What does the 2025 Budget mean for you?
NOVEMBER 2025
Following our Budget Summary as part of last week's newsletter, we wanted to share our thoughts on the impact of the government’s announcements.
Our financial planning team have evaluated the rules on pensions, Inheritance Tax (IHT), saving and dividend income and investments in VCTs and EIS. The team also consider how offshore bonds might be used to manage the impact of some of Rachel Reeves’ changes.
Our Chief Investment Officer, James Calder, reflects on the impact of the budget on your portfolio. And the head of our AIM service, David Willcox, has provided a short commentary on what the budget means for the AIM market.
PENSIONS
The Chancellor’s latest Budget reshapes the pension landscape and signals a tougher environment for both workers and employers. The new cap on National Insurance relief for salary sacrifice could reshape how you plan contributions and manage tax exposure. It also raises fresh questions about long-term saving, take-home pay and how firms structure their schemes. If you want to understand the full implications for different income levels, workplace arrangements and future retirement planning, our commentary below breaks down the key changes and their impact.
INHERITANCE TAX (IHT)
The feared overhaul of IHT did not materialise in the Chancellor’s lastest budget. Instead, the government focused on tightening the existing framework through a longer freeze on thresholds and a new transferable allowance for agricultural and business property. These measures will shape how you protect family wealth, manage business assets and plan succession in the years ahead. If you want a clear view of how the changes could affect estates and why early planning now matters more than ever, our commentary sets out the essential points.
VENTURE CAPITAL TRUSTS (‘VCTS’) AND ENTERPRISE INVESTMENT SCHEMES (‘EIS’)
The Budget has shifted the balance between VCTs and EISs and investors now face a clearer trade-off between risk and tax relief. The cut to the VCT income tax reduction will matter for anyone using these schemes to manage their annual liability. At the same time, the government has opened the door for much larger sums to flow into growth companies. If you want a concise view of what these changes mean for you, our commentary breaks down the implications.
SAVINGS AND DIVIDEND TAXES
Rising taxes on savings and dividends now look set to tighten the squeeze on investors over the next few years. The latest Budget confirmed higher rates from 2026 and 2027, along with frozen allowances that limit how far you can shelter income. These shifts make careful structuring of cash, investments and ownership between spouses more important if you want to keep your tax bill in check. We explain the new rates, the planning opportunities that remain and why reviewing your strategy ahead of the changes will help protect more of your return.
MARKET COMMENTARY
Most changes introduced by the Budget will not affect your portfolios immediately. Our investment approach remains focused on stability and quality, with a preference for funds that are resilient. While the UK media has been dominated by budget news, your portfolio is globally diversified to help manage risk and deliver performance. We continue to monitor developments closely, but we believe that we are well-positioned to navigate the government’s changes.
AIM MARKET COMMENTARY
As lead manager of CAM's AIM Portfolio Service, David Willcox shares that the outcome from the budget is broadly a sense of relief. We have seen no further tinkering (technical term) with the AIM / BR rules in the budget. This is in line with our view that these rules were unlikely to change again, given the 2025 rule changes had not even taken effect. We noted some weakness in AIM-listed companies prior to budget day and very much see this as an opportunity for the long-term investor. This is an attractive starting point, as the portfolio of companies we invest into are inexpensive and have very strong balance sheets.
