Budget 2025 preview: a roundup of expert views ahead of the big day tomorrow

With a fiscal hole of up to £30bn to plug, rising government debt, and a smorgasbord of potential measures expected from her in her budget speech tomorrow, Chancellor Rachel Reeves has a lot on her plate. Advisers need to be alert to changes in taxes, savings rules, pensions, and investment incentives. IFA Magazine will cover all Budget news and expert analysis throughout the week, starting here, with insights from leading industry experts on what’s at stake.

Tomorrow’s Budget is shaping up to be one of the most complex in recent years. Rather than a few headline-grabbing tax measures ( we know that hikes to income tax are now off the agenda) advisers should expect a wide array of reforms affecting pensions, ISAs, Capital Gains Tax, property taxes, and more. The so called ‘smorgasbord’ approach. Experts have been sharing with us their views on the potential implications for clients, households, and the wider economy of the various measures under the spotlight, highlighting areas that advisers should keep an eye on. From long-term savings incentives to pension stability, investment culture, property taxation, the bond markets and government revenues, there is a lot for advisers to consider.

As we look ahead to what might be announced in the budget at lunchtime tomorrow, experts from across the industry have been sharing their thinking with us in anticipation of what the Chancellor might have in her red box, and the implications for advisers as follows:

Encouraging saving and investment: Budget reforms to incentivise hard-working individuals and long-term saving are high on the agenda. Andy Butcher, Branch Principal & Chartered Financial Planner at Raymond James Investment Services, says: “Reports of potential reductions to cash ISA limits are deeply concerning and counterproductive. While the intent to encourage investment is laudable, a ‘stick’ approach that penalises diligent savers by pushing more of their hard-earned money into taxable environments will only increase the tax burden on ordinary families and stifle consumption. The UK needs a ‘carrot’, a national educational campaign to demystify investing and clarify that it doesn’t always have to be high-risk. The very name ‘Stocks and Shares ISA’ might be a deterrent, and a rebrand or clearer communication may help encourage broader participation in non-cash assets, boosting national savings without compromising consumption. The relentless chipping away at Capital Gains Tax (CGT) allowances and increases in rates are actively disincentivising investment. Slashing the CGT allowance to a meagre £3,000 creates an unnecessary barrier, forcing individuals with modest gains into complex tax filings. To encourage a savings and investment culture, we need to increase CGT allowances. The previous Budget’s decision to hike CGT rates on entrepreneurs also sends the wrong message. Innovators and small businesses are the heartbeat of our economy, and we must tell them the UK is ‘open for business’. The £1 million allowance should be lifted, or rates reduced, to incentivise the next generation of entrepreneurs to build and grow here.”

Adam Craggs, Partner and Head of Tax at RPC, adds: “The public are likely to respond to a cash ISA cut in the Budget with a mix of frustration, caution and political scepticism. Savers—particularly older, risk-averse households—may feel penalised, as cash ISAs remain one of the few safe, tax-efficient products available to them. Many already indicate that they would not move into stocks and shares ISAs. Instead, they may shift savings into ordinary accounts, even if that means paying more tax, or they may simply save less. Financial institutions, especially building societies, are also likely to raise concerns that a reduced cash ISA allowance would weaken their deposit base and limit their ability to fund mortgages, with potential knock-on effects for the housing market. Politically, the cut risks being viewed as unfair or poorly targeted—more akin to a stealth tax than a measure to encourage investment. MPs and consumer advocates have questioned whether reducing the allowance would achieve its intended outcome, suggesting it could do more harm than good.”

Stephen McGee, Chief Executive of Scottish Friendly, notes: “The Chancellor has a golden opportunity this week to reset the nation’s attitude to saving and spark a genuine investing culture in the UK. An opportunity I urge her to take. For too long, the country has had a cash mindset that history shows erodes household wealth and deprives UK businesses of vital capital. Cutting the annual cash ISA allowance would be a big, decisive step towards building a US-style long-term investing culture. If the goal is to genuinely change behaviour, the cap ideally needs to be around £8,000. That still gives households enough scope to build a meaningful emergency fund while encouraging those saving larger sums to invest the rest. This is a real lever the Chancellor can pull to boost growth, productivity, and household wealth.”

