HARRISON SMITH COLUMN: Autumn Budget 2025
Harrison Smith is a financial adviser based at Hartlepool’s Innovation Centre. Harrison, managing director of Azalea Wealth Management, offers an insight into money matters in a monthly column.
We enjoyed watching and listening to the Autumn Budget 2025 from the Azalea headquarters for the first time.
What a dramatic lunchtime it was - the early details released by the Office for Budget Responsibility (OBR) were unprecedented and certainly added a layer of drama before Chancellor Rachel Reeves even started her speech.
As always, there is a substantial amount to digest. While much of the media focuses on spending, I want to zero in on the direct effects this year’s speech will have on the small business community and our private investors.
The key areas that require immediate attention and planning are the ISA reform, the future salary sacrifice adjustments and the continuation of the tax thresholds freeze.
ISA reform has been on the agenda for several months now and from April 2027 key changes will take effect. The overall annual ISA allowance will remain at £20,000.
However, the focus is clearly on encouraging investment over pure cash savings. For those under 65, the allowance for saving in a Cash ISA will be capped at £12,000, meaning the remaining £8,000 of the allowance is essentially reserved for investment elements - although you will still be able to invest the full £20,000 if you want to.
Crucially, the full £20,000 allowance for Cash ISAs is still available for those over 65.
The government wants to promote growth by moving capital out of long-term cash savings. However, this highlights the absolute importance of professional advice.
Simply having an investment ISA is not enough - you need to ensure the investments are right for you, matching your risk profile and long-term financial plan.
We also saw the highly anticipated announcement regarding changes to salary sacrifice contributions to pensions.
A £2,000 a year cap on the amount that can be put into pensions via salary sacrifice while benefitting from the full National Insurance (NI) exemption will be in place from April 2029.
Salary sacrifice is a highly tax-efficient method used by around a third of private sector employees, saving on both employee and employer NI contributions.
For higher earners who previously sacrificed up to the £60,000 annual allowance, the reduction in tax benefits will be substantial.
It is vital to remember this change is not due to come into effect for another three and a half years, meaning the situation remains unchanged at this time, but it signals a significant future constraint on a highly tax-efficient saving method.
The other key subject is the income tax thresholds, which the Chancellor announced, are to remain at their current level until 2031.
This means the Personal Allowance remains at £12,570, the Basic Rate upper threshold at £50,270, and the Higher Rate threshold at £125,140.
By 2031, these thresholds will have been fixed for a full ten years. While it might seem static, the economic reality is the fiscal drag effect - as inflation and pay rises occur, more of your income is pulled into higher tax brackets, decreasing real-terms disposable income.
This is a quiet, yet powerful, tax-raising measure.
For the business and investor community, a crucial detail was also the two-percentage point increase announced for tax rates on property and savings income starting from April 2027.
Like every budget in recent years, this can feel overwhelming. But our role is to filter the noise and focus on the action.
The Budget has created clear windows of opportunity and future financial hurdles. The collective effect of frozen thresholds and the new cap on a tax-efficient measure like salary sacrifice creates a clear and urgent need for people to look at their wider financial planning.
If anything in the announcements has caused confusion or created questions about your own circumstances and financial planning, Azalea Wealth Management is here to discuss your situation and guide you confidently towards the bigger picture.
*Azalea Wealth Management is based in Hartlepool, servicing clients regionally and nationally. For a no-obligation consultation, get in touch through http://www.azaleawm.co.uk
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
An investment in a Stocks & Shares ISA will not provide the same security of capital associated with a cash ISA.
The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is generally dependent on individual circumstances.
Please note that St. James's Place does not offer cash ISAs.
Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.
