Dan Swift, Head of Financial Planning TrinityBridge comments: “While the lack of big bang changes in today’s Budget will be welcome news for many individuals, significant increases to the headline rates of income tax, VAT and employee National Insurance were not expected, given the Government’s manifesto commitments. However, this lack of significant change doesn’t mean people won’t feel the impact. The continued freeze on personal tax allowances and thresholds means more individuals will find themselves paying tax or moving into higher tax brackets as their earnings rise.
“There were some notable tweaks to personal taxation. The further two percentage point increase in tax on savings interest and property income, on top of the previous 2% increase already announced in the last Budget, will be felt by those affected. For individuals receiving income from savings or rental properties, this will add to their tax liabilities and makes it important to consider how these sources of income fit into their wider financial plans.
“The decision to retain the full £20,000 cash ISA allowance is a welcome simplification. The proposed £12,000 limit was a fairly blunt way of encouraging people to invest, particularly as relatively few individuals use their full annual cash ISA allowance. Decisions about whether to hold money in cash or invest should be based on someone’s financial circumstances, investment timeframe and appetite for risk, rather than being dictated by changes to tax allowances.
“With further announcements still coming through, and a number of previously announced measures yet to take effect such as pensions coming into the scope of inheritance tax from 2027, individuals shouldn’t take their eye off the ball. There is still plenty to come and plenty to consider as these changes begin to affect people’s finances. Taking the time to understand how they fit into your wider financial plans will be important before making significant decisions.”