The fiscal balancing act: Hetal Mehta, Chief Economist at St. James’s Place, highlights the delicate choices facing the Chancellor: “With the Budget tomorrow, the key question is whether the policy dilemmas facing the Chancellor will finally be resolved. Support the economy or balance the books? Break manifesto pledges or break fiscal rules? Keep markets onside or keep voters happy? The economic picture heading into the Budget is mixed: GDP growth has been lacklustre, inflation has remained elevated but below Bank of England fears, and unemployment is rising to 5% in Q3. One critical variable is productivity, which remains below peer nations. Higher borrowing costs, reduced welfare savings, and new employment rights could widen the fiscal gap. Restoring the £9.9bn fiscal headroom seen at the Spring Statement would require tax rises or spending cuts of £20–30bn. The UK tax burden, already on track to reach around 38%—the highest on record—could climb further. No easy fiscal choices remain. This Budget will demand a delicate balancing act, with direct implications for households, markets, and many of our clients.”

Pensions under scrutiny: Andrew Tully, Technical Services Director at Nucleus, says: “It’s a tough environment for pension savers today, and the last thing they need is to feel like they aren’t in control of their retirement savings planning because of government tinkering, uncontrolled speculation and changes to existing rules. Changes to pension tax-free cash withdrawals reportedly being off the table for this year’s budget is welcome news, but without a stable retirement framework the same damaging rumour will continue to drive behaviour ahead of future fiscal events. To help UK adults feel more confident about their financial futures, we need long-term planning in pensions. We cannot be in a position that sees savers make drastic changes to their retirement savings because of rumour and speculation, because they don’t trust that pensions will be left alone.”

Rebecca Williams, a Divisional Lead of Financial Planning at Rathbones, says: “While the government have put rumours of a change to the pension tax free lump sum to bed, speculation over the upfront tax relief on pension contributions remain – as has been the case before various major fiscal events in the past decade.

“With more responsibility falling on individuals to build a sufficient pension pot, it’s vital that people are encouraged to save and invest for their future so they can enjoy a comfortable retirement from their own resources. Further reductions in pension tax relief risk undermining this goal.”

Alexandra Loydon, Group Advice Director at St. James’s Place, adds: “Constant changes to pension rules undermine the very goal the Government and regulators are pushing for – boosting long-term investing and closing the UK’s investment gap. You can’t build confidence in a system that keeps shifting under people’s feet. Salary sacrifice is one of the few ways that helps people save more for retirement and restricting it risks discouraging contributions at precisely the wrong time. We’ve also seen how speculation around tax-free cash can push people into withdrawing money unnecessarily, often against their long-term interests. Rumours and uncertainty can be just as damaging as actual policy changes because they drive poor decisions and weaken confidence in saving for retirement.”

Wealth and taxation: Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, warns: “Tomorrow’s Budget is likely to include another significant round of additional tax increases such as a ‘Mansion Tax’ alongside potentially further tinkering with the Inheritance Tax (IHT) and Capital Gains Tax regimes that will fall on the wealthy. Unfortunately, such measures do little to support the UK’s standing as a competitive and appealing jurisdiction for wealth. With the country’s top 1% of taxpayers contributing to a third of all tax revenue, policymakers must work harder to stem the outflow of the wealth community and get the UK back to becoming an attractive destination for wealth. In the meantime, given the expected myriad of tax changes, we expect to see continued levels of high demand for financial advisers to support long-term financial planning.”

Jack Fletcher-Price, equity analyst at Morningstar, explains the potential impact of property measures: “The mansion tax has the potential to slow down transactions above the threshold, as logically owners would defer moving in the hope it will be repealed by a later Government. The changes to council tax bands is probably overdue, but it will further undermine trust in this Government given they promised not to do this in the run up to the election.”

Mark Campbell, Head of Wealth at Isio, adds: “If there is one clear and obvious trend in the world of personal finances it is that pre-Budget mania and speculation is increasing. More than ever, the Treasury has leaked policies and tested the water with ideas that we can be almost certain will never come to pass. As we’ve seen with previous Budgets, the effects of this are very damaging. People make short-term decisions based on speculation and rumours. This year, we have seen changes to income tax, pension tax relief, salary sacrifice, and inheritance tax (IHT) mooted in public. We know from previous Budgets that there is a good chance that many of these will not make the cut. With perhaps the biggest change for many years set to come into effect in April 2027 when IHT applies to defined contribution pensions, it is more important than ever to have a robust plan in place. Endless speculation damages trust at the worst possible time.”

