Chancellor Rachel Reeves will deliver her second budget on 26th November 2025 with much speculation about the content. Against a backdrop of a budget blackhole, the chancellor may be left with ‘little option’ but to focus on wider tax rises if she is to stick to the manifesto commitment not to raise National Insurance contributions, basic or higher rates of income tax, or VAT in the upcoming budget.
At Prime Minister’s Questions Sir Keir Starmer refused to rule out tax rises, with a government spokesperson saying the government would ‘lay out our plans’ at next month’s Budget.
Simplifying and strengthening saving, and modernising the tax system should be high on the agenda said wealth manager Quilter who are calling for the chancellor to ‘take a long-term, strategic approach to reform that prioritises fairness, simplicity, and predictability for households and investors.’
Rachael Griffin, tax and financial planning expert at Quilter, outlines four areas the chancellor should be considering ahead of the much-anticipated budget. The first is building on the successo f ISAs… a ‘big success story’ said Griffin. But over time constant tweaks have made the system more difficult to navigate.
“The priority now should be simplifying and strengthening the regime, not adding further layers of complexity. Recent speculation has suggested the Chancellor is exploring ways to boost UK share ownership by overhauling the ISA system, potentially including rules that require part of people’s investments to be held in British companies or offering a stamp duty tax break for doing so.”
“While encouraging investment in UK businesses is a positive ambition, structural reforms of this kind risk confusing savers and undermining confidence in one of the country’s most trusted products. People value ISAs because they are straightforward and accessible, and introducing new restrictions could make them feel forced into a particular route, something that would likely prove unpopular and open to political attack.”
She is critical of proposals which would be ‘extremely complex to implement in practice.’
“Instead of structural reform, the government focus on behavioural approach. That means working closely with the industry to actively promote the long-term benefits of investing, while offering targeted support to help people move some of their cash savings into assets that can grow their wealth over time. By focusing on education and confidence-building rather than new restrictions, more people will be encouraged to put their money to work in the market.”
One area of speculation is the chancellor will look at introducing a cap on lifetime gifting and/or the current taper rate. ‘Gifting has quietly become one of the most powerful tools of intergenerational support’ said Griffin, ‘but the rules governing these transfers are stuck in the 1980s.’ Quilter research shows the average retiree gifts nearly £2500 every year to children and grandchildren. One in three help with education costs.
She points to the challenges younger generations face in housing and education costs as evidence of much needed modernisation.
“Given that IHT revenues are set to rise as pensions come into scope, now is the time to revisit gifting rules. The £3,000 annual gifting exemption hasn’t been updated for more than 40 years. If it had kept pace with inflation, it would now be £12,000. While a full uprating might be unrealistic in the current fiscal climate, a modest increase to, for example, £9,000, would better reflect modern financial realities and would make the system more equitable, simpler, and reflective of how families now share wealth.”
Creating more liquidity would align with the government’s efforts to encourage consumer spending and create a more financially mobile economy. ‘At a time when nearly half of retirees say they regularly provide financial help to family members, the government should recognise how important these transfers are to the real economy. If the government’s goal is to foster a high-growth, investment-led economy, then reducing friction around intergenerational wealth transfer is not just aligned with that vision, it is essential to it’ concludes Griffin.
Head of retirement policy at Quilter Jon Greer suggests there is an opportunity to move tax policy away from firefighting to future proofing.
“If the government remains steadfast in its decision to not raise the headline rates of tax, then now is the time to set out a clear plan for tax reform that fosters predictability helping people plan with confidence and avoids piecemeal reactive changes that are insufficiently thought through.
The tax system has become a web of complexity built on years of political short-termism. Each new budget tinkers around the edges, often creating unintended consequences that have to be unpicked later. With a significant fiscal hole to address, some think tanks and business groups argue that sticking rigidly to the manifesto pledge of not raising the main taxes risks making the problem worse, forcing yet more patchwork fixes and adding complexity rather than clarity. A more pragmatic approach, including broader tax rises, to deliver stability and simplicity might be the lesser of two evils.”
He is calling for a Tax Policy Commission, a body who role would be to assess and remove unnecessarily complex taxes and consider the longer-term impacts of proposed tax measures before they’re introduced.
Using the example of the abolition of the Lifetime Allowance without a replacement framework in place, Greer said there was ‘widespread confusion among savers and providers.’
“Similarly, the upcoming change to the inheritance tax treatment of pensions from 2027 has been administratively more complex to introduce than assumed, whilst creating uncertainty and speculation from retirees that other changes could be made that damage the ability of people to plan properly. Both are prime examples of how well-meaning reforms can backfire when they’re rushed or lack adequate consultation on how to achieve a policy aim.”
The fourth area needing resolution is a sustainable alternative to the tiple lock said Greer. He acknowledged it has provided protection for pensioners, but it is now outdated. The Office for Budget Responsibility estimates the triple lock could cost taxpayers £15.5 billion annually by 2030, more than three times higher than was initially expected. He is calling for the government to bring forward a consultation to determine the most appropriate uprating mechanism, and a full appraisal of State Pension income levels should be conducted to set it at an appropriate level – with cross-party agreement to remove the risk of its continued use as a ‘political football.’
“The triple lock shouldn’t be a political trap, it should be a policy designed to provide long-run confidence, balance intergenerational fairness, and keep pension spending sustainable. Better to reform it thoughtfully now than face more abrupt change later.”
