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From 1 December 2025 the UK deposit protection rules will shift in a way that will matter for many savers, especially those holding larger balances or receiving significant one-off payments. The Financial Services Compensation Scheme is increasing the maximum protection for eligible deposits held with UK banks, building societies and credit unions. The long-standing limit of £85,000 per person per authorised firm will rise to £120,000. The protection for temporary high balances will also increase, moving from £1 million to £1.4 million, with cover lasting for up to six months.

These changes follow a review of the scheme that considered the erosion of real value caused by nearly a decade of inflation. The previous limit had not changed since 2017. As prices, house values and average cash holdings increased, the £85,000 cap covered a smaller and smaller proportion of typical savings. The new figures are intended to restore the original level of protection and maintain confidence in the financial system.

Why the changes matter for savers

For everyday savers, the increased limit means a larger share of their money is fully protected if their bank were to fail. While bank collapses remain rare, the reassurance of compensation has always been a central part of financial stability. Raising the limit helps ensure that savers do not have to worry unnecessarily about the safety of ordinary cash deposits.

The updated rules on temporary high balances are important as well. Life events often lead to large short-term cash holdings. A house sale, a divorce settlement, an inheritance or an insurance payout can all result in six figure sums sitting temporarily in a bank account while the individual decides what to do next. Under the previous rules the protection for these situations was capped at £1 million. The move to £1.4 million brings that figure closer to the current value of many property transactions and gives people more time and confidence to organise their finances.

How the protection works in practice

The £120,000 limit applies per person per authorised institution. If you have several accounts with the same bank, and that bank operates under a single licence, all balances are grouped together for the purpose of the protection calculation. Joint accounts are covered per individual, so a joint account held by two people could receive protection up to £240,000 in total.

The temporary high balance protection operates slightly differently. It applies only to specific types of transactions such as proceeds from property sales, inheritances and insurance claims. The money must have been received within the past six months, and the individual must be able to show the source of funds. The protection is automatic, but it is time limited. After six months the standard £120,000 limit applies.

For most people, the process in the event of a bank failure is straightforward. The Financial Services Compensation Scheme normally refunds protected deposits within seven days. You do not need to make a claim or fill in forms. The system is designed to be fast and automatic.

Practical things to consider

One point that often surprises savers is that well known banking brands can share the same banking licence. This means the £120,000 limit applies to the group as a whole rather than to each brand. It is worth checking which brands belong to which authorised firm if you hold more than £120,000 across several accounts. Splitting money between institutions with separate licences can provide greater protection.

The increase in the limit will mean that many savers who currently split modest sums between two or three banks may find they no longer need to do so purely for safety reasons. Even so, some individuals prefer to spread funds for convenience or organisational reasons, for example separating savings for different goals across different accounts. The higher limit does not remove these preferences; it simply reduces the pressure to do so for safety alone.

For people expecting a large one-off payment, the new temporary high balance protection provides breathing space. Rather than rushing to move or invest the money within a few days, individuals have up to six months to decide how best to use the funds while still enjoying a significant level of protection.

Conclusion

The increase in the UK deposit protection limits is a welcome modernisation of a long-standing safeguard. It restores the real value of protection that had been steadily eroded and gives savers greater confidence that their money is safe. The change is sensible, proportionate and aligned with current financial realities. For individuals and small businesses alike, it reduces anxiety and provides more flexibility, especially around major financial events that temporarily increase cash balances.

Artificial intelligence (AI) writing tools, such as ChatGPT, Gemini, and Claude, have become extremely popular. They can create emails, write marketing content, and debug code quickly. Many people think these tools could replace traditional editing tools. A spell checker, once a key part of word processors, might seem unnecessary now that AI can rewrite a paragