The Autumn Budget

Hi, I'm Simon Martin, Technical Development Manager here at Aviva and I am here to deliver a really quick overview of the 2025 Autumn budget that we saw announced this week by the Chancellor. Before we go into looking at the changes, it's important to look back to the weeks and months leading up to the budget, where we saw lots of rumour and conjecture around what might change in the budget.

We had talks of pension commencement lump sums, pension tax relief, income tax bands, income tax rates. There was all sorts talked around, and many of those things clearly didn't change. And for me, it just highlights the value that you, as financial planners, deliver to clients, and the risks for clients who make decisions based on rumour as that very often delivers poor client outcomes.

So lots didn't change. But let's move on to look at what did change in the 2025 budget. There were a few main things that I think impact financial planners and their clients. The first one we've seen is the frozen income tax bands. The freeze has been extended from 2028, a further three years till 2031.

The other big change is the limit, the limit on salary sacrifice.

We are going to see from 2029, salary sacrifice will only get for employee and employer, National Insurance relief for the first 2,000 pounds. Again, that would be a big consideration for clients who use that quite a lot. And also for employers who use salary sacrifice with their staff and perhaps give them the saved National Insurance. So we'll see what happens there.

Then of course we saw the ISA restriction changes. So the limit is going to remain at 20,000 pounds from 2027, but only 12,000 pounds of that for (people) under 65 can be used for Cash ISAs. So again, it's a government way of trying to encourage savers to become investors. We also saw some changes to income or the taxation of income that's coming from assets.

So savings from savings income and rental income are both going to be increased by or the tax on is going to increase by two percentage points, 22, 42 and 47%, which is going to again impact people who get their income from that way. We've also seen dividends. Dividends are going to be increased by two percentage points in the ordinary and higher rate, with additional rate remained unchanged.

So again, lots to think about there. Those advisers who've got business owners clients who are interested in employee benefit trusts, there's been some fairly significant changes to employee ownership of trusts. Rather than being 100% relievable for capital gains tax on qualifying disposal, that's been reduced to 50%. So lots there. I mean, that's just a small subsection of it, but there's lots there, lots to think about and lots of going to be lots of need for clients to take full holistic advice.

It's also important to remember the changes in 2024, some of which have not fully come into place yet, including the changes to pensions and inheritance tax. The freezing of the nil right band, which in 2024 was until 2030. That's moved on to 2031, and the changes to agricultural and business relief, all of which have not fully or not at all come into force yet.

Ultimately, the value of holistic financial planning advice is going to be greater than ever, and you're going to be vital in helping clients navigate the complicated tax scenarios.

Aviva, of course, will be here to work with you as you deliver great client outcomes as clients walk through these changes.

WI05096 12/2025