Financial Notes

MITCH’S NOTE 👋

The much anticipated 2025 Autumn Budget has been released. I couldn’t react to it the day it was announced as I had other commitments, so I thought i’d give it a couple of days to understand the details, and give me a little bit of time to digest the changes so I could share my thoughts a little more objectively. For what it's worth, here they are…

PERSONAL FINANCE 💷

I’m sure by now most of you will have seen the budget and how the changes may affect you, so I won’t give a full breakdown of all the changes, instead i’ll give my thoughts on some of those that I find most frustrating.

I think the headline of this article summarises quite nicely how I feel about this budget (and the last one)… a tax on ambition.

Both Rachel Reeves and Kier Starmer have spoken so much about growth, and the need for economic growth and increased productivity, but let me be frank, I don’t think any of the measures mentioned inspire either.

Having said that, we’re resilient humans right, and I think many people are just accepting that all of this is out of our control and we’ll get on with it regardless. We may not like it, it doesn’t mean we agree with it, but ultimately we have no choice but to accept it.

Here are some of the measures that I think are counterproductive:

Ok so that is admittedly most of the changes announced that I think are counterproductive, let’s discuss some of the ones that are most pertinent.

Income Tax Threshold Freeze

Known as fiscal drag, also known as stealth tax. I don’t care how they try to spin it, it’s a tax on working people. What’s worse in my opinion is that it’s a way of deceiving a portion of the public that doesn’t fully understand what fiscal drag is.

Here’s what it means…

If today you had a £50,000 salary, right now you pay £10,480 in income tax and NI.

By 2031, the OBR would expect that salary to grow to £58,067, not because of a promotion, but simply because of the increase in cost of living, AKA inflation.

But in 2031, your annual tax bill will be £13,831, £3,351 more than what you pay today.

This means your effective tax rate of 21% today, will increase to 23.8% by 2031.

You’re better off in nominal terms (which is why I think its a deceiving way to tax workers), but you’re worse off in real terms because of inflation, resulting in you paying proportionately more in taxes to the government than you are today.

You can run your own numbers to see how fiscal drag affects you in this Sky News calculator here.

2% Increase in Dividend Tax

I’ve got to be honest, as a small business owner, this one got under my skin.

Businesses owners pay 20% value added tax and up to 25% in corporation tax before they even get to take any money from the business they’ve worked so hard to create.

With any remaining profit left, from 2026 business owners then have to pay 10.95% in basic rate dividend tax, or 35.95% in higher rate dividend tax.

You add the figures up on that and the effective tax rate doesn’t bear thinking about.

Small business owners got crippled in the last budget with employers NI, and now dividend tax rate increases, it’s totally anti-business and anti-growth in my opinion.

Not all of us are running multi-billion pound corporations where we can afford extra NI, or pay extra dividend tax on already tightening profit margins.

I think the government have fundamentally failed to understand that business owners employee people, create the economic growth we so desperately need, drive innovation and pay a sh*t tonne of tax too, so why penalise them more? Why disincentivise them and aspiring business owners? To me it just doesn’t make sense.

Mansion Tax

I certainly don’t live in a £2M house, so why do I care and why should you?

Well, i’ll care IF they treat mansion tax like they do income tax thresholds, in that if they don’t adjust the £2M value in line with increasing property prices, this mansion tax will just become an additional council tax…

If your house is worth £350k today, and if we see continued house price growth of c.5% per year, then you will pay a “mansion tax” within 35 years if they do not adjust the thresholds.

House worth £500k today? You’ll pay it in 28 years.

House worth £750k today? You’ll pay it in 20 years.

Past performance is of course no guarantee of future prices in the housing market, but it is food for thought when you consider the implications of this over the long term.

It might not be a problem for another couple of decades for many home owners, but I do wonder what this kind of tax opens the doors too (no pun intended).

Perhaps it starts at £2M, but reduces to £1M, perhaps £500k property value, after all it was rumoured there would be a tax levy on properties valued at £500k just before the budget!

All of these taxes create uncertainty, and uncertainty isn’t good for the economy, financial markets, or the housing market.

Cash ISA Allowance

Rachel Reeves has reduced the Cash ISA allowance, the rationale? Well it’s to encourage the use of a Stocks & Shares ISA, in the hope that this shifts more capital into UK publicly listed companies, to help fuel and facilitate growth…

But here’s the problem:

I believe this data demonstrates we have deeper rooted problems here in the UK around personal finances.

Simply cutting a Cash ISA in the hope to get more investment in Stocks ISA’s I think is naive.

Instead we need to tackle the root cause of the problem, proper financial education in schools would be a good starting point.

Which I have seen has been included as part of the governments new skills for life and work school curriculum. This is a good starting point providing they teach the right stuff!

Without that though, this change will just be another tax grab for those holding cash in non-ISA, interest bearing savings accounts, where, oh wait… didn’t they increase tax on that too?!

Yes they did, by an extra 2%!

And look, i’m not even anti-tax, I’m more than happy to pay my fair share providing that we see a material difference in our lives. After all Labour have raised an extra £66B in tax revenue in the last two budgets since being in office, thats A LOT of tax payer money, and I just hope it’s put to good use.

Ok rant over. Glad to get that one off my chest. I hope you enjoyed it?! 😐

BONUS STUFF ⭐️

I NEED SOME FEEDBACK!

I’ve decided to build a website to continue on my mission to empower people financially and to help people get started with investing - all of the content on the website will be absolutely FREE!

I have some ideas on what i’d like to create, but I want some feedback from you as to what you would find interesting and useful. Please reply to this email if you have any thoughts!

VIDEO OF THE WEEK 🎬