One of Cumbria’s leading accountants, Lamont Pridmore, is urging taxpayers to review their finances as they face tougher choices, as the Chancellor Rachel Reeves moves to close personal tax opportunities in her latest Budget.
Despite some early dramatics following the OBR report being published hours ahead of the Autumn Budget, we finally have a clear picture of what’s to come from this Government over the course of the current parliament.
Rising to address The Commons, Rachel Reeves described her plan as a Budget of fairness. She said the Government had a duty to restore stability after weak growth and rising national debt.
The early release of the OBR report confirmed what was expected, that Income Tax thresholds will stay frozen until at least 2030.
However, Reeves later confirmed that the freeze will actually run to April 2031.
Graham Lamont, chief executive at Lamont Pridmore, said: “While these long freezes are expected to raise billions, it is at the detriment of all taxpayers.
“By freezing Income Tax, more workers and families are forced into higher tax bands as their wages and income rise in line with inflation. This means paying more of their hard-earned money to the Government, despite promises to protect working people.
“The Chancellor did not address the Inheritance Tax payable on the sale or transfer of businesses to the next generation or the threshold in her speech.
“However, from reading the red book published alongside her speech we can see that she has also chosen to keep that at £325,000 until 2031 as well – a year longer than expected.”
The Budget also revealed a new property charge, already dubbed a mansion tax by many, adding further pressure for those with high-value homes.
Owners with properties worth more than £2 million will pay an annual levy starting at £2,500 and those with properties over £5 million pounds will pay £7,500.
Basic and higher rates on property, savings and dividend income will also rise by two per cent leading to higher tax bills for people who rely on rental and other forms of income.
Mr Lamont added: “There’s been speculation for months about the Government bringing in some kind of wealth tax. Although this new charge is not described as such, this is clearly something that will only have an effect on wealthier households and will impact how they think about property as part of their wider financial plans.
“With the levy in place and the Inheritance Tax freeze running to 2031, the overall cost of holding and passing on property will rise. Individuals should take time to consider the future impact rather than make impulsive decisions.”
The Chancellor also confirmed new rules on salary sacrificed pension contributions. From April 2029, contributions above £2,000 will attract National Insurance (NI).
“These rules will alter how many people choose to plan for their retirement,” added Mr Lamont.
“Pension contributions through salary sacrifice have been one of the main tools for long-term saving. Once the charge applies, clients will need to think carefully about the most efficient way to build their retirement funds.”
Another topic that has made headlines in the last few months is changes to Individual Savings Accounts (ISAs).
The Government wants to increase the flow of money into the stock market to support growth and strengthen the UK’s position as a place to build and scale businesses. To make this possible the Chancellor has announced changes to the structure of the allowance.
Reeves confirmed that the £20,000 annual tax-free allowance will remain, but from April 2027, the cash limit will be reduced to £12,000 for under-65s. The other £8,000 can be put in a Stocks and Shares ISA.
“The new ISA rules have been introduced to encourage more personal investment in UK companies,” explained Graham.
“Shares can offer higher rewards over time, but they also carry more risk than cash. Clients will need to decide how comfortable they are with market movements before shifting a larger share of their savings into stocks. This is a big change for people who prefer the security of cash, so early advice will be important here.”
Businesses appear to have gotten away fairly unscathed in this year’s Budget in contrast to the announcements in 2024. However, one of the major pressures for business owners will be the additional rise in National Minimum Wage and the National Living Wage due in April 2026..
