HL commentary as it happens

Bond market thinks this is a fiscally responsible Budget

The markets reacted reasonably well to Chancellor Rachel Reeve’s 2025 Autumn Budget. After an initial rapid fluctuation in bond yields, following the leaked OBR report ahead of the Chancellor’s speech, gilt yields trended flat – and down from last week, indicating the bond market at least thinks this is a fiscally responsible Budget. This will be a very welcome sign for the Chancellor.

FTSE 100 benefitted from a relief rally led by banks

The pound was up against the dollar yesterday, which shows global conviction in the UK’s growth prospects, though it is slightly softer by this morning. The FTSE 100, opening flat this morning, benefitted from something of a relief rally, with banks leading the charge – grateful not to have been hit with a much-rumoured banking levy. A case of no news is good news for that sector.

Autumn Budget 2025: Inheritance tax allowance freeze will drag more people into the net

Nobody likes the idea of the taxman dipping into your pockets after you’ve died, so today’s news won’t be welcome, particularly for the 13% of Baby Boomers, who said paying more inheritance tax was their biggest Budget tax fear.

The inheritance tax nil rate band has been frozen at £325,000 and the residence nil rate band at £175,000 until 2031. Previously, it was frozen until 2030. The nil rate band was introduced in April 2009, while the residence nil rate band hasn’t moved since April 2020, so they already both have significantly less value thanks to inflation since. It means that rises in the value of anything from investments to property risk pushing more people over the thresholds and into the realms of paying 40% tax.

Autumn Budget 2025: VCT tax blow hidden in small print

The Chancellor has delivered a blow to investor and early-stage businesses alike by slashing the tax relief available on venture capital trusts. The Budget speech led with the positive news that both annual and lifetime limits would be reviewed to support scale up and not just start-up companies. This will be warmly welcomed by the industry which has called for limits to be re-examined to support broader growth opportunities. But hidden in the small print of the Budget document was the detail that in order to ‘balance’ this change, the tax relief on VCTs would be cut from 30% to 20% following the 2025/26 financial bill – so investors have until the end of the tax year before the changes come into force.

Good news for Premium Bonds, as NS&I fundraising proves sluggish

The Premium Bond prize rate may hold steady, despite rate cuts in the wider savings market, to help NS&I hit its fundraising target for the year. Its half-year haul was just £3.9 billion, and while the first half of the year does tend to be more sluggish, it’s a long way shy of the new £13 billion target.

It’s a sign that efforts to attract more cash by boosting the 1-year bond rate between July and November weren’t as successful as it might have hoped. It will be hoping for a better result from hiking the rates on 1,2,3 and 5-year bonds in November. Given the fact it was moving in the opposite direction to much of the market, this may well see a decent bump in fundraising. However, there’s still a chance it will need to make up lost ground, in which case the Premium Bond prize rate could be in the frame.

Autumn Budget 2025: Chancellor commits to nuclear energy reform and low-carbon technology investment

The Chancellor welcomed the findings of a Nuclear Regulatory Review report, which argues for radical reforms to reduce unnecessary cost, bureaucracy and misaligned incentives. She committed to set out plans for delivering on the report’s findings within three months. Alongside this, she also restated a previously announced commitment that Great British Energy would back the creation of the UK’s first small modular reactor in North Wales and announced an investment of £14.5 million for ‘low carbon technologies’ in Grangemouth.

Autumn Budget 2025: New tax on EVs reduces their appeal to consumers

Chancellor Rachel Reeves announced a pay-per mile tax for electric vehicles (EVs). EV owners can expect to pay 3p per mile from 2028. That’s on top of the Vehicle Excise Duty that all EVs became subject to from April 2025.

Taken together, the changes risk weakening consumer demand for EVs, thereby making it more difficult for vehicle manufacturers to meet the Government’s aim of reaching 80% zero‑emission car sales by 2030.

It wasn’t all bad news, though. The Chancellor committed £200 million to accelerate the rollout of EV charging infrastructure, helping to reduce ‘range anxiety’ – a commonly cited barrier to EV adoption. She also pledged to retain an existing incentive offering 100% business rates relief for EV charge points for the next decade, and announced £1.3bn of new funding for the current EV car grant scheme, which lowers the upfront cost of purchasing a new EV.

