Chancellor Rachel Reeves delivered her second budget this week, unveiling changes that could affect how you spend and save. Here is a five-point action plan to help manage your finances.
From April 2027, the £20,000 annual Isa limit remains, but for under-65s, cash Isa deposits will be capped at £12,000; the rest must go into stocks and shares Isas. Over-65s can still put all £20,000 into cash. Until then, exploit existing allowances. Sarah Coles of Hargreaves Lansdown recommends acting soon while rates are strong—Trading 212 offers 4.56% on easy-access cash Isa, Leeds Building Society and Post Office 4.05%.
Interest outside Isas is taxed above personal savings allowances (£1,000 basic rate, £500 higher rate, up to £5,000 for lower earners). At 4%, a basic-rate payer can hold £25,000 before tax. Dividend tax rises from April 2026: ordinary rate from 8.75% to 10.75%, upper rate from 33.75% to 35.75%. To avoid this, use 'Bed & Isa'—sell investments and repurchase within an Isa wrapper, but watch for capital gains tax. Coles advises prioritising high-dividend shares for transfer.
Married couples can use two dividend allowances and two Isas via spousal transfers, which are tax-free. Jason Hollands of Evelyn Partners notes this is not possible for unmarried couples.
Salary sacrifice for pensions loses NI exemption on contributions above £2,000 a year from April 2029. You have until then to adjust. Check with your employer if scheme rules change. Consider increasing contributions now to exploit current savings, or explore other salary sacrifice schemes like Cycle to Work.
