What are the key policy changes in the November 2025 budget?

Changes to personal taxes:

• The cash ISA limit is being reduced to £12,000 from April 2027
  a) This only applies to people 64 or younger and for contributions made from April 2027
  b) It does not apply to the stocks and shares ISA limit which remains £20,000 per year
• National Insurance (NI) and income tax threshold have been frozen until April 2031
  a) The Income Tax personal allowance is fixed at the current level of £12,570 and will remain frozen until April 2031.
  b) There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. This means that there is no personal allowance where adjusted net income exceeds £125,140.
• Tax rates on dividend income and all savings income have been increased by 2% points for basic and higher bands

Changes to benefits and wages:

• Two-child benefit cap will be scrapped from April 2026, allowing families with more than two children to receive benefits
• Legal minimum wage is rising
  a) For over 21s it is rising from £12.21 to £12.71 per hour
  b) For 18-20 year olds it is rising from £10 to £10.85
• Basic and new state pensions remain protected by the "triple lock” policy, and are set to go up by 4.8% from April
• National Insurance (NI) relief through salary sacrifice schemes, will only apply to contributions under £2,000 from April 2029
• Help to Save scheme, which offers people on universal credit a bonus on savings is to be extended and expanded beyond 2027

Changes to pensions:

• Only the first £2,000 of employee pension contributions through salary sacrifice each year will be exempt from NICs from April 2029

Changes to housing:

• There is a new high-value council tax surcharge for properties worth over £2 million in bands F, G and H
  a) Properties worth £2-£2.5 million will be charged an extra £2,500 per year
  b) Properties worth £5 million plus will be charged £7,500 extra per year
• Lifetime ISAs (LISAs) will be replaced with another first-time buyer scheme
• Tax charged on rental income is increasing by 2% from April 2027

Changes to transport and travel:

• 5p cut to fuel duty on petrol and diesel has been extended again until September 2026
• Electric vehicles and plug-in hybrid cars will be taxed through a new mileage-based tax from 2028
• Rail fares for journeys in England will be frozen next year

What does this mean for your estate plan?

Why these changes matter:

These changes have two key areas of impact.

Changing the role of pensions in estate planning

Historically, pensions have been exempt from inheritance tax (IHT) and national insurance. Both of these have now changed.

Last year's budget ruled that from 6th April 2027, most unused pension funds will be included in a person’s estate for inheritance tax purposes.

The most recent budget means that pension contributions above £2,000 will now be subject to National Insurance (NI) tax.

For many, pensions have been the backbone of their retirement plans and estate plans, but with these changes, some people will want to review their plans to find more predictable ways of protecting their long-term savings.

Impacting what people leave behind - through taxes on savings, dividends, property in their life time and after their death

These costs may need to be factored in, and might impact other estate planning decisions such as lifetime gifting, life insurance policy amounts and even how an estate is divided.

This means that for some people, their estate planning strategy or the contents of their plan, such as their will, or trust might need reviewing to reflect these changes.

Estate planning tools to help address these changes:

Review your estate plan

Why?
If your pension would be included as part of your estate and your estate will be subject to inheritance tax, or if what you leave behind relies heavily on your pension, you may want to think about the inheritance tax consequences of this budget change.

Setting up life insurance policies and putting these into trust:

Why?
The cover amount can be set at a fixed value, placed in trust, and paid out quickly upon death or critical illness. This means families may have more certainty regarding what will be available to them, and in which circumstances.

The role of trusts has become even more important

Why?
With multiple changes to pension rules and pension contributions, they are no longer as reliable or tax-efficient as they once were. Trusts can be a way of plugging this gap for some people by providing a tax-efficient way of ensuring you maximise what you pass on.

Learn more about different types of trusts here:

• Discretionary Will Trusts
• Flexible Life Interest Trusts
• Property Protection Will Trusts
• Vulnerable Persons Will Trusts

Consider gifting in your lifetime

For those that are in a financial position to do so it may be more tax efficient to gift money to your beneficiaries or to charities in your own lifetime. This can be an alternative way of reducing your inheritance tax liability (if you qualify) by minimising the overall value of your estate as well offering other potential tax benefits.

You can learn about the different types of gifts and their potential benefits here.