Autumn Budget measures place further pressure on personal wealth, say Monahans experts

Monahans part of the Sumer Group, one of the South West’s leading accountancy and advisory firms, is encouraging people to reassess their long-term savings and investment plans following the Chancellor’s latest Budget.

Chancellor Rachel Reeves delivered the Government’s intentions for the nation’s finances under a cloud of speculation, but delivered measures aimed at anchoring the UK’s economic outlook.

A central feature of the speech, and the one most likely to have an impact on many households, was the decision to keep Income Tax thresholds fixed until April 2031.

Dominic Bourquin, Corporate Tax and Corporate Finance Partner at Monahans, said, “When the measure was introduced in 2022, it was presented as a temporary step lasting until 2026. It was later pushed to 2028 and now another three years have been added.

“While it may appear reassuring that the Government is not increasing Income Tax rates directly, frozen thresholds often have the same end result.

“As wages rise, more people are pulled into higher tax bands, meaning they pay more in tax despite no changes to headline rates. This creates additional pressure for households already grappling with prolonged financial strain.”

The Chancellor’s red book also confirmed that the Inheritance Tax threshold will remain unchanged at £325,000 until 2031, despite speculation throughout the year about possible reform.

Another significant change is the introduction of a High-Value Council Tax Surcharge for residential properties in England. Homes valued above £2 million will attract a £2,500 charge, and those worth more than £5 million will face a £7,500 charge from April 2028 onwards.

Stephanie Hurst, Tax Director at Monahans, said, “This is effectively a new form of wealth-based levy aimed at the top tier of the property market. Coupled with the freeze on Inheritance Tax, the long-term cost of owning and passing on property is set to rise. Planning early rather than acting under pressure will be crucial.

“Individuals will also need to factor in the 2% rise in the basic and higher rates applied to property, savings and dividend income, which further increases the overall tax burden.”

Changes were also confirmed for pensions. From April 2029, salary sacrificed pension contributions above £2,000 will attract National Insurance.

“Salary sacrifice has long been a helpful and efficient way of boosting retirement savings,” added Dominic. “Once the new limit applies, many people will need to revisit their contributions and consider alternative approaches to maintaining their pension planning.”

The Chancellor also clarified her long-trailed plans for Individual Savings Accounts (ISAs). While the £20,000 annual allowance remains intact, from April 2027 only £12,000 of this can be placed in cash. The remaining £8,000 must be allocated to a stocks and shares ISA. This restriction will not apply to those aged over 65, who may continue to use the full allowance in cash.

Stephanie said, “Shares can outperform cash over the long term, but they carry more volatility. Savers will need to think carefully about the level of risk they are comfortable with, especially if they have historically preferred the stability of cash. Early, tailored advice will be essential.”

However, Stephanie said that in a slight reprieve the Chancellor did make the £1 million limit on the 100% Agricultural Property Relief and Business Property Relief transferable to a surviving spouse or civil partner when it is introduced from April next year, which will be welcomed by many local farming families.

Although the majority of the measures were aimed at personal finances, businesses will also feel an impact as the National Minimum Wage and National Living Wage increase in April 2026.

Monahans is urging individuals to take stock of their income, property portfolios, pension arrangements and estate plans well before the new measures take effect.

“As most of these changes are phased in over several years, there is time to put a clear and personalised financial strategy in place,” added Dominic.

To find out how the Autumn Budget could affect your finances, visit Monahans at www.monahans.co.uk