What’s new in the 2025 landscape?
In 2025, the tax and investment landscape is tightening, with reduced allowances, frozen thresholds, and fiscal drag pulling more people into higher tax bands. Rumours of a cap on Cash ISAs persist despite reassurances about preserving the £20,000 annual limit, making it wise to use the allowance early.
The dividend allowance has been cut to just £500, raising tax exposure for even modest portfolios held outside wrappers. Meanwhile, the proposed £5,000 ‘British ISA’ has been shelved, so maximising existing ISAs, SIPPs, and JISAs remains key.
Capital Gains Tax relief has also shrank, with the annual exempt amount down to £3,000 in April 2025, making strategies like spousal transfers and phased disposals more important.
With income tax bands frozen, around 500,000 more people are expected to fall into the 40% bracket this year, meaning careful drawdown planning and smart use of wrappers will be essential to preserve wealth and reduce tax burdens.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
