28/11/2025
‘Most damaging Budget in living memory’, says tax expert:
Over £23bn in tax rises, one million more people dragged into higher rate tax and endless tinkering made Budget the ‘most damaging in living memory’, argues Nimesh Shah, CEO of Blick Rothenberg
Even before the chancellor Rachel Reeves stood up to deliver her Budget 2025 speech, this was one of the most damaging Budget statements in living memory and will leave a lasting impact for a generation.
❗The 2% increase to dividend tax rates, property and savings (raising over £2bn) presumably breaks Labour’s manifesto pledge not to increase income tax.
❗The reduction in the cash ISA limit to £12,000 will cost a higher rate taxpayer over £140 in income tax, assuming interest rate of 4.5% and no personal savings allowance.
❗The ISA regime has just been made even more unnecessarily complicated by having a different regime for over-65s. I understand the logic but this is making a mess of ISAs.
❗The changes to salary sacrifice pensions from 2029 are another damaging blow to business after last year’s employer’s NIC increase. This will be inflationary and lead to further job losses.
‼️One million dragged into higher rate tax ‼️
It was a certainty that personal tax allowances and thresholds would be frozen in the Budget. I wasn’t expecting it would be for another three years and would drag almost one million people into higher rate (40%) tax.
Changes to dividends, property income and savings introduces new rates into the personal tax system, which add further complexity into the already complicated regime.
The real impact of frozen tax allowances and thresholds is that someone earning £20,000 is almost £600 worse-off today; they will be over £1,000 worse-off in 2031.
The personal allowance will be frozen at £12,570 until 2031. Had it increased with inflation, it should today be worth nearly £16,000; and it should be worth closer to £18,000. This is a significant tax increase on “working people” on lower incomes.
The effect of frozen personal tax allowances and thresholds is severe for middle earners and has been a feature since 2010 when the higher rate band was £43,875; today it is £50,270 when it should be almost £68,500 had it increased with inflation.
I have to ask whether that was Rachel Reeve’s last Budget? If it was, she’s had her thunder truly stolen by the Office of Budget Responsibility (OBR) with their inexcusable early release of the Budget.
The chaos was summed up by the OBR publishing the forecasts before the speech and leaking the entirety of the Budget before Reeves said a word.
This is the perfect ‘tax and spend’ Budget from the Labour government, and the tax policies will leave a devastating impact on the economy for years to come. It is a Budget for the Labour Party - not the economy, not business and definitely not working people.’
Source: Business & Accountancy Daily 27/11/25
