Autumn Budget 2025: Investment Changes for Individuals

How do the announcements in the Autumn Budget 2025 affect investments?

As things stand, an individual can invest up to £20,000 per tax year into Individual Savings Accounts. This can be split in any combination between lower-risk Cash ISAs or more risky Stocks and Shares ISAs or wholly invested into one product or the other.

With effect from 6 April 2027 the overall limit will remain at £20,000 but, of this, those under 65 will only be able to invest £12,000 into a Cash ISA. The remaining £8,000 of the allowance must be invested in a Stocks and Shares ISA.

The allowances for those aged 65 and over will not change.

Younger individuals who prefer the lower risk profile of cash deposits should take advantage of being able to invest the full £20,000 into a Cash ISA in the current and 2026/27 tax years.

We would still encourage full use of the investment allowance due to the tax-efficient nature of ISAs, even after the change. This will become even more important with the increase in the rates of Income Tax applying to savings and dividend income with effect from 6 April 2026.

There will also be a change to pension contributions made to employer’s schemes by way of salary sacrifice with effect from April 2029. The National Insurance contributions saving that they attract will only apply to £2,000 of pension contributions each year.

Members of employer pension schemes that offer salary sacrifice might want to consider maximising contributions prior to April 2029 to take advantage of the National Insurance benefit they currently offer.

If ISA and pension contribution allowances have been fully utilised, the tax-deferral ability of investment bonds might become more attractive given the increases in the tax rate that will apply to investments outside of these products.

Please get in touch with your usual Mercer & Hole contact or a member of our Financial Planning team.