Financial planning: Autumn bulletin 2025
In this comprehensive edition of our financial planning autumn bulletin, we address pivotal areas that directly impact your financial security and future prosperity. We examine the government’s renewed focus on boosting pension contributions through the revived Pensions Commission, analyse potential Budget measures that could affect your tax position, and explore the expanding reach of inheritance tax following recent legislative changes. Additionally, we provide insights into state pension reforms under review, income investment opportunities in the current rate environment, and the government’s initiatives to encourage a shift from cash savings to equity investments.
Our commitment remains to deliver timely, actionable guidance that empowers you to navigate an ever-evolving fiscal landscape whilst maintaining focus on your long-term financial aspirations. We strongly encourage you to engage with your dedicated adviser to discuss how these developments may influence your personal circumstances and to ensure your financial plans remain robust and well-positioned for the challenges and opportunities that lie ahead.
This content is provided by Tax Briefs for its expert analysis and up-to-date information on the latest tax and financial planning-related developments.
Time to boost pension contributions?
The government wants to boost retirement savings among the public and has revived the independent Pensions Commission to come up with potential solutions.
The new Commission is seeking views from businesses, unions and taxpayer groups on the best way to achieve this and will make its recommendations in 2027. Its consensus approach mirrors the first Pensions Commission, launched over 20 years ago, which led to the introduction of auto-enrolment, creating a huge increase in the number of employees saving into workplace pensions.
Despite that boost to numbers via workplace pension engagement, there are concerns that most people make just the minimum level of contributions, which seem increasingly unlikely to fund a comfortable retirement.
Currently, employees (aged 22 and over) pay 5% of ‘qualifying’ earnings, with employers contributing 3%, to their workplace pension. These auto-enrolment payments are deducted from earnings between £6,240 and £50,270, although employees are free to contribute more.
Given the scale of the problem, the Commission is expected to recommend an increase to minimum contribution levels, as well as proposing an auto-enrolment style system for the self-employed who currently lag behind.
Reforming auto enrolment
The Pensions and Lifetime Savings Association (PLSA) has called for a 12% minimum to be introduced by 2030, split equally between employer and employee. Alternatives include, lowering the minimum age for automatic enrolment to 18, and abolishing the lower earnings level, so pension contributions are made from the first £1 of earnings.
Bear in mind that a ‘comfortable’ retirement is currently likely to cost a couple £5,000 a month, according to the PLSA which will require substantial savings during people’s working life.
You certainly don’t have to wait until the Pension Commission reports to boost your pension funds. If your employer offers a ‘matching’ scheme, then consider increasing pension payments via this scheme first. Alternatively, you may want to look at personal pensions or SIPPs, particularly if you’re self-employed.
If you’re contributing at the minimum auto-enrolment level, or haven’t increased pension contributions for years, it may be time to review whether you are on track for the kind of retirement you’d like and take advice.
The value of your investment, and the income from it, can go down as well as up and you may not get back the full amount you invested.
Past performance is not a reliable indicator of future performance.
Occupational pension schemes are regulated by The Pensions Regulator.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
Looking ahead to the Autumn Budget
Last year’s big tax-raising Autumn Budget should have been a one-off, but Autumn 2025 promises more of the same.
Rachel Reeves’ Budget premiere last October produced tax rises amounting to £41 billion a year by 2029/30, over half of which stemmed from higher employers’ national insurance contributions (NICs). In an interview following that Budget, the Chancellor said, “…there’s no need to come back with a budget like this. We’ll never need to do that again.”
Under a year later, the notion that the 2024 Budget was a one-and-done affair now looks like wishful thinking. In early August 2025 the independent National Institute of Economic and Social Research (NIESR) suggested the Chancellor would need to find more than £50 billion in additional taxes and/or spending cuts to stay within her ‘cast iron’ fiscal rules. That was much higher than other estimates, but the Prime Minister’s response was only to say that the NIESR’s numbers were “not figures that I recognise”.
