Autumn Budget 2025

After the Chancellor, Rachel Reeves, delivered the Government’s highly anticipated Budget announcement, Adam Ruddle, LV= Chief Investment Officer shares his thoughts on what the changes mean for Cash ISA savers.

Additionally, LV= Wealth Proposition Director, Sarah Hills, shares her thoughts on the decision to freeze income tax bands until 2031.

Reducing the cash ISA allowance:

Adam Ruddle, LV= Chief Investment Officer, said:

“The Government has confirmed recent speculation that the annual cash ISA allowance is being reduced.

“From April 2027, the cash ISA allowance will be cut to £12,000 from £20,000 for those under 65. 

“While this change may disappoint cash ISA savers, it’s important to consider alternative options, such as stocks and shares ISAs.

“Although cash ISAs remain a popular savings vehicle, stocks and shares ISAs may present a compelling alternative, particularly now that the cash allowance has been reduced.

“Recent research from LV’s Wealth & Wellbeing programme found that nearly one in ten (8%) UK adults shifted their funds into cash or low-risk accounts in response to market volatility, political uncertainty, and global events. Following today’s changes, we anticipate a reversal in this trend, with more people exploring investment options through stocks and shares ISAs.

“LV’s stocks and shares ISA enables up to £20,000 of tax-free investment per tax year and offers a balanced approach to risk and reward. A key feature is the use of Smoothed Managed Funds, which aim to protect savers from short-term market volatility. A stocks and shares ISA from LV= can be an attractive option for savers who value stability while seeking the growth potential from long-term investments.

“Yesterday’s change may prompt reactive decisions that could negatively impact long-term savings goals. We strongly encourage individuals to seek professional financial advice before making any changes to their investment strategy to support their financial wellbeing and to plan effectively for the future.”

* This is a stocks and shares investment and will go up and down in value, your client may get back less than they put in.

Freezes to income tax bands:

Sarah Hills, Wealth Proposition Director, said:

“It’s vital that people understand the implications of freezing the personal tax-free allowance and income tax bands until 2031. These measures will significantly affect pensioners and working-age individuals alike.

“Freezing tax thresholds will push more people into higher tax brackets and may lead to unwelcome consequences.

“For pensioners, there’s a growing risk that the basic state pension could exceed the personal tax-free allowance, resulting in more individuals being liable for income tax.

“For working-age people, wage inflation means a greater portion of their income will be taxed, and some may be pushed into higher-rate tax bands.

“According to LV’s latest Wealth and Wellbeing research, more than two in five (41%) people are worried about their financial future. With the continued freeze on income tax thresholds, many could find themselves with less disposable income—often without expecting it.

“At LV=, we recognise the importance of seeking professional financial advice for individuals to ensure their financial wellbeing and to plan effectively for the future.”

*How much tax you pay depends on your clients individual circumstances and may be subject to change in the future.