Autumn Budget 2025: interactive investor experts comment

interactive investor, the UK’s second-largest investment platform for private investors and leading flat-fee investment platform, reacts to today’s Autumn Budget announcement.

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Changes to the cash ISA limit

Today, the Chancellor announced that the cash ISA allowance will reduce to £12,000 from April 2027. While the full £20,000 allowance will remain, £8,000 of this will now be designated exclusively for investment purposes. This doesn’t apply to those over 65.

interactive investor believes that to create a thriving investment culture in the UK, the focus of ISA reform needs to be on less complexity in the ISA landscape.

Richard Wilson, Chief Executive, interactive investor, says: “Cutting the cash ISA allowance is the wrong lever to pull, and has once again delayed the overall goal of ISA simplification. For some, saving in cash is essential, and it’s unproductive for the chancellor to blindly hope that this will direct them towards investing in the markets. Consumers don’t need more layers, they need simplicity. Give us one ISA. And, if the chancellor is serious about encouraging more retail investment in the UK, then the answer is simple – scrap stamp duty on UK shares and investment trusts.”

Stamp duty on UK listings

A stamp duty holiday on new UK listings is a step in the right direction, but it’s not enough to move the dial. interactive investor calls for stamp duty to be scrapped across all UK shares and investment trusts.

Richard Wilson, Chief Executive, interactive investor, says: “If the government thinks that retail investors are the answer to boost the UK stock market, then it seriously needs to look at scrapping stamp duty. It’s an outdated and irrational tax that is bad for liquidity and bad for growth. It is suffocating investment in British businesses, and it has to go.”

Income tax

Income tax threshold freeze is extended

Craig Rickman, Personal Finance Expert, interactive investor, says: “Extending the freeze on income tax thresholds to 2031 is another tax increase in all but name and arguably breaks the election manifesto pledge not to raise tax on working people. With inflation easing but wages still rising, the decision means millions will hand over a bigger slice of their pay without any change to the headline tax rate.

“The move may boost Treasury coffers, but it risks dampening disposable incomes and weakening household confidence at a fragile time for growth.”

Camilla Esmund, Senior Manager, interactive investor: “The individual tax burden is impacting so many more of us, now. Today’s announcement of the extension of frozen tax thresholds means it’s even more crucial to make our money work harder for us. Fiscal drag - the stealthy effect of frozen tax thresholds while wages rise, literally dragging more of us into a higher tax bracket - is not going away any time soon.

“A great way to protect our wealth is to maximise tax-saving opportunities, helping you keep more of your growth and income. In a nutshell, this means using tax-wrappers such as ISAs and pensions. ISAs and SIPPs (self-invested personal pensions) each have their own set of benefits, depending on investor’s individual needs and circumstances, but investments held in these accounts will be shielded from tax, and this helps grow your money over the long term.”

Pensions

Salary sacrifice pension contributions above £2,000 face National Insurance from April 2029

Craig Rickman, Personal Finance Expert, interactive investor, comments: “Scaling back pension salary sacrifice is a direct hit to working savers and employers alike. For many employees, this is one of the few reliable ways to boost pension contributions without feeling the pinch in take-home pay. Introducing a £2,000 cap risks shrinking scope for saving at a time when people need every advantage they can get.

“Higher earners will feel the impact, but this isn’t just a ‘top end’ issue. Employers may rethink how they structure contributions, and everyday savers could see less going into their pensions unless they top up from their own pockets.

“The message for workers is simple: review your contributions and check whether changes affect you. And for policymakers, the warning is equally clear – weakening one of the strongest incentives to save risks long-term consequences that far outlast the short-term revenue gain.”

The pension tax-free lump sum remains untouched

Craig Rickman, Personal Finance Expert, interactive investor, says: “The fact that the pension tax-free lump sum is safe brings a huge sigh of relief for millions. This is a part of the pension system people understand, value and actively plan around. Taking it off the chopping block goes some way to preserve confidence at a time when trust in long-term saving is essential.

“Speculation about reductions has been unhelpful, but today’s clarity means people can continue planning with a bit more certainty. It won’t fix every retirement challenge, but it protects a cornerstone of the pension system that helps people manage the rising cost of living in later life. However, unless the government commits to leaving this treasured feature of the pension landscape alone, there’s a risk rumoured cuts will surface before every major fiscal event.”

Dividend tax and capital gains tax

Dividend tax rate has been uprated by two percentage points across the board from April 2026

Craig Rickman, Personal Finance Expert, interactive investor, says: “Increases to dividend tax are a further blow to investors who are already facing bigger tax bills due to jacked up capital gains tax rates and stingier annual tax-free allowances to investment income and profits. The pain would also be felt by owners of private limited companies who draw a small salary and the rest in dividends for tax-efficiency reasons.

“Higher dividend tax rates may prompt investors to reconsider how they position their portfolios, focusing on high-yielding stocks within their ISAs and pensions, which are exempt from dividend tax, and opting for growth stocks on holdings outside tax wrappers.”