If tax rises are inevitable, then where could the Chancellor target? Rumours are rife, but the government’s stance reiterates its manifesto promise not to increase the rates of income tax, VAT and NI (for employees, anyway). Maintaining this line is a major constraint as these are the three largest sources of tax revenue. For instance, HMRC estimates that adding one percentage point to all income tax rates would produce over £10 billion a year, whereas doing the same for inheritance tax is worth only £0.3 billion.
Likely targets
One likely non-rate income tax increase is a two-year extension to April 2030 of the freeze on allowances and tax bands. This allows inflation to drag more people into tax and pushes existing taxpayers into higher rates. A good example is the £12,570 personal allowance, first set in 2021/22, which would now be about £15,000 without the freeze.
A cut to income tax and/or national insurance relief on pension contributions is a regular Budget candidate which, to date, has only attracted limited tweaking via the pension annual allowance. It’s a tempting target with the latest figure for the cost of relief is over £78 billion. Another frequently suggested reform is for income tax relief to be set at a flat rate, say 30%, rather than the current marginal income tax rate of up to 45% (48% in Scotland).
The Chancellor has already made clear she wants to reduce the amount that can be invested in cash ISAs (currently 100% of the maximum £20,000 subscription, itself frozen until 2030). Any restriction could have a wider impact, catching some funds currently classed as fixed interest investments within stocks and shares ISAs.
Another rise in capital gains tax rates is unlikely after last year’s changes, but there could be an increase to the tax on share dividends by, for example, raising the rates to bring them into line with other income tax rates.
Some useful pre-Budget actions could be considered after seeking advice, such as making pension contributions before the Chancellor speaks. There is also strategic planning, which normally requires personalised advice. This could involve minimising taxable income as far as practical, maximising use of independent taxation and timing income so that important thresholds (eg £100,000 at which the personal allowance is tapered) are only crossed every other tax year.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
Past performance is not a reliable indicator of future performance.
Are you up to speed with your state pension?
As inheritance tax (IHT) is set to extend from 2026, what are your options to mitigate its impact?
Source: HMRC
Three quick questions on IHT, in ascending difficulty:
- How much is the current nil rate band (NRB)?
- When is the NRB next due to increase?
- Which Chancellor originally set the current NRB level?
The answers are:
- £325,000
- 6 April 2030, as announced by Rachel Reeves in the October 2024 Budget.
- Gordon Brown (in 2006, effective from April 2009).
That third answer goes a long way in explaining why yearly IHT receipts have grown by 258% since January 2010 while prices (as measured by the CPI) have risen by 58%.
Rachel Reeves has also increased future IHT receipts by reducing business and agricultural reliefs from next April and bringing most pension death benefits into IHT from April 2027. Recent media reports have suggested that the coming Autumn Budget could see a further tightening of the IHT regime, focused on lifetime gifting.
Gifting
If you are concerned about the potential impact of IHT on your family, then consider making lifetime gifts before the Budget. The current rules are generous, with any outright gift attracts no immediate IHT and is free of that tax if you survive the following seven years. Even if you only survive just over three years, in some circumstances you could still save IHT.
The major problem with outright lifetime gifts is that you need to be willing and able to make them, for example by downsizing the family home. However, often there are tax considerations, among others (e.g. care costs) that limit their scope. Fortunately, large lifetime gifts are not the only way to help mitigate IHT.
Start by reviewing your will, which determines how your estate will be distributed. If you do not have a will, your estate will be subject to the intestacy rules, which may not reflect your wishes and could lead to unnecessary IHT consequences, particularly where family businesses are involved.
If you do have a will, ensure it is up to date. Changes in IHT legislation, especially those affecting Business Property Relief (BPR), mean that older wills may no longer make full use of available reliefs. For example, BPR can significantly reduce the taxable value of qualifying business assets, but only if the will is structured correctly. This is especially important for family-run businesses, where succession planning and ownership transfers must be handled with care to preserve relief.
Regularly reviewing your will and considering the BPR changes will help ensure that your business interests are protected and that your estate planning remains tax-efficient.
With your will in place, you can then examine your lifetime planning options. Various exemptions exist for regular gifts. Some investments can be chosen or structured to reduce your IHT liability while retaining the right to receive an income for your benefit.
