The latest UK Budget delivered by Chancellor Rachel Reeves has set the stage for significant financial shifts in the years ahead. From frozen tax thresholds to changes in ISA limits and pension rules, millions will feel the impact.
While many of the reforms won’t take effect immediately, now is the time for households to rethink how they save, invest, and plan. Danchima Media breaks down the key changes and expert advice on how to safeguard your finances.
1. Protecting Your Savings
The Chancellor announced a major adjustment to cash ISA limits, reducing the current £20,000 allowance to £12,000 for most savers from April 2027. Only adults over 65 will retain the full £20,000 limit.
The Government hopes this will encourage younger savers to push money into stocks and shares ISAs, boosting long-term investment in the economy. But not everyone is keen on market risk, and many prefer the stability of easy-access or fixed-rate savings accounts.
Use Your ISA Allowance While You Can
Financial specialist Anna Bowes advises savers to maximise their current ISA allowances before the cut takes effect.
> “Use the full allowance in the next two years before the change kicks in on 6 April 2027. Also review your existing ISAs—switch if your rate is no longer competitive.”
With banks engaged in a “mini price war”, switching has become even more worthwhile.
Consider Fixed Rates and Tax Wrappers
Locking into a fixed-rate savings product now could also be beneficial if future rates fall.
Camilla Esmund from interactive investor reminds savers that ISAs and pensions shield investments from tax and help money grow faster over time.
2. Protecting Your Pension
By 2027, millions of pensioners will pay income tax on their state pension for the first time, due to the continued freeze of the £12,570 tax threshold.
The Budget also targeted salary sacrifice schemes—a popular tax-efficient way to boost pension pots.
New NI Charges on Salary Sacrifice From 2029
From April 2029, salary sacrifice pension contributions above £2,000 per year will attract National Insurance charges. This change may slow down retirement savings for many workers.
Antonia Medlicott of Investing Insiders warns:
> “The new cap may prevent some people from reaching their pension goals. A SIPP gives more control and still offers generous tax relief.”
A £100 contribution, for instance, becomes £125 instantly for basic-rate taxpayers. Growth within a SIPP remains tax-free, and from age 55 (57 from 2028), 25% can be withdrawn without tax.
Maximise Existing Opportunities Now
PensionBee’s Lisa Picardo encourages anyone using salary sacrifice to increase contributions before April 2029 while the rules still favour larger tax-efficient deposits.
3. Protecting Your Mortgage and Property Investments
The Budget introduced a £2,500 council tax surcharge on homes valued above £2 million, rising to £7,500 for properties over £5 million—a move widely referred to as a “mansion tax”.
Landlords were also hit with a 2% rise in property income tax, raising their tax bands to:
22% (basic rate)
42% (higher rate)
47% (additional rate)
Combined with pressures from the Renters’ Reform Bill, this could push more landlords to sell, tightening rental supply and driving up rents.
Could Mortgage Rates Rise?
Cash ISAs are a major funding source for banks. Cutting the cash ISA limit could reduce the flow of deposits that lenders rely on, potentially nudging mortgage rates higher.
David Hollingworth, L&C Mortgages, explains:
> “If cash savings tighten, lenders may need to make mortgages more expensive.”
Lock In a Mortgage Early
Experts recommend securing a mortgage rate now—most lenders allow customers to lock in up to six months in advance and still switch if a better deal comes along.
Some rates remain below 4%, although mainly for buyers with strong deposits.
Mortgage adviser Jack Tutton expects continued stability:
> “Rates have been falling for a while, and with no major surprises in the Budget, this trend should carry on.”
4. First-Time Buyers: What You Should Know
Changes may eventually be made to Lifetime ISAs (LISAs), but for now the scheme remains intact. LISAs continue to be a cornerstone for helping young people save towards property.
However, potential reforms could create uncertainty for future first-time buyers.
The UK Budget introduces sweeping changes that will reshape how people save, invest, and plan for retirement. While many reforms are delayed, proactive steps taken now—maximising ISA allowances, reviewing pensions, or locking in a mortgage—could shield your finances from future shocks.
Danchima Media will continue to monitor policy shifts and provide reliable financial guidance as the landscape evolves.
