What does the uk budget mean for me

​What a budget. Our initial reaction is that the process leading up to it has been nothing short of shambolic. Endless leaks, speculation, and U-turns have exhausted everyone. Whatever happened to good old-fashioned purdah? Instead, we’ve had a free-for-all of briefings, capped off by a leak on the morning of the announcement - an extraordinary embarrassment that moved bond markets and undermined confidence in the OBR.

UK Budget 2025

Economic outlook

Looking at the OBR forecasts, the headline is that there’s no real change to growth on a five-year aggregate basis. Yes, there’s a slight upgrade for 2025, but that’s offset by downgrades in the following years. Inflation expectations have nudged higher, but the big story is productivity. The OBR has finally downgraded its long-run productivity assumptions—a technical point, but hugely significant. Before the financial crisis, productivity growth was around 2.5%. Since then, it’s been anaemic. This downgrade is realistic, but it raises serious questions about the sustainability of UK debt over the long term. Not in the near-term, but for the 10 year plus long-dated gilts market.  That’s the structural challenge we face.

Understanding the energy-currency-inflation relationship

Other macro assumptions changes since March 2025 are worth noting. Oil price forecasts have eased from $72 to $66 a barrel (on two year forecast average), while sterling has been upgraded from $1.24 to $1.33 against the dollar (on two year forecast average). That helps reduce inflation because energy costs are dollar-priced and the sterling assumption is higher, but if sterling weakens, those assumptions could get challenged. Debt-to-GDP (we still prefer PSND ex Bank of England) remains stubbornly high - moving from 88.1% today to 95.3% by 2029-30 (from 95.0% 2029-30 in March 2025 estimate). No shocks there, but no solutions either.

Tax policy

On tax policy, there are very few positives. Support for VCTs is paired with a cut in the income tax relief from 30% to 20%.  CGT relief on ESOTs has been reduced from 100% to 50%. Scrapping stamp duty is only on new UK listings: we'd hoped (however unlikley) for a broader abolition of stamp duty on trading UK shares. ISA changes add complexity: over-65s keep a £20,000 cash allowance, while under-65s must split £8,000 into investments and £12,000 into cash. But the headline is frozen tax thresholds until 2031, reversing last year’s pledge to inflation-link them. That means more earners dragged into higher bands - a stealth tax by any other name.

The mansion tax

Then there’s the new wealth tax on property from April 2028: taxes of £2,500 per annum on homes over £2 million and £7,500 per annum on homes over £5 million. It’s not just the rate that matters, it’s the precedent. We now have a central wealth tax on physical property.

Unearned income

Add to that higher taxes on unearned income dividends income from Apr-26, property income from Apr-27, and savings income from Apr-27 and the focus is clear: unearned income is squarely in the crosshairs. Property owners and investors with large portfolios outside a tax wrapper will feel the squeeze.  For additional rate taxpayers the 47% tax on savings income makes it even more logical for additional rate taxpayers to consider using near-term low-coupon direct gilts as a smarter alternative to cash.
Other measures include capping salary sacrifice for pensions and halving CGT relief for employee ownership trusts - a big shift for business structures.

Market reaction

Near-term, markets have reacted relatively calmly; yields are slightly down. But the longer-term questions remain: how do we get eceonmic growth going and productivity back on track? Without that, every budget will be a sticking plaster.
Overall, this is a mishmash of mini-measures - complex, piecemeal, and emblematic of deeper structural issues. Mixed messages abound: encouraging investment while penalising successful investors. For now, the Chancellor looks like she will escape unscathed. But the real work lies ahead.

A summary of key measures will follow