In the nearly 27 years I've been doing my job, I can't remember a past Budget that has attracted this level of commentary, prediction, and hysterical doomsaying than this one. And all before we knew exactly what Rachel Reeves was going to say.
For that reason, we intentionally avoided making any comment before the Budget speech was delivered, preferring to wait and see before passing any judgment.
The whole thing has, up to the point of delivery, been a comms disaster for the Labour party, but now that Mrs Reeves has sat down and we've had a chance to read the detail, let's take a look at the personal finance headlines and what they might mean for anyone serious about their financial planning.
I have created a video for my Meaningful Money YouTube channel, which is embedded below - scroll down for some further thoughts
Income Tax and National insurance
Mrs Reeves honoured her manifesto promises not to raise income Tax, VAT and National Insurance for individuals. Furthermore, the income tax thresholds, which are currently fixed till 2028, will now rise again after that date. Keeping thresholds the same increases tax income by a phenomenon called 'fiscal drag', whereas raising the thresholds should mean fewer people paying income tax in future.
Employers got a rougher deal though, with the rate of Employers' NI rising to 15% from 13.8% and the threshold over which it is paid reduced to £5,000 from £9,100.
Capital Gains Tax
Capital Gains Tax rates have increased immediately to 18% and 24%, bringing them in line with the rates payable on property. It was widely expected that CGT rates would rise, but I had hoped that in doing so, the Chancellor would increase the Annual Exempt allowance to a more meaningful level - no luck on that score.
Business Asset Disposal Relief (BADR), which provides that the first £1m of proceeds of the sale of shares in one's own business will be taxed at the lower rate, will also rise to 18% but in two steps, rising to 14% in 2025 and 18% in 2026. Same goes for Investors' Relief for unlisted shares.
If you're planning to sell a business, you might want to think about doing that before next April, to pay tax at the lower rate...
The Enterprise Investment Scheme and Venture Capital Trust regimes were confirmed as staying put, at least for now.
Inheritance Tax
Lots of changes here, and as many of our clients are in Agriculture, there was some unwelcome news. The Agricultural Property Relief (APR) and Business Property Relief (BPR) regimes were made considerably worse.
Currently, any assets that qualify for APR and BPR are zero-rated for inheritance tax after being held for two years, no matter the value. From April 2026, the first £1m will be tax-free, but any value above that will be subject to inheritance tax, albeit with 50% relief, so your estate will pay 20% not 40% on the excess.
The nil rate band and residence nil rate bands will be frozen until 2030, bringing more estates into IHT over time.
Qualifying AIM shares, currently free of inheritance tax once you have held them for two years, will be subject to IHT from April 2027, at a 50% relieved rate, so again, 20% not 40%.
Pensions
Pensions death benefits were low-hanging fruit ripe for the Chancellor to pluck. Currently, pensions are outside of one's estate and not subject to inheritance tax at all. But from April 2027, they will be.
I had hoped that if they were to become taxable, pensions would benefit from some kind of additional nil rate band, perhaps making the first £250,000 of one's pension fund tax-free, with the rest subject to IHT. But no dice here - the whole unused pension fund will be subject to IHT.
I have yet to read the full documents, but Rachel Reeves didn't mention any changes to the income tax-free withdrawals from inherited pensions before age 75 - so we'll keep an eye on that. Even after paying IHT, this will still be a valuable benefit.
Finally, the Chancellor confirmed the 4.1% increase to the state pension from April 2026 and the retention of the triple-lock, both things we knew already.
What should we do?
In the short-term, nothing. The biggest changes as far as our clients are concerned are the changes to pension death benefits and the IHT regime. Both of those will need some thinking through and a revisiting of previously-made plans. But we have until April 2026 and 2027 to figure out what is best for each individual family's circumstances.
Finally, I would urge you to monitor your media intake in the next few days. There will be lots of vitriolic backlash to the announcements today, and that's largely unhelpful. Far better to let the dust settle and then come at the challenge objectively if possible.
That's what we're here to help you do.
As always, if you have any questions, don't hesitate to get in touch with your Jacksons adviser. Failing that, at your next review, we'll have plenty to talk about!
Header image used under licence: Rachel Reeves ©House of Commons
