In many ways, it was a relief to finally hear Wednesday’s Budget after so many weeks of speculation as to the likely content of Chancellor Rachel Reeves’ famous red box.

A lot of the wilder rumours turned out to be just that, rumours, including concerns that restrictions may be introduced to the 25% tax free cash that can be taken from pensions and a potential reduction in the higher rate of tax relief on pension contributions.

What we did see was a second consecutive tax raising Budget, this time amounting to £30billion which, when added to the £36billion in this Government’s first Budget last year, equates to the biggest tax take of any Government since 1970.

The Chancellor contended that this approach was essential to help the more disadvantaged with those who could afford it being called on to make a “contribution”.
Among the key measures announced were:

• Income tax thresholds frozen for a further three years until 2030/31.
• The amount of money that can be saved in a cash ISA reduced to £12,000 from April 2027 from £20,000, although those over 65 retain full allowance.
• The Lifetime ISA to be replaced by a fresh ISA following consultation. This is a popular product used by some clients on behalf their children.
• Tax on dividends, savings and property income to rise by two percentage points.
• Electric vehicle drivers to be charged 3p per mile on top of other road taxes from 2028, which would equate to an extra £300 a year for someone with annual mileage of 10,000 miles.
• Mansion tax to be introduced on homes valued at more than £2million with four bands ranging from £2,500 to £7,500.
• A £2,000 cap on the amount that can be put into pensions through salary sacrifice to be introduced from April 2029. Any contributions over this will be subject to tax.
• The state pension will rise by 4.8% from April 2026.
• The two-child benefit cap to be scrapped from next year.

While the Budget may require some clients to make minor adjustments such as increasing pension contributions and maximising their ISAs, having a long-term, diversified financial plan means that there will be no requirement for any steps out of the ordinary.

The nature of our regular client reviews means that we are continually looking at the broader picture as opposed to a piecemeal approach, guiding clients and advising on any potential changes to financial plans in a considered, more strategic way.

Looking at the broader picture, the tax-raising agenda of this Budget, on top of the one 12 months ago, will inevitably put a big weight on the economy and intensifies the urgency to start delivering the growth that was promised in the election manifesto.

The markets have so far reacted positively to the Budget, potentially reassured by the increase in fiscal headroom to £22billion which the Chancellor hopes will provide greater insulation against future economic turbulence.

As ever, please do get in touch if you would like to talk through anything with a member of our team.