The ultimate backstop of a whole of life assurance policy placed under trust, has seen a renaissance in popularity since last year’s Budget. The policy premiums will often be covered by regular gift exemptions, while the trust framework ensures the policy’s value is outside your estate and immediately available to your chosen trustees.
Whatever your IHT knowledge or plans, advice is vital. The nil rate band may not have changed for 16 years, but over that period the surrounding legislation has greatly expanded in complexity.
The Financial Conduct Authority does not regulate will writing and some forms of estate planning.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
Are you up to speed with your state pension?
The government has launched another review of the State pension age (SPA), which could see future increases automatically linked to life expectancy.
It comes as SPA, currently 66 for both men and women, is due to rise again, increasing in stages to 67 between 2026 and 2028. A further increase to 68 is also scheduled to take place – although not until 2044. The current review will consider whether this should be brought forward.
Links to life expectancy?
The Pension Act of 2014 required the government to review the SPA at regular intervals. This latest review will adopt a wider lens, considering the longer-term sustainability of the state pension, alongside the merits of permanently linking it to changes in life expectancy.
Several European countries, including the Netherlands, Italy and Portugal, already do this. The review will look at how these work in practice and the potential effect on socio-economic groups with lower life expectancy. It will also consider how changes to the state pension might impact intergenerational fairness.
Sustainability
You might assume that it will be some time before the SPA is raised to 68, or beyond, given the fact that life expectancy has stalled in recent years. This plateauing is partly due to the coronavirus pandemic, but other factors, such as rising obesity, physical inactivity and the type of foods we eat, are also thought to play a part.
But this actuarial data isn’t being considered in isolation. By looking at the longer-term sustainability of the state pension, this review will also be looking more broadly at the potential cost savings of increasing the SPA. This may be important, given both the Labour Party and the Conservatives have publicly committed to retaining the triple lock on pensions, for the time being at least.
Understanding your state pension
For those approaching retirement, it is worth checking when you will receive your State pension — particularly if you are reaching your 66th birthday after April 2026. The increase to 67 will happen incrementally, so the exact date you get this payment will depend on the month you are born. You can check what you will get and when here.
Could you postpone?
However, it is important to remember that you don’t have to take your state pension on that date. Those who do not need the income, perhaps because they are still working, or have pensions or income from other sources, can defer taking their state pension, and will receive an uplift of around 5.8% for each year deferred when they eventually take the benefit. But of course, those who defer are not receiving this money in the interim, so may not necessarily be better off overall.
Ultimately, whether it pays to defer depends on how long you eventually live, which none of us knows in advance. There may also be tax implications to take into account, so speaking to an adviser about your options is important before taking any decisions.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
Where next when investing for income?
The Bank of England has cut interest rates three times this year and savers’ rates have followed.
Source: Bank of England, ONS
Since last November, the Bank of England has cut its bank rate by 0.25% at every other meeting, effectively each quarter. The cuts have come despite inflation rising from 1.7% in September 2024 to 3.8% ten months later. A final 2025 rate cut (to 3.75%) might still arrive at the end of the year as the Bank has two more rate setting meetings
As ever, the banks and building societies have been quicker to pass on falling rates to their depositors than rising ones. Deposit interest is also likely to be falling, mirroring the bank rate’s downward steps. Where the drop in rates could end is uncertain, but they have already fallen to just 2% for Eurozone countries.
The Bank’s steady cutting of short-term interest rates has had much less impact outside the deposit sector, making other income-producing investments relatively more attractive. For example:
- Sterling fixed interest funds: These funds generally hold UK government and/or commercial bonds, which offer attractive yields to investors. In part this reflects the continued high borrowing by the government. For example, the yield on 10-year government bonds (gilts) is now around 4.6%, close to the level last seen in 2008.
- UK equity income funds: Usually one of the higher paying of the major equity markets, the UK average is close to 3.5%, allowing investment managers to design an income portfolio offering yields of 4% and more, while the average dividend yield on US shares is down near 1%. However, a good rule of thumb is always the higher the yield, the greater the risk.
