Speculation about the size of the black hole in the country’s finances and how the Chancellor was going to fill it was the backdrop to Budget day this Autumn, but on the day there were few surprises. Rachel Reeves stuck to her plan not to raise taxes through national insurance or income tax, which leaves us with a complex taxation strategy to unpick.
Perhaps the least surprising move was to extend the freeze on income tax bands and personal allowances for another three years (although for one more year than anticipated), sweeping another wave of basic-rate taxpayers into the higher-rate band, and tipping others over the higher-rate threshold. This extension to the boundary freeze is equivalent to a tax increase for anyone who gets a pay rise that takes them over a threshold. In the feature for this edition of our newsletter we explore this and other key changes coming down the line, including a hike in dividends tax from April, plus a new limit on salary sacrifice arrangements from 2029/30and a revision to ISAs limiting cash holdings for under-65s from April 2027.
As the tax system becomes even more complicated, tailored advice will become increasingly important on how to best manage the interaction between income, savings, investments and tax.
Our other stories in this edition include:
- Understanding the inflation factor – The monthly CPI figure, ranging between 2.8% and 3.8% this year, can give the illusion of stability in the price of goods and services, but if the lens pans wider to reveal the cumulative increases since the beginning of the decade, the real impact of inflation on financial plans becomes clear.
- Can you afford your retirement? Confidence in the State pension scheme is low. As arguments against the affordability of the triple-lock promise gather momentum 51% of adults don’t expect the State pension to last long enough for their retirement, so it’s prudent to make sure your own saving strategy is robust.
- Help for healthy working – The level of sickness among working adults in the UK has risen significantly since the pandemic, and a large proportion of absence due to younger people experiencing mental health issues. Employers may be able to support their staff better but you can also take steps to protect yourself and your lifestyle in case of health problems.
- Download Our Latest Newsletter Last updated: 18 December 2025
Our next newsletter will be available in March, when we will look ahead to the new financial year. Please do get in touch if we can continue to help or provide you with more information on any of the topics covered.
From all of us at Midland Financial Solutions, we wish you a Merry Christmas and a Happy New Year.