Innovation and competitiveness: Justin Arnesan, principal, EAP Innovation Funding at Ryan, says: “A meaningful pro-innovation budget needs to update existing reliefs, so they reflect where modern IP value actually sits. The UK should widen the 100% full expensing regime so that the purchase of patents, licences, and software can qualify just like plant and machinery. At the same time, the R&D rules need to remove the overseas restriction on R&D activities. If the innovation supports a UK entity, it should be claimable, irrespective of geography. Innovation is global by nature, and the UK government should enable, not limit, collaboration that drives growth. These are small technical fixes, but they would make the UK materially more competitive overnight, and they do not require major new spend.”

Gilt markets and interest rates: Matthew Amis, Investment Director – Rates Management, at Aberdeen Investments, explains: “Chancellor Reeves could still positively surprise the gilt market on Wednesday. Having stepped back from income tax hikes, the market noise may yet be behind us – but Reeves has one trick left. The one rabbit out of the hat could be the extent of the inflation busting measures. If Chancellor Reeves can materially lower inflation, then this could spark the Bank of England’s imagination when it comes to rate cuts in 2026. The obvious risk to Reeves and the gilt market is that front-loaded costs to lowering inflation are paid for with a collage of backloaded tax hikes. Any material increase in gilt issuance in the coming years will not be well received.”

Property taxes: Ingrid McCleave, a partner and tax specialist at DMH Stallard, says: “I hope that if Rachel Reeves goes ahead and abolishes stamp duty land tax, as suggested she might do, the fact that people have already paid stamp duty land tax when they purchased their home, is reflected in some form of tax credit or tax relief against whatever alternative tax she brings in to replace it. Although the abolition of SDLT benefits new purchasers, its replacement is likely to unfairly disadvantage people that have retained their home and have no intention to purchase a new home, having already paid between 2% and 12% SDLT on the value of their home, when they purchased it.”

Tax receipts and fiscal drag: Tom Goddard of Blick Rothenberg notes that advisers should be alert to potential changes in income tax, thresholds, and gifting rules amid rising tax receipts and continued fiscal drag. “Revenues from all major tax streams are consistently rising and will continue to do so,” he said. “Instead, the Chancellor should focus on addressing the UK’s weak growth forecasts.” VAT receipts are also up, though more modestly, reinforcing the picture of resilient overall revenues. As Tom notes, “If the UK economy experiences some real growth, tax takings will naturally rise. Encouraging investment through tax policies that reward success and don’t punish it should be at the top of the batting order.”

Property under the microscope

Rathbones’ economists estimate that abolishing SDLT could boost housing market activity by 25%, equivalent to more than 300,000 additional transactions per year.

With mansion tax & council tax on the agenda, Rathbones’ economists estimate that abolishing SDLT could result in more than 300,000 additional housing transactions per year, an increase of over 25%. This is based on a detailed academic assessment of the impact of SDLT on household mobility and the official statistics on housing transactions.

Oliver Jones, Head of Asset Allocation at Rathbones, says: “Housing is the least mobile form of wealth, making property taxes hard to dodge and attractive to policymakers. But not all property taxes are equal. Levies like stamp duty, which make moving home costly, are among the most damaging. When people can’t relocate to affordable housing, businesses struggle to find workers. Growth in innovation hubs such as Cambridge has been stifled by limited housing supply.

“Policymakers should therefore look for ways to remove and replace, not increase, taxes on property transactions.”

Commenting on the SDLT possibilities, Ingrid McCleave, a partner and tax specialist at city law firm DMH Stallard, said: “I hope that if Rachel Reeves goes ahead and abolishes stamp duty land tax, as suggested she might do, the fact that people have already paid stamp duty land tax when they purchased their home, is reflected in some form of tax credit or tax relief against whatever alternative tax she brings in to replace it.

“Although the abolition of SDLT benefits new purchasers, its replacement is likely to unfairly disadvantage people that have retained their home and have no intention to purchase a new home, having already paid between 2% and 12% SDLT on the value of their home, when they purchased it.” 

In conclusion

Tomorrow’s Budget promises to be a complex balancing act, with measures affecting taxes, pensions, savings, property, and business incentives all under the spotlight. For advisers, the key challenge is separating speculation from concrete policy and understanding the potential implications for clients’ long-term financial plans. From encouraging a genuine savings and investment culture to maintaining pension stability and supporting economic growth, the choices made by the Chancellor will ripple across households, markets, and businesses alike. Right throughout the week, IFA Magazine will continue to bring real-time analysis, expert insight, and practical takeaways for advisers navigating the Budget’s outcomes. In a year of fiscal pressures and a smorgasbord of potential reforms, staying informed and proactive will be more important than ever.