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TeaHe Budget From pension changes to ISA limits and support for families, lots of questions and concerns have arisen.
Many readers are wondering how the new rules will affect them savingsRetirement plans, and household finances – and what they should do now to prepare.
recently question and answer with Independent Readers, I solved your questions pensionISA, Universal Credit, and the practical steps you can take to navigate the changes.
Here are some of them – and my answers.
Question: For those of us who can’t max out the full £20k anyway, does it also make sense to change the ISA allowance?
dan1976
A: Let’s start with what the main changes are:
Rachel Reeves says that £8k of your ISA has to be allocated to a Stocks and Shares ISA. This is a weird way of saying that your cash isa Has been capped at £12k. So, if you’re someone who traditionally puts £20k in a stocks and shares ISA, you won’t notice this. Similarly, if you don’t come close to adding a combined £12k to your ISA, you probably won’t even notice. Finally, if you are over 65, this change will not apply to you – be careful!
So what are the real effects?
resilience: Your choices – or ability to choose – are running out. Let’s say you fill up your Stocks and Shares ISA every year but suddenly want to save for a house in a Cash ISA – your ability to do so has been reduced. Let’s say you’ve received a big inheritance, or had a good year at work, and you want to top up your Cash ISA – you’ll now only be able to put in £12k.
Tax: Those who want to continue saving and used to top up their £20k Cash ISA allowance each year will now move at least £8k of that to a non-tax-efficient account. With the increase in the rate you pay on savings interest in this Budget, it is possible that you will pay more tax on your savings.
Investment: Rachel Reeves has cited the reason for this decision as encouraging investment in the country. I don’t know about you, but in my opinion, people don’t start investing because they are pushed into a corner. They start because of education, confidence and encouragement. Basically, I prefer the carrot to the stick.
Q: I have three children – does removing the two-child benefit limit mean my family will now receive more support?
bibenbi
A: Simple answer: Yes.
This is a “universal” credit, meaning anyone with more than two children will benefit from this announcement.
in practical terms:
- You will get benefits for each of your children.
- The exact amount depends on your personal circumstances and Universal Credit calculations.
- It will start in April 2026.
It’s worth noting some of the other changes announced for families on Universal Credit (other conditions apply, so you’ll need to check if you’re eligible):
Get free fractional shares worth up to £100.
Capital at risk.
terms and Conditions apply.
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Get free fractional shares worth up to £100.
Capital at risk.
terms and Conditions apply.
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- Help in Savings – Extra 50 Percent Bonus savings (up to £1,200).
- Free school meals – depending on age and income.
- Childcare support – Universal Credit can cover up to 85 per cent.
Many people were quite angry about this, wondering where Wealth Will come to pay for it! But overall, if it does what the government says and brings about five lakh children out of poverty, I am in favor of it.
Q: I pay about £30k into my pension using salary sacrifice. How will the announced changes affect me? I also think it is being introduced in 2029 – why the delay?
9diamonds
A: Let’s start with the reasons for the delay: who knows. My best guess is that, come 2029, there’s a chance that this policy could magically disappear as part of an election campaign (but that’s just my guess – I would still seriously prepare to implement this change).
Now, how does this affect your money!
It is important to note that these changes apply Only for salary sacrifice schemesSo before you start stressing, make sure you’re on a similar plan.
The main effect is simple: you’ll pay National Insurance on anything contributed above the first £2k – in your case, that’s £28k. The rate of National Insurance depends on your total salary, with most basic rate taxpayers falling in the 8 per cent range and most higher rate taxpayers paying 2 per cent (taken from your take home pay).
However, there are two other consequences to be aware of, as your employer will also pay National Insurance on this (at a higher rate of 15 per cent):
- More National Insurance on their part could mean a reduction in the benefits they offer, especially if they are currently generous.
- The total pay package may decrease over time as employers seek to pass this cost on to employees.
And a question back to you:
Does this technically mean that Labor has broken its manifesto promise that you will pay more National Insurance?
Q: Due to poor money management in my youth, my pension amount is small for my age. Will anything in this budget really help someone like me?
sammyw
A: Unfortunately no. This budget wasn’t exactly one that gave huge tax breaks or left us all with a lot of money.
However!
No matter what is announced, there is no better time than now to use these changes as the perfect opportunity to get your finances back on track. Don’t wait for government help – do it yourself!
pension
- (negative) changes pension Will not be implemented until 2029. Still, pensions remain an incredibly powerful tool, thanks to tax incentives. You still pay zero income tax Wealth Contributed, so take advantage of it.
- Does your employer offer a match scheme? If so, not using it is literally leaving free money on the table.
savings and investment
- Hopefully Reeves will prove me wrong and these changes to the ISA will bring investment to the country! The one positive I took from this is that more people now know what an ISA is – it really is a superpower for saving and investing.
- Take the time to learn how to use all the different ISA accounts. Most people should have a balanced approach in their minds. There are tons of free resources available online, on social media, or on YouTube!
hope this helps! If I can ever be of more help, I’ll answer questions weekly Independentmoney newsletter And you will be very happy to send them there.
Q: I’m thinking of opening my first ISA. With budget changes, should I choose cash, stocks and shares, or a mix – and how do I decide?
ben j
A: First of all, congratulations on opening your first ISA! These are great products that very few people take advantage of in this country, so please spread the word.
When it comes to choosing which ISA to put your money in, there are a few things to consider.
Factual Rules:
- £20k allowance on all your ISAs, including cash, stocks and shares, lifetime, and innovative finance (which no one really uses).
- The lifetime ISA cap is currently £4k per tax year (apparently under review).
- cash isa Will be limited to £12k per tax year from April 2027.
How to choose:
Ask yourself the following questions:
- when do you need it WealthLong term (over 5 years) → Stocks and shares ISAs start to make sense. Short term → Cash ISAs are your friend due to low volatility.
- How do you feel about risk? If the thought of losing your balance makes you stressed → cash isaIf you can handle short-term fluctuations for long-term growth → Stocks and Shares ISA,
- Do you already have an emergency fund? If not → start here first.
These questions can help guide you towards the ISA that is best suited for your money. But the main thing to remember is that it’s probably not one or the other, but a balance between both types of accounts. How you divide that balance is up to you – possibly based on the questions above.
Look for tips on your emergency savings fund Here,
Q: When will the changes to Voluntary National Insurance contributions abroad start?
A: In this case, it’s April 6th – but great question, and always worth checking. Here is a link to it More information,
PS: For everyone else (and everything else), please check the dates when the changes will be implemented and respond accordingly. Don’t assume anything is changing immediately, because most things aren’t!
These questions and answers were part of a ,ask me anything‘ Hosted by Gabriel Nussbaum on Thursday 27 November at 1pm GMT. Some questions and answers have been edited for this article. You can read the entire discussion in the comments section original article