What the recent Budget can teach you about trusting in your financial plan

On 30 October 2024, the new chancellor, Rachel Reeves, delivered her highly anticipated Budget, bringing a range of changes to financial legislation in the UK.

If you’ve kept a close eye on headlines since, you’ll likely be aware that some of these announcements were significant, and may be particularly impactful for you and your wealth.

Now that the dust has started to settle, it’s clear that these changes reinforce the importance of having faith in your bespoke financial plan.

So, continue reading for a brief reminder of some of the changes that might affect you, and why trusting in your strategy remains vital, even during periods of uncertainty.

Some crucial changes in the Budget could have a considerable effect on your finances

Many of the changes introduced in the Budget could have wide-reaching implications for you, whether you’re employed or running your own business.

A rise in employer National Insurance

From 6 April 2025, the rate of employer National Insurance contributions (NICs) will increase from 13.8% to 15%.

Currently, employers typically only pay NICs on annual earnings above £9,100, but this threshold will drop to £5,000 in April 2025. It is expected to stay at this level until 2028, when it will begin rising in line with the Consumer Prices Index (CPI).

It’s worth noting that there was some relief for smaller businesses. The Employment Allowance, which offers a discount on employer NIC bills, will rise from £5,000 to £10,500 from 2025. Additionally, the £100,000 eligibility threshold for this allowance will be removed entirely.

Capital Gains Tax reforms

Changes to Capital Gains Tax (CGT) were also a primary focus of the Budget. From 30 October, the main CGT rates increased, with the basic rate rising from 10% to 18%, and the higher rate from 20% to 24%. This brings both in line with the CGT rate for disposing of buy-to-let and second properties.

On top of this, some of the other changes on the horizon include:

• The rate for Business Asset Disposal Relief (BADR), previously known as Entrepreneurs’ Relief, and Investors’ Relief will increase from 10% to 14% in 2025, and then to 18% in 2026.
• The lifetime limit for Investors’ Relief will reduce from £10 million to £1 million, aligning it with the £1 million limit for BADR.
• Carried interest gains for private equity managers will see rates rise to 32% from April 2025.

Inheritance Tax changes

Inheritance Tax (IHT) reforms also featured in the Budget, particularly in regards to the treatment of pension funds.

Indeed, from 6 April 2027, unused pension funds and death benefits will likely become subject to IHT.

The government has also changed reliefs available for agricultural and business assets.

Starting from April 2026, Agricultural Property Relief will only apply to the first £1 million of combined business and agricultural assets, with a 50% relief rate for assets above this threshold.

Similarly, Business Property Relief will receive a 50% cut for unlisted shares on markets of a recognised exchange, such as the alternative investment market (AIM).

Many people adjusted their plan in preparation for the Budget, which might’ve been unwise

It’s fair to say that the anticipation surrounding Reeves’ Budget was palpable, causing many people around the country to pre-emptively alter their financial plans.

For instance, interactive investor reveals that, in September 2024, £3.2 billion exited investment funds, reversing the three-month trend of positive inflows earlier in the year, with:

• £1.3 billion invested in June
• £1.4 billion invested in July
• £806 million invested in August.

This shift might be due to the fact that many were concerned about impending changes to CGT, prompting investors to sell assets ahead of the Budget announcement.

Similarly, there was speculation that pension tax relief might have been targeted, leading to an eightfold increase in self-invested personal pension (SIPP) contributions in October 2024, MoneyAge reports.

Pension withdrawal requests also more than doubled in October 2024 compared to the same month a year earlier.

Despite this, interesting data from FTAdviser shows that pension providers saw an influx of calls from clients wishing to cancel the withdrawal of tax-free cash from their pensions after the pre-Budget rumours didn’t come to fruition.

Interestingly, this does highlight an important fact: that it’s vital to trust in your financial plan and avoid acting impulsively in reaction to speculation.

Above all, it’s vital to trust in your financial plan to weather such events

At times like these, it’s more important than ever to remain confident in your long-term financial plan.

You’ve worked closely with us at Douglas White Financial Planning (DWFP), and together we’ll have examined your unique situation, including your income, pension savings, and expenditure.

We’ll have then built a bespoke plan around this information that’s perfectly suited to your needs and goals. We even regularly review this plan, ensuring that it continues to remain relevant in a changing world.

This personalised approach means that your plan is exclusive to your situation, unlike the generic advice you might receive from your friends, family, or social media.

In fact, making a knee-jerk reaction to what the latest headlines tell you might only serve to derail your progress towards achieving your long-term goals.

Take, for example, the number of pension withdrawals seen before the Budget. These people likely felt compelled to act out of fear or anxiety, only to realise later that this wasn’t necessary.

The fact that so many cancelled their withdrawals once the rumours were dispelled shows just how important it is to resist the urge to react emotionally.

“Noise”, whether that’s from the media or your loved ones, can lead you to make decisions that aren’t aligned with your own circumstances.

Even if the Budget did introduce changes that directly affected your wealth, the plan that we build together is designed to weather such events. This should ideally give you the confidence to stay the course.

Then, armed with this confidence, you’ll likely be better able to adapt to what you know is happening, rather than what you think might happen.

Get in touch

If you’re still unsure about how the Budget might have affected your finances, then we can give you some much-needed peace of mind that your plan will remain on track.

Email info@douglaswhiteltd.com or call 0151 345 6828 to speak to us today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.