Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“It is undeniable that consumers from all walks of life will be anxious on how tax or welfare changes will impact them financially. The months ahead could be challenging for consumers, so it is essential to take time out to budget, but also to seek independent advice if there are any anxieties about meeting any financial commitments.”
Cash ISA reform
“The Chancellor ruled out any immediate plans to reform cash ISAs over recent weeks, but it’s vital savers utilise their allowances every tax-year, or lose it. There was an abundance of debates to review cash ISAs in attempts to encourage consumers to invest in UK stocks, but fundamentally there will be savers out there who do not want to be forced to place their hard-earned cash in a pot which could be at risk. A stocks & shares ISA is suitable for those who intend to invest over the longer-term, as fund performance can fluctuate over shorter-term timescales. However, over the longer-term, stocks and shares ISA can outpace cash returns and beat inflation, but there is never a guarantee that funds will perform well. Those now considering a stocks & shares ISA would be wise to keep in mind that past performance is never guaranteed to be reflected in future returns. Indeed, the significant rise in stock markets over the past year may not be sustained and could fall back. Opening an ISA and making an initial investment is just the start, it’s important to regularly review whether it’s working hard enough and still suits someone’s needs. Apathy is dangerous when it comes to savings cash, especially at a time when interest rates are falling, and inflation sits above its 2% target.”
Personal allowances for savers
“Unsurprisingly there were no adjustments announced for personal allowances today, the income tax freeze until 2028 stands. Unfortunately, there will be hard-pressed savers who may now end up in a higher rate tax-bracket, subsequently halving their Personal Savings Allowance (PSA). According to the Office for Budget Responsibility (OBR), it is estimated that 2.5 million people are expected to pay higher-rate tax at 40% (2025-26). The incentive to review and switch accounts is vital for savers and it is worth noting that £300bn is sitting in UK current or savings accounts earning no interest whatsoever, according to the Bank of England. It is essential savers take action to consider all the various accounts available to them, maximise the interest they earn and utilise any tax-free allowances before the end of the 2024/25 tax-year.”
Affordable Homes Programme
“The Chancellor confirmed last week that more investment was going into housing supply, with a top-up of £2bn into the Affordable Homes Programme, which is the third top-up in five months. This comes following a £500m top-up in October 2024, and a further £350m last month. Driving the supply of affordable housing has been a significant task but it must be addressed to support those who desperately need a place to call home. It is also worth reminding borrowers about the Government’s clampdown on Right to Buy (RTB) which has been under review to ensure enough stock of social housing is built to replace sold properties in an attempt to re-build a housing system in crisis.”
Stamp Duty
“Time is ticking down for borrowers to finalise their property purchase to take advantage of the Stamp Duty Land Tax (SDLT) discount. The nil-rate tax threshold up to £250,000 will drop to £125,000 and the First-Time Buyer’s Relief nil-rate tax threshold of up to £425,000 will drop back down to £300,000. These reliefs were going to end, but there have been repeated calls for a further extension to boost the housing market. This means buyers who miss the deadline will need to ensure they have some decent savings to pay the SDLT, so mortgages which help borrowers save on the upfront cost of their deal or even offer a generous cashback payment could be more attractive.”
Lifetime ISA ‘overlooked’
“Despite calls to review the workings of Lifetime ISAs, savers are still in the dark on whether they will see any radical changes. This has unfortunately left some savers in a tricky position. Due to rising house prices the Lifetime ISA may now not be fit for purpose. The £4,000 LISA allowance remains frozen like many other allowances, but most notably the upper limit on the property value threshold remains at £450,000. Not only this but the withdrawal penalty has been highlighted as a deterrent and should be reviewed. To give this weight, HMRC revealed that penalty charges reached £75.2 million in the 2023/24 tax-year. Circumstances can change so there should be some exceptions made to these penalties. Those considering a Lifetime ISA need to check the full terms and conditions before they enter any arrangement to ensure they are eligible for the 25% Government bonus. This product might not be suitable for everyone, so it’s wise to compare different savings accounts where they can move their money freely.”
Landlords ‘ignored’
“There has been much debate over the future of the buy-to-let market, with landlords in dismay over whether they can continue with their investment in property, and feeling ignored. The stamp duty surcharge on additional homes was increased to 5% and recent studies suggest there has been an exodus of landlords who have quit the private rental sector due to dwindling margins. In some more positive news, buy-to-let rates have been on the downward trend and the choice of deals rose to a record high. Borrowers would be wise to navigate the latest deals if they are coming to the end of their fixed deal and seek advice if they need support.”
National Insurance hike for employers looms
“The hike to National Insurance contributions by employers will rise to 15% from April 2025 and there have been numerous calls for a retraction, but it is still going ahead. What is worse for employers is that the threshold at which businesses start paying National Insurance on a worker’s earnings is going to drop from £9,100 to £5,000. As these changes impact businesses, it could have negative effects on their employees, such as pausing pay rises or re-thinking auto-enrolment policies. These have a dragging effect on an employee’s wealth over the longer-term. On the other hand, these measures could make salary sacrifice schemes much more attractive. According to the Confederation of British Industry (CBI), it is expected the rate hike from 13.8% to 15% will cost British businesses £25bn in the next year alone. Not only this, but a survey carried out by the Bank of England suggested 54% of firms are expected to raise prices and the same proportion said they would lower employment.”