Autumn Budget 2025: LISA reform mustn’t neglect existing holders or the self-employed

While the Chancellor didn’t mention it, the Budget documents included plans for a consultation early next year to replace the Lifetime ISA with an ISA product to support first time buyers. This will be worrying for those who rely on it for their retirement savings. The LISA has the ability to have a huge impact on the retirement prospects for groups such as the self-employed. This is a group that is not included in auto-enrolment and so miss out on employer contributions. They may also find pensions lack the flexibility that they need as money cannot be accessed until at least the age of 55.

The consultation into a replacement must consider the needs of self-employed people saving for retirement. They are already under-saving, so it’s important not to put any more barriers in the way.

Autumn Budget 2025: State pension rise of 4.8% confirmed in Budget

Pensioners are in line for a 4.8% boost to their state pension from next April as the Chancellor announced it will rise in line with the triple lock. This will give someone on the full new state pension £241.30 per week while those on the full basic state pension would see their weekly payment rise to £184.90. However, not everyone will see the triple lock rise across the whole of their state pension as elements such as the additional state pension will only rise in line with inflation which came in at 3.8%.

The freeze on income tax thresholds means it is highly likely that the full new state pension will breach the threshold for basic rate tax in 2027. It does mean that those who are solely reliant on it will need to pay tax and this may come as an unexpected shock.

However, it is important to say that the government has said it is looking at how to ease the admin burden for those whose sole income is the basic or new state pension without any increments. This will hopefully save them from having to pay tax via simple assessment from 2027-28 if the new or basic state pension exceeds the personal allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year.

Autumn Budget 2025: Banks dodge a bullet as Reeves keeps tax changes off the table

UK lenders emerged largely unscathed from today’s Autumn Budget. Reeves resisted calls for sweeping tax changes, leaving the industry outside the political crosshairs - for now. It’s a delicate balancing act: banks are posting bumper profits, and few voters would have mourned tougher levies. Yet policymakers know the stakes. Push too hard, and the UK risks hobbling a critical engine of credit, investment and growth.

The sector already shoulders one of the world’s heaviest tax loads. Further hikes could have dented London’s competitiveness - a point CEOs have hammered home, particularly global players who might rethink their UK footprint if the screws tighten.

Valuations aren’t as compelling as they were earlier in the cycle, but upside remains. UK banks are well-capitalised, highly profitable, and positioned to deliver stronger shareholder returns through 2026. For investors, the story has moved on from scraping a living to one about steady, disciplined growth.

Autumn Budget 2025: Salary sacrifice cut risks poor outcome for pensions

The government has announced it will restrict the amount that can be contributed to a pension under salary sacrifice and receive National Insurance relief to £2,000. This will come into force from April 2029.

Salary sacrifice on pension contributions enables workers to get the full value of every pound through income tax and National Insurance savings.

Restricting the amount of someone’s salary that can be sacrificed and receive National Insurance relief to £2,000 a year may not have a huge impact on lower to middle incomes but will act as a disincentive to those on higher incomes who were looking to make the most from their pension through salary sacrifice.

Autumn Budget 2025: Balanced Budget keeps gilt yields stable post leak wobble

All bond investor eyes in the UK are on gilt yields for Budget day. Yields spiked a little initially, but the market has been sanguine since in the build up to Reeves’ speech.

The leak of the OBR forecasts caused some volatility, falling then rising before falling again as the speech began. The 10-year is under 4.45% at the time of writing (they closed at 4.5% yesterday), putting it near the bottom of its range so far in 2025. Moves of 0.05% are relatively common.

Coming into today, gilt investors were hoping for measures that allowed them to have greater confidence in fiscal responsibility going forward, which would have allowed yields to fall (and prices rise). So far, the government hasn’t provided much by way of surprises for bond investors, evidenced by the relatively small moves in yields so far. As ever though, the devil will be in the detail so things could change over the coming hours and days.

