to the new annual ‘mansion tax’.
• Review your investment approach. In some cases, it may make sense to step back from assets producing a high level of income and move into growth-oriented portfolios to reduce taxable income. Though this might increase your liability for Capital Gains Tax if you sell these assets, the CGT rates are lower than income tax rates. They remained at 18% (standard rate) or 24% (higher rate) in the Autumn Budget.
• For more adventurous investors, Venture Capital Trusts (VCTs) or Enterprise Investment Schemes (EISs) may be appropriate. These are vehicles to encourage investment in young, innovative companies. Significant reform was announced in the Autumn Budget. From April 2026, income tax relief on Venture Capital Trusts reduces from 30% to 20%, which makes it less attractive. On the upside, VCTs and EISs will be allowed to invest in larger, more established companies than before.  However, you should not consider these investments without regard to, or advice in respect of, the higher risks involved and possible risk of significant capital loss.

5. ‘Mansion tax’ on high-value properties

Properties over £2m will face the new ‘mansion tax’ surcharge, affecting homeowners predominantly in London and the southeast.

Action points:

• Review property valuations and likely council-tax implications.
• If planning to downsize within the next few years, evaluate whether it may be beneficial to act sooner.
• Build the increased annual cost into cashflow planning.
• Those with rental properties will need to consider increased tax on property income (see above).

6. Estate planning: a growing priority

With Inheritance Tax thresholds frozen and unused pension funds set to become subject to this tax from April 2027, estate planning is entering a period of rapid change. The number of households potentially affected by IHT is set to jump from 1.6 million to 5.1 million from April 2027.

Steps to consider:

• Review wills, trusts and lifetime-giving strategies.
• Reassess the role of pensions in wealth-transfer planning
• Farmers and business owners should prepare early for the April 2026 changes to Agricultural and Business Property Relief. Last year, it was announced the rate of relief would be cut from 100% to 50% on the value of property over £1 million. This has left many families concerned that farms and other family businesses may have to be sold to pay Inheritance Tax. This year, it was announced that the £1 million allowance will be transferable between spouses and civil partners, so that £2 million can be passed on tax-free.

And finally: the case for proactive planning

While there was no single headline tax rise, the Autumn Budget 2025 brings in several incremental changes, and the cumulative effect may be significant for some. Especially savers, investors, homeowners and retirees.

Practical next steps may include:

• Reviewing pensions and adjusting contributions
• Making fuller use of Stocks & Shares ISAs and investment bonds
• Restructuring investment portfolios for tax efficiency
• Reconsidering UK property strategy
• Updating estate planning arrangements
• Expats should urgently review their situation regarding National Insurance contributions and entitlement to the UK state pension

Above all, the Budget underscores the value of personalised financial planning — ideally well ahead of the 2026 and 2027 rule changes.

See the full Autumn Budget 2025 statement here

AJB Wealth can help with all aspects of financial planning and investment management. To discuss your situation, please book an obligation-free consultation, or call us on 01428 774 070.

Important: The content of this bulletin is for general consideration only and does not constitute advice. No action must be taken, or refrained from being taken, without advice. This company accepts no responsibility for any loss occasioned as a result of any such action, or inaction. You are also reminded that investments can fall, as well as rise. And in the event of early encashment, you may receive less back than your original investment.