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“It is undeniable that consumers from all walks of life will be anxious on how tax or welfare changes will impact them financially. The months ahead could be challenging for consumers, so it is essential to take time out to budget, but also to seek independent advice if there are any anxieties about meeting any financial commitments.”
Cash ISA reform
“The Chancellor ruled out any immediate plans to reform cash ISAs over recent weeks, but it’s vital savers utilise their allowances every tax-year, or lose it. There was an abundance of debates to review cash ISAs in attempts to encourage consumers to invest in UK stocks, but fundamentally there will be savers out there who do not want to be forced to place their hard-earned cash in a pot which could be at risk. A stocks & shares ISA is suitable for those who intend to invest over the longer-term, as fund performance can fluctuate over shorter-term timescales. However, over the longer-term, stocks and shares ISA can outpace cash returns and beat inflation, but there is never a guarantee that funds will perform well. Those now considering a stocks & shares ISA would be wise to keep in mind that past performance is never guaranteed to be reflected in future returns. Indeed, the significant rise in stock markets over the past year may not be sustained and could fall back. Opening an ISA and making an initial investment is just the start, it’s important to regularly review whether it’s working hard enough and still suits someone’s needs. Apathy is dangerous when it comes to savings cash, especially at a time when interest rates are falling, and inflation sits above its 2% target.”
Personal allowances for savers
“Unsurprisingly there were no adjustments announced for personal allowances today, the income tax freeze until 2028 stands. Unfortunately, there will be hard-pressed savers who may now end up in a higher rate tax-bracket, subsequently halving their Personal Savings Allowance (PSA). According to the Office for Budget Responsibility (OBR), it is estimated that 2.5 million people are expected to pay higher-rate tax at 40% (2025-26). The incentive to review and switch accounts is vital for savers and it is worth noting that £300bn is sitting in UK current or savings accounts earning no interest whatsoever, according to the Bank of England. It is essential savers take action to consider all the various accounts available to them, maximise the interest they earn and utilise any tax-free allowances before the end of the 2024/25 tax-year.”
Affordable Homes Programme
“The Chancellor confirmed last week that more investment was going into housing supply, with a top-up of £2bn into the Affordable Homes Programme, which is the third top-up in five months. This comes following a £500m top-up in October 2024, and a further £350m last month. Driving the supply of affordable housing has been a significant task but it must be addressed to support those who desperately need a place to call home. It is also worth reminding borrowers about the Government’s clampdown on Right to Buy (RTB) which has been under review to ensure enough stock of social housing is built to replace sold properties in an attempt to re-build a housing system in crisis.”
Stamp Duty
“Time is ticking down for borrowers to finalise their property purchase to take advantage of the Stamp Duty Land Tax (SDLT) discount. The nil-rate tax threshold up to £250,000 will drop to £125,000 and the First-Time Buyer’s Relief nil-rate tax threshold of up to £425,000 will drop back down to £300,000. These reliefs were going to end, but there have been repeated calls for a further extension to boost the housing market. This means buyers who miss the deadline will need to ensure they have some decent savings to pay the SDLT, so mortgages which help borrowers save on the upfront cost of their deal or even offer a generous cashback payment could be more attractive.”
Lifetime ISA ‘overlooked’
“Despite calls to review the workings of Lifetime ISAs, savers are still in the dark on whether they will see any radical changes. This has unfortunately left some savers in a tricky position. Due to rising house prices the Lifetime ISA may now not be fit for purpose. The £4,000 LISA allowance remains frozen like many other allowances, but most notably the upper limit on the property value threshold remains at £450,000. Not only this but the withdrawal penalty has been highlighted as a deterrent and should be reviewed. To give this weight, HMRC revealed that penalty charges reached £75.2 million in the 2023/24 tax-year. Circumstances can change so there should be some exceptions made to these penalties. Those considering a Lifetime ISA need to check the full terms and conditions before they enter any arrangement to ensure they are eligible for the 25% Government bonus. This product might not be suitable for everyone, so it’s wise to compare different savings accounts where they can move their money freely.”
Landlords ‘ignored’
“There has been much debate over the future of the buy-to-let market, with landlords in dismay over whether they can continue with their investment in property, and feeling ignored. The stamp duty surcharge on additional homes was increased to 5% and recent studies suggest there has been an exodus of landlords who have quit the private rental sector due to dwindling margins. In some more positive news, buy-to-let rates have been on the downward trend and the choice of deals rose to a record high. Borrowers would be wise to navigate the latest deals if they are coming to the end of their fixed deal and seek advice if they need support.”
National Insurance hike for employers looms
“The hike to National Insurance contributions by employers will rise to 15% from April 2025 and there have been numerous calls for a retraction, but it is still going ahead. What is worse for employers is that the threshold at which businesses start paying National Insurance on a worker’s earnings is going to drop from £9,100 to £5,000. As these changes impact businesses, it could have negative effects on their employees, such as pausing pay rises or re-thinking auto-enrolment policies. These have a dragging effect on an employee’s wealth over the longer-term. On the other hand, these measures could make salary sacrifice schemes much more attractive. According to the Confederation of British Industry (CBI), it is expected the rate hike from 13.8% to 15% will cost British businesses £25bn in the next year alone. Not only this, but a survey carried out by the Bank of England suggested 54% of firms are expected to raise prices and the same proportion said they would lower employment.”