- Structured products: These are specialist investments that can offer higher income yields than the UK equity or fixed-interest funds but come with potentially greater complexity and risk.
Fixed-interest funds, UK equity funds and structured products can all be wrapped within an ISA, taking the income that they generate out of personal tax.
To learn more about these and other income options and current yields, please contact us.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
Past performance is not a reliable indicator of future performance.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
Savings or investment? Shifting from cash to stocks
The government is keen to encourage savers to invest more of their money into stocks and shares to help boost growth.
A cautious nation
UK households had just 32% of their savings in stock market investments in 2023, outside of their pension funds, a figure which has been in decline for over ten years.
The Chancellor, Rachel Reeves, is hoping new rules might encourage people to invest more. The government will roll out ‘targeted support’ from next year, narrowing the gap between personalised financial advice and more generic guidance. Banks and other financial companies will be able to make product recommendations, including information about potential investment opportunities.
A new approach to consumer advice
Reeves also criticised the risk warnings that are required on all investment products. She told the City she’d like to see a shift towards “informing rather than warning” as a way to encourage people to be more adventurous with their longer-term savings.
The Chancellor also floated the idea of an advertising campaign to promote the benefits of investing. This has drawn comparisons to the ‘Tell Sid’ advertising campaign of the 1980s, which encouraged millions of consumers to buy shares in newly privatised utilities.
Given the high proportion of cash savings, there may be good reasons to consider equity-based investments, particularly if you’re looking to build wealth for the future.
Most people will invest in both cash and equities so may want to speak to an adviser about the best mix to meet both longer and shorter-term savings goals. This will help ensure they are not taking too much, or too little risk with their money.
Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
Investments do not offer the same level of capital security as deposit accounts. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
Could you cut your tax bill with salary sacrifice?
Many employees could cut their tax bill and boost pension savings by making the most of salary sacrifice arrangements.
Not all employers offer these schemes but there has been more interest since the government increased national insurance (NI) payments for employers.
These schemes offer tax savings to employers and employees. Under such arrangements an employee ‘sacrifices’ part of their gross salary, with their employer paying this sum directly into their workplace pension.
Income tax and NI aren’t due on the sacrificed salary, which reduces the employee’s overall tax bill. The employer also saves on the NI they would otherwise have paid on the sacrificed salary, making a more significant saving since the recent NI increase.
Such arrangements are particularly beneficial for higher- and additional-rate taxpayers. There are now more people falling into these higher tax bands, despite more buoyant wage growth, under the impact of long-term frozen tax thresholds. These income tax bands are due to remain at current levels until at least 2028.
Salary sacrifice can also be valuable for those close to thresholds for losing other benefits, such as child benefit, tax-free childcare or personal allowance. By keeping your taxable salary below the relevant limits, you can still retain access to these benefits, on top of the tax savings.
However, employees should remember that salary sacrifice reduces their take home pay and lowers the income used in mortgage affordability assessments, and that money diverted into a pension may not be accessible until age 55 (57 from April 2028).
News Round Up
Important October tax dates
There are two key tax dates in October:
- 5 October is the deadline for registering with HMRC for self-assessment and a 2024/25 tax return, if you have not registered before. You can check here whether you need to register.
- 31 October is the final date for filing a paper self-assessment return for 2024/25. If you file online, you have another three months’ leeway.
The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.
Company cars return
New HMRC data shows that company car ownership is on the rise after declining by a quarter in the second half of the 2010s. The increase has been driven by electric vehicles (EVs), which now account for 41% of the company car population. The tax advantages of salary sacrifice for EVs have played a major part. However, the government is tripling EVs’ taxable benefit over the next four years.
Counting billionaires?
Lord Kinnock, the former Labour Party leader, revived talk of a wealth tax over the summer, an idea that last appeared in the wake of the pandemic. While the government refused to be drawn on the possibility, they will be aware that the Commons Public Accounts Committee recently discovered HMRC does not actually know how many billionaires there are in the UK.
