Autumn Budget 2025: Financial Services Sector Predictions & Wish List

If the Chancellor introduces caps on Cash ISAs, we’d expect to see a shift in consumer behaviour. Limits on cash savings would naturally redirect more money towards investment products—welcome news for platforms and fund managers.

While this may prove unpopular with individuals who prefer the security of cash, it could benefit the wider economy. Investment capital supports growth, and long-term investing has historically delivered stronger returns for individuals, even though past performance is not a guide to future outcomes.

Should these reforms materialise, we may also see innovation in product design, particularly blended or lower-risk investment vehicles that appeal to savers transitioning away from cash.

If Cash ISAs remain untouched, platforms will need to continue focusing on organic growth. Enhancing the user experience, improving education around long-term investing, and clearly communicating the value of a balanced portfolio will remain central to retaining and attracting customers.

Pensions are an area where many possible options are open to Rachel Reeves, and not all potential outcomes will significantly affect financial services. To consider a couple of scenarios:

A reduction in the amount of tax-free cash available at retirement would trigger an immediate demand for advice. Wealth managers and financial advisers should prepare for a surge in client queries, particularly around drawdown strategies, cash-flow planning, and inheritance considerations. Proactivity will be key, as clients are likely to seek clarity quickly.

If pensions remain stable, advisers can continue to support clients with upcoming inheritance-tax changes relating to pensions and maintain focus on long-term retirement planning without the need to recalibrate strategies mid-year.

Rumours continue around potential VAT changes affecting FS, ranging from a tightening of HMRC guidance to the removal of long-standing VAT exemptions.

More restrictive guidance could mean higher irrecoverable VAT for many firms and increased compliance costs, putting pressure on margins. Businesses should:

• Review their position with VAT advisers
• Re-examine Partial Exemption (PE) calculations
• Assess supply chains and pricing models
• Preparing early will help firms minimise the financial impact and plan for operational adjustments.

Although improbable, the removal of VAT exemptions across financial services would significantly increase costs for consumers.  If financial services become subject to VAT this would mean that businesses in the sector would be able to recover more VAT on costs.   Firms would need to engage with clients early to explain the implications, as service prices would inevitably rise.

Such a shift could also drive consolidation: smaller firms may struggle to absorb the extra cost burden, reducing competition and potentially impacting service levels for consumers.