The Stock Markets
Navigating The New Budget
Other Essays Produced This Month
Smart Investors Prepare for Bad Times During Good Times
Difficult Conversations: The Heart of Financial Guidance
Other Essays from the Archive:
Your Most Important Transition (Retirement)
For all other essays, see the full archive on the content page.
After months of speculation, the recent Autumn Budget was delivered by Rachel Reeves on 30 October.
While many investors were rushing to make changes based on nothing more than speculation, we encouraged caution.
Now that the Chancellor has delivered the budget, we have a clearer picture of the changes ahead and can begin to unpack the many details that still need to emerge.
Before diving into some details, let's remember a core financial planning principle: your long-term financial security should always be the foundation of any decisions you make. While tax planning is a crucial component of sound financial planning, it shouldn't be the sole driver of our strategies.
Selected Budget Announcements
Income Tax and National Insurance
From April 2028, personal tax thresholds will be uprated in line with inflation. While this change is not immediate, it could help mitigate the effects of fiscal drag in the long term.
Savings and Dividend Allowances
The starting rate for savings will remain at £5,000 for the 2025/26 tax year, and the Personal Savings Allowance will maintain its current levels. The Dividend nil rate of taxation will stay at £500. These unchanged allowances underscore the importance of maximising tax-efficient savings vehicles.
Employer National Insurance
Starting April 6, 2025, employers will face an increase in National Insurance contributions from 13.8% to 15%. This change may impact business owners and could influence employment decisions.
Corporation Tax
The government has published a Corporate Tax Roadmap, committing to cap the Corporation Tax Rate at 25% and maintain current rates for small profits. This provides some certainty for business planning, but we'll need to watch for future developments.
Pensions and Inheritance Tax
Contrary to speculation, most pension-related matters remained untouched. However, a significant change is coming: from April 2027, unspent pensions will be brought into the Inheritance Tax (IHT) regime. This could have substantial implications for estate planning and intergenerational wealth transfer. We’re still processing the full implications of this, and transfers between spouses on death will remain outside of the IHT calculations.
State Pension
Under the triple lock rules, the state pension will increase by 4.1%. While this is good news for retirees, it reminds us of the importance of building additional retirement savings.
Non-UK Domiciled Individuals
From April 6, 2025, the taxation of non-UK domiciled individuals will undergo significant changes. This may affect some of our clients with international connections, and we'll need to review these cases carefully.
Capital Gains Tax
Effective October 30, 2024, the main rates of CGT will increase from 10% and 20% to 18% and 24%, respectively. This change emphasises the need for strategic planning regarding asset disposals.
ISAs and Junior ISAs
Subscription limits for Adult ISAs will remain at current levels from April 6, 2025, to April 5, 2030. While not an increase, this stability allows for continued tax-efficient saving and investing.
Stamp Duty Land Tax
From October 31, 2024, the surcharge on additional property purchases will increase from 3% to 5%. This change could impact investment strategies for those considering property investments.
The Importance of Personalised Financial Planning
While these changes provide a general framework, it's crucial to remember that every investor has a unique financial situation. What might be an optimal strategy for one client could be less suitable for another. As we digest these changes, we'll consider how they interact with your circumstances and goals.
Some of the announced changes require further clarification, and we're actively monitoring for additional details. At our next planning meeting with you, we’ll discuss how these changes might affect your financial plan.
As always, our focus remains on your long-term financial well-being. While budget changes can seem daunting, they're just one factor in the broader landscape of your financial journey. We've navigated changes before and will continue to adapt and optimise your plan as needed.
If you have any immediate questions or concerns, please don't hesitate to reach out. We're here to provide clarity and guidance as we move forward together. Stay focused on your long-term goals, and let's work together to make the most of the opportunities that lie ahead.
😀 Rational Optimism
The media is not a friend of the disciplined and patient investor. Ignoring the key determinants of lifetime investor returns, the media focuses on short-term returns, market predictions, and negative news.
We present the following as an antidote to the onslaught of negative news:
Why I Brought My Toddler to Watch SpaceX’s Flying Skyscraper
“In Awe”: Scientists Impressed by Latest ChatGPT Model o1
📰 Read
Making Financial Plans Less Boring With Goals That Are ‘Not NOT Serious’ [4 minutes]. Does your financial plan reflect your individual passions and experiences?
6 Lessons From My 6-Week Mini-Retirement [4 minutes]. Insights on life and work after taking time off.
Now & Later [2 minutes]. Will your future self thank you for what you're about to do?
Why Taking Vacation Time Could Save Your Life [6 minutes]. The numerous health benefits of time off.
How to Change Yourself: Pain vs. Perceived Pain [5 minutes]. The psychology of behavioural change.
The Art of Waiting [9 minutes]. In a world that values speed, the true advantage lies in your ability to wait.
🎧 Listen
This Was Never Easy: A Brief History of Nostalgia [23 minutes]. Nostalgia can distort our perception of the economic past, making it seem more unpredictable than the future.
🍿 Watch
Why You Should Be Good At Doing Nothing
🖼️ A Picture is Worth a Thousand Words
Which Countries Are the Happiest in 2024?
The Best Metro Systems Across European Capital Cities
The Speed at Which New Technologies Go Mainstream
We hope that you enjoyed this month’s newsletter. Please let us know what you enjoyed, or write back with any of your own news.
As always, we're here for you.
Main Image source: Rachel Reeves https://members.parliament.uk/member/4031/portrait