Budget 2025: Latest Proposals Affecting Later Life

The influential ‘think tank’ The Resolution Foundation has outlined, in its latest report, measures for the Chancellor Rachel Reeves to consider as she looks to dig herself out of the £20bn-£50bn black hole in November’s Budget. Given Resolution’s closeness to Government, it’s likely that at least some of the proposals will make their way into the Budget in two months’ time.

How will any proposals affect Later Life financial planning? As Labour looks to navigate its manifesto pledge to not adversely affect ‘working people’, then some of the proposals could spell bad news for anyone in post-retirement or later life (i.e. non-working people). Specifically, those who rely on investment properties, investment portfolios or pensions to generate an income for their retirement needs could be hit.

First of all, lets consider Capital Gains Tax (CGT) reform. Resolution wants an end to CGT effectively being eliminated on death, with this being replaced by the original base cost being rolled over to the family member who is inheriting. Currently, the usual financial planning strategy for later life is to retain assets which hold significant gains in lifetime, until death therefore no CGT to be paid on death or on immediate sale by the inheritor. This strategy might need to be revisited.

Then there is the proposal to raise basic rate dividend tax. The Resolution’s logic is that the total income tax and corporation tax on dividends should equal the amount of income tax and NICs on employee pay. The way the maths works is that this would mean, for the basic rate taxpayer, and increase to 16.5%. Not great for retirees relying on share portfolios for a retirement income and highlights the ever-present need to use all available tax-free allowances and tax efficient investment wrappers like investment bonds and ISAs.

Another eyebrow raising proposal, which specifically hits retirees, is to potentially raise income tax by two percentage points, whilst cutting all employee National Insurance by the same amount. The change would thus be neutral for employees below State Pension Age but would add two percentage points to the effective rate of income tax for, amongst others, pensioners in receipt of pension income and rental income. The income tax raid would also come by extending the personal allowance and threshold freeze to 2029/30 – even though Rachel Reeves made a point of not doing so in her last Budget speech.

What does all this mean for later life financial planning? Over the next few months in the lead up to the Budget on 26th November we will be providing insightful commentary and advice for those in later life. This can be best accessed reviewing our regular blog articles and commentary on the Harold Stephens website and social media channels. Go to ‘Harold Stephens IFA’ channel on You Tube and subscribe to get the very latest videos direct from Richard Higgs, later life financial planning specialist.

Finally, register and reserve your place at one of our 2 post-budget Later Life Financial Planning live events to be held on Wednesday December 3rd 2025 by emailing office@haroldstephens.co.uk.