Autumn Budget 2025: Sigh of relief as tax-free cash spared in Budget

There was a huge sigh of relief as tax-free cash cuts did not feature in today’s Budget speech. This has been one of the more damaging rumours in the run up, with increased numbers of people looking to take their money before a change could be announced. It’s a move that has potential to do huge damage to people’s retirement resilience. Removing money from the tax efficient environment of a SIPP risks exposing it to a host of taxes such as capital gains and dividend tax. There is also the potential of leaving it in a cash account where it gets frittered away over time.

The actions people take when there’s a vacuum of information can be very damaging and underlines the importance of putting in place a stable long-term framework for pension tax – something the ongoing review into pension adequacy can do. Such a move would enable people to move forward with their pension planning with confidence and without fear of being tripped up by changes further down the line or swayed by Budget speculation.

Autumn Budget 2025: Income tax on rental income for landlords will rise by 2% across the board from 2027

The rates will rise to 22% for basic rate taxpayers, 42% for higher rate taxpayers and 47% for additional rate taxpayers. The government said this was designed to account for the fact that landlords don’t pay National Insurance on rental income – and was positioned as making things fairer.

Landlords pay tax on the way in, tax on the sale, and tax on any income along the way. The hike in the tax rates on rental income make things even worse. Property investors might have to reconsider whether the maths still adds up under these rules, or whether they should join the exodus from the sector.

The move will also be incredibly difficult for renters, who are already wrestling with runaway rents, and could see their monthly costs hiked yet again. The HL Savings & Resilience Barometer already shows they have less money left at the end of the month – at just £39 compared to £299 among mortgage holders. They also have less in savings, and are less likely to be on track with their pension than homeowners. Higher rents would make this even worse.

Autumn Budget 2025: British investing hub and Stamp Duty holiday welcome boost for UK shares and a British investment culture

The Chancellor has announced plans for investing platforms to build hubs championing UK investment opportunities in 2026. Hargreaves Lansdown fully supports the initiative which will help meet retail investor demand for the best of British. The hub, alongside the confirmed Stamp Duty holiday for new UK listings, is a welcome boost for UK shares.

Autumn Budget 2025: Chancellor announces reforms to cash ISAs

The government has confirmed it will cut the cash ISA limit to £12,000 from April 2027. The overall allowance will still be £20,000, but only £12,000 of it can be used for cash savings. People over the age of 65 will still be able to put the full £20,000 into cash.

We need an investment culture in the UK. The Chancellor’s calculation that investing instead of saving in an ISA could have left you £50,000 better off demonstrates the huge growth potential offered by investment. However, it remains to be seen whether the cut to the cash ISA will have the impact the Treasury is hoping for.

Autumn Budget 2025: Shock rise in income tax on savings interest

The OBR documents indicate the rate of income tax on savings interest will rise in April 2027. If you bust your personal savings allowance, basic rate taxpayers will pay 22% on interest, higher rate taxpayers 42% and additional rate taxpayers 47%. That's a rise of 2% across the board.

This is a really shocking tax rise for savers. The personal savings allowance will still protect the first £1,000 of savings interest for basic rate taxpayers and £500 of interest for higher rate taxpayer, but after that people will face a hike in their tax bill.

Autumn Budget 2025: Income tax thresholds will be frozen to 2031

According to the OBR report, that has been released early by mistake, the government has extended the freeze in the tax thresholds to 2031 – even longer than had been expected. This comes as no surprise, given it has been such an effective stealth tax already. Fiscal drag has hauled over 6 million more people into paying income tax, and 3.36 million more into paying higher or additional rate tax. We’ve had to hand over an extra £89 billion in income tax this year – compared to 2021/22 – as a result.

Autumn Budget 2025: OBR report indicates there will be higher council tax for properties worth more than £2 million

The report indicates council tax will rise for properties worth more than £2 million. This will be coupled with a revaluation of homes in the highest council tax bands. This would mean a more realistic reflection of property values in tax bills.

Prices in England haven’t been revalued for council tax purposes since the system was introduced in 1991. Price rises since then have been lumpy. In London they’re 8 times higher than they were in 1991, whereas in the north of England they’re 3.5 times higher. This isn’t reflected in the banding, so someone in a much more expensive home in the south has been paying the same tax as someone in a less expensive home in the north.

