Before evaluating some of the latest headlines, we’d like to remind you of a couple from the 2025 Budget.
Pension Salary Sacrifice Cap
The Chancellor announced that from 2029, employees and employers will not make any NI savings on any pension contributions salary sacrificed by employees into their pension beyond £2,000 per annum. This does not change how much can go into pensions via salary sacrifice schemes, just how much national insurance relief is available. So, whilst the national insurance savings are limited, the income tax position remains the same for individuals. However, it may impact whether some employers continue to offer salary sacrifice schemes.Interest Tax Rates to Increase
Alongside dividend taxation, the Chancellor also confirmed that Savings Interest Tax rates will rise from April 2027. This means that interest earned on savings — such as from bank accounts, bonds, and some investment products — will become slightly less tax-efficient. The tax bands will change as follows:- Basic Tax Rate: 20% to 22%
- Higher Tax Rate: 40% to 42%
- Additional Tax Rates: 45% to 47%
Cash ISA Sub-Allowance Reduced to £12,000
The Cash ISA sub-allowance will be reduced to £12,000 for under 65s from 2027. That’s down from £20,000, and could cost savers who keep their assets in cash. The intention behind this is that it encourages savers to instead invest. While the annual £20,000 ISA allowance will remain, less of it can be used purely on cash. As a reminder, ISAs are a saving and investment product, into which savers can pay £20,000 tax free. Over 65s are unaffected by this change.High Value Homes to Attract More Tax
From April 2026, homeowners of properties worth over £2 million will see a council tax surcharge. This will start from £2,500 for properties between £2m and £2.5m, to £7,500 for properties above £5m.Inheritance Tax Changes
In addition to the previously announced change to pensions regarding IHT, the main nil-rate band (£325,000) and the residence nil-rate band (£175,000) will now remain frozen until 2031, meaning more estates are likely to move into the taxable bracket over time.Farm IHT
Speaking of IHT, that’s been in the news again recently, as an about-turn was announced regarding IHT on farms. A 20% IHT on agricultural assets will now be applied on values exceeding £2.5m, rather than £1m as was previously announced. This change, announced just before Christmas, comes after months of protests and opposition to what was sometimes dubbed ‘family farm tax’.Market Instability
Amid uncertainty surrounding tariffs and geopolitical tension, we’d like to remind you that although markets often react quickly to headlines, that doesn’t mean long-term investors should do the same. Over a short period, markets can rise and drop dramatically, and it can be tempting to pull out funds in panic. However, when looking at the bigger picture, its worth noting that markets often recover, and panic reactions can serve to solidify losses while minimizing potential for future growth. Your investment actions should instead be aligned to your long-term goals. A holistic financial plan that remains appropriate for your needs, goals and desired outcomes can be an indispensable source of guidance in the face of market uncertainty. Get in touch with Danbro Financial Planning today. Please note, The value of your investments (and any income from them) 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. Levels, bases of and reliefs from taxation may be subject to change, and their value depends on the individual circumstances of the investor.Blog written by
Charlie Sturgess
Charlie is a Designer in Danbro's Marketing team. He is responsible for producing creative assets and content for use across the group's various channels.
His background is varied, having studied Design and English, and worked in the financial services as an administrator.
Outside of Danbro, Charlie can be found up a climbing wall, or watching the F1.
