Yesterday felt a bit like watching someone open the boot of your car and casually start loading bricks into it while insisting it will still handle exactly the same on the motorway.
That’s pretty much how most British investors felt when the Autumn Budget landed. Yes, we knew tax rises were coming – the numbers had been leaked, whispered about, and half-priced-in for months – but seeing the final list in black and white still made the stomach drop for a lot of people I speak to.
So let’s cut through the noise. Here’s what the changes actually mean for your money, in plain English, with the real-world implications that rarely make the headlines.
The Big Picture: More Tax, Same (or Less) Growth
Before we dive into the asset classes, it’s worth taking a step back. The Office for Budget Responsibility basically confirmed what many suspected: growth forecasts have been trimmed, inflation will tick higher for longer, and the national credit card bill is now £22 billion bigger than expected just eight months ago.
In my experience, markets hate uncertainty more than they hate bad news. The good(ish) news? A lot of the fear was already baked in. The FTSE 100 didn’t collapse. Ten-year gilt yields went up five basis points and then calmed down. In other words, the sky didn’t fall – but the ceiling definitely feels lower.
UK Stocks – Cheap for a Reason, But Maybe Not Forever
Let’s start with the one genuine sweetener in the entire box: new companies listing in London will enjoy a three-year stamp duty holiday on their shares. It’s a nod in the right direction, but honestly feels like offering a free umbrella after you’ve already been soaked.
The UK remains almost unique among major markets in charging 0.5% stamp duty on share purchases. New York doesn’t. Frankfurt doesn’t. Even Hong Kong scrapped it years ago. That half-percent might look tiny, but it compounds brutally over time and makes fund managers think twice before allocating serious money here.
“Removing stamp duty completely would have been bold. A three-year exemption for new listings is… cute.”
– London-based equity fund manager, speaking off-record yesterday
Still, some portfolio managers I’ve spoken to are quietly optimistic. Domestic UK shares still trade at their widest discount to global peers in decades. Earnings yields are high, balance sheets are (generally) rock solid, and dividend yields for the FTSE 100 sit comfortably above 4% in many sectors.
The budget wasn’t the disaster some feared. Companies now have clarity on employer National Insurance costs, and households know the worst of the tax rises are front-loaded. That clarity alone could unlock some of the corporate investment that’s been on ice since the mini-budget chaos of 2022.
Gilts – Yields Stay Attractive, Volatility Surprisingly Low
If you’d told me a year ago that the government would borrow an extra £140 billion over the parliament and gilt yields would barely flinch, I’d have asked what you were drinking.
Yet here we are. The 10-year gilt closed the day around 4.48% – higher, yes, but hardly the blow-out many predicted. For income-focused investors, that’s actually not terrible. Real yields (after inflation) remain positive for the first time in years.
- Short-dated gilts (2-5 years) still offer close to 4% with minimal duration risk
- Index-linked gilts suddenly look interesting again if inflation surprises to the upside
- Corporate bonds, especially investment-grade, keep their spread advantage over gilts
In short, fixed income hasn’t become uninvestable – it’s just a little less cushioned than it was six months ago.
Savings and ISAs – The Slow Death of Cash Privilege
Perhaps the most emotionally charged change for ordinary households is the planned cut to the ISA allowance from £20,000 to £12,000 starting April 2027, combined with a 2 percentage point rise in savings interest tax rates.
Make no mistake – this is deliberate policy. The Treasury wants money flowing into “productive” UK assets rather than sitting in cash earning 4-5%. Whether that actually happens is another question.
Here’s the practical impact:
- Anyone under 65 will lose £8,000 of annual tax-free wrapper space in less than 18 months
- Basic-rate taxpayers will pay 22% on savings interest above the personal savings allowance (instead of 20%)
- Higher-rate taxpayers jump to 42%, additional-rate to 47%
- Dividend tax also rises 2 points across the board from April 2026
If you’re the kind of person who likes keeping six months’ expenses in an easy-access saver “just in case”, these changes sting. The emergency fund just became more expensive to maintain.
Property – A New Two-Tier Market Is Coming
The headlines focused on the “mansion tax” – an annual surcharge on homes worth over £2 million starting 2028 – but the subtler changes might hurt more people.
From 2027, rental income and capital gains on property will be taxed at brand new property-specific rates (22%/42%/47%). Buy-to-let landlords are already doing the maths, and many are concluding that marginal investments no longer stack up.
“We’re seeing landlords with 8-10 property portfolios quietly putting feelers out to agents. The numbers just don’t work anymore after the combination of Section 24, stamp duty surcharges, and now this.”
– South-East England letting agent
The mansion tax itself will hit perhaps 150,000 households, concentrated in London and the Home Counties. Early estimates suggest bills of £2,500–£7,500 per year depending on valuation band. Downsizing starts to look attractive when the annual tax exceeds what you’d pay in mortgage interest on a smaller home.
Perhaps the most interesting aspect? The £2 million threshold isn’t indexed to inflation. In ten or fifteen years, significant chunks of Surrey and Kensington could find themselves accidentally ensnared.
Pensions – The Salary Sacrifice Party Is Almost Over
For years, salary sacrifice into pensions has been the closest thing to legal tax avoidance left for higher earners. From 2029, contributions above £2,000 per year will attract employer National Insurance at 15%.
The employee still saves their own NI (up to 8%), but the employer saving disappears on amounts above £2,000 – and that’s where the real money was for many schemes. Some companies were effectively giving staff a 13.8% bonus by sharing the employer saving. Those schemes will almost certainly be scaled back or closed.
Mid-career professionals earning £50,000–£80,000 are the real losers here. A promotion that pushes you into the higher-rate tax band could now leave you barely better off once the pension changes bite.
What Should You Actually Do Before the Deadlines?
Time is suddenly not on your side for some of these changes. Here are the moves I’m discussing with clients right now:
- Max out your £20,000 ISA allowance for 2025/26 and 2026/27 while it still exists – that’s £40,000 of tax-free growth you can still lock in
- Consider using the current tax year to bed & breakfast shares or funds and reset your capital gains base cost before rates potentially rise further
- If you’re sitting on large cash balances earning 4-5%, start drip-feeding into diversified equities or funds – the new ISA limit makes procrastination expensive
- Review any salary sacrifice arrangements with your employer before schemes are quietly withdrawn
- Landlords: run fresh calculations on your portfolio yield after the 2027 tax changes – some properties may need to be sold while capital gains rates are still known
None of this is financial advice – your situation is unique – but doing nothing is now an active decision with a cost attached.
The Autumn Budget wasn’t the apocalypse some feared, but it wasn’t a love letter to investors either. It was a sober, brick-by-brick transfer of cost from the state balance sheet to private households and companies.
The UK remains a market full of undervalued assets trading at discounts that still make international allocators rub their eyes. Whether those discounts narrow depends less on yesterday’s budget and more on whether companies finally feel confident enough to invest and hire again.
For now, the message is clear: tax efficiency just became the most valuable currency in British investing. Those who adapt quickest will feel the least pain.