Oil slips as Ukrainian peace talks progress

Oil prices slipped close to their lowest level in five weeks, as optimism over a potential Ukrainian peace deal pressured prices. Progress in negotiations has fuelled speculation that sanctions on Russian crude could be lifted, unlocking supply from one of the world’s largest producers. With global output already outpacing demand, any additional barrels risk deepening the glut, keeping prices under pressure.

US markets react to rising rate cut hopes

Wall Street is heading into the holiday season with more than turkey on the table. US equities notched another positive close last night and look poised to open higher again this afternoon, setting the stage for a festive mood before tomorrow’s Thanksgiving break.

The real feast, however, has been in rate expectations. The interest-rate yo-yo is back in full swing, with markets now pricing in close to an 80% chance of a December cut. For all the finger pointing towards AI, it’s hard to ignore that the dramatic shifts in rate cut hopes have been the dominant market driver in recent weeks. Still, whichever force you believe is steering the ship, brace for turbulence: the Fed’s internal debate remains far from settled, and mixed signals rarely make for smooth sailing.

UK Banks are expected to avoid major tax hikes

Despite being squarely in the crosshairs, UK banks look set to escape the most severe blows. If tax changes materialise, the most probable lever is a hike in the banking surcharge. Based on our modelling, that would translate into a low to mid-single-digit hit to profits for the big five. The pain, however, won’t be evenly distributed. UK-centric lenders would bear the brunt, with nearly all their earnings exposed to domestic taxes. Global giants, by contrast, enjoy a natural hedge thanks to their diversified international footprints.

UK markets open higher as Budget looms

UK stocks opened on the front foot this morning, buoyed by softer US economic data that reinforced expectations of a December rate cut across the Atlantic. But the calm may be short-lived. All eyes turn to Rachel Reeves this afternoon, as she unveils a Budget expected to deliver tens of billions in new taxes - a move that could ripple through markets and consumer confidence alike.

Brent Crude oil prices slide below $63 per barrel

Brent Crude oil prices slid back down below $63 per barrel this morning, erasing some of yesterday’s gains as tentative hopes for a Russia-Ukraine peace deal emerge, raising the prospect of a lift on Russian sanctions in an already oversupplied market, a theme that’s overshadowing rising expectations of a US rate cut.

Retail sales and consumer confidence data results

On the inflation side, September’s Producer Price Index is expected to have notched up a 0.3% increase after falling back 0.1% in August. Retail sales growth in September is expected to have slowed from 0.6% to 0.4% but the Conference Board’s Consumer Confidence Index (a drop of 1.1 points to 94.6 expected) will be a more relevant number as retailers start the countdown to Christmas.

The other key piece of the puzzle is this week’s rolling four-week employment report by ADP which at the last count showed job losses of 11,250 per week on average. There’s a lot to process here but, in essence, it will need either a hotter-than-expected PPI number, or punchier read out on the demand and jobs front, to derail hopes of a further rate cut by the Fed in December, with futures now implying over an 80% chance of a quarter point drop next month.

US futures suggest gains will hold at today’s open

Friday’s bounce on Wall Street continued higher on Monday, with US futures suggesting these gains will hold at today’s open. Tech stocks led the way with the NASDAQ Composite surging 2.7%, its strongest day since mid-May bringing the index back to within 5% of the all-time highs seen a month ago.

Today’s attention will turn to key US economic data releases before traders start to wind down ahead of Thursday’s Thanksgiving pause. Markets will be looking for further reassurance that the soft-landing narrative isn’t gravitating in the direction of stagflation. But the public numbers coming out today are more backward looking than usual, delayed by the earlier US government shutdown.

FTSE 100 slips ahead of UK Budget

After a quiet start to the week the FTSE 100 has edged down a few points as the UK braces for one of the most hotly-anticipated Downing Street Budgets in recent history. If rumours of an imminent cut to the medium-term growth outlook by the Office for Budget Responsibility prove to be true, that makes the delicate balancing act of fiscal prudence and stimulating the economy more precarious than ever.