The Chancellor’s second Autumn Budget will be delivered against the backdrop of pressure to widen the Government’s fiscal headroom through a combination of targeted tax hikes and public spending cuts.
The Chancellor faces a catch-22: she must fill the Treasury’s coffers, reassure the bond market, and prevent a spike in the cost of servicing national debt, while simultaneously easing pressures on businesses and presenting the UK as an attractive place to invest.
Compounding these pressures, a multitude of public services and state-supported organisations have highlighted the financial strains they face, and consequently, their need for further Government support.
With a week to go, officials in the Treasury will be crunching the numbers on various policy options, with the intention of taking the inevitable tough decisions from this coming weekend.
What will the Budget mean for the UK financial services sector? As a core component of the UK’s economy and identified as one of eight “growth sectors” in the Government’s flagship Industrial Strategy, the Labour Government has proactively sought to engage with the full breadth of the financial services sector – from challenger and incumbent banks to asset managers and insurers.
Cut to Stamp Duty for newly listed firms?
The Treasury is exploring the possibility of scrapping Stamp Duty Reserve Tax (SDRT) – the 0.5% levy on the purchase of shares – but most likely only for newly listed firms. This would be a relatively minor tweak in the context of the Autumn Budget but would send a signal that the Government recognises the need for the London Stock Exchange (LSE) to regain its competitive edge.
While the UK remains an attractive place to invest due to its strong institutions and regulatory environment, many start-ups in recent years have opted to list abroad, most notably in the United States, where liquidity and access to deeper capital pools are greater.
SDRT contributes an estimated 0.3% of Exchequer revenue (2023 figures), meaning that on balance, the benefit of a cut for newly listed firms – in terms of projecting a pro-business message and demonstrating that the Government is on the side of investors – would likely outweigh the short-term loss in tax revenue.
However, sceptics in the City argue that a simple cut to SDRT would be insufficient to reverse the recent downward trend in UK start-ups listing on the LSE.
What’s happening to ISAs?
A cut to the £20,000 tax-free allowance for Cash ISAs has been discussed throughout much of 2025 and came close to being included in the Chancellor’s Mansion House reforms announced in July. However, the idea was pulled before Reeves took to the podium due to divergent views across the sector – with asset managers largely supportive and building societies and consumer rights groups broadly opposed.
If a cut is announced, the precise figure remains unclear – with a range between £8,000 and £12,000 cited most often, though numbers as low as £4,000 have also been floated.
The Treasury Committee published a report in late October calling for the current £20,000 allowance to be retained. The Committee argued that lowering the threshold would be unlikely to incentivise people to move their savings into investments – the central argument of proponents – and would reduce the capital base of building societies, thereby negatively affecting consumers and the wider financial ecosystem.
Concerning the Stocks & Shares ISA, the Treasury is considering a requirement for providers to allocate a fixed proportion of new investments – possibly between 25% and 50% – into UK-listed equities. The idea is intended to channel more household savings into domestic markets – though a mandated floor would almost certainly introduce further administrative complexity. If introduced, it would apply only to new contributions from next April and not to existing holdings.
“Exit charge” on start-ups
Another idea circulating in recent months was an “exit tax” – a levy on individuals who leave the UK while owning assets that have increased in value but have not yet been sold.
Currently, individuals who become non-resident can often avoid UK capital gains tax (CGT) on gains made while they were resident, provided they dispose of assets after leaving, although rules exist to catch those who are only temporarily non-resident.
The proposal has been strongly opposed across the financial services sector, particularly by start-ups, who warn that such a measure could prompt entrepreneurs to relocate operations elsewhere – thereby undermining the Government’s drive to retain innovators to boost economic growth. The latest intel from the Treasury suggests the proposal is unlikely to feature.
Difficult decisions
Whatever decisions are taken, it will be impossible for the Chancellor to satisfy everyone. The Treasury must raise revenue through a complex smorgasbord of targeted tax rises and spending cuts, constrained by the Labour Party’s commitment not to increase taxes on “working people”. More broadly, the Government must project stability following last week’s tumultuous events – both internally and to the business community – if it is to support firms and boost national economic growth.
In this environment, businesses and organisations looking to engage with Government should consider how best to position their products and services to support the drive for economic growth and ease pressure on the public finances.
At Whitehouse Communications, we specialise in precisely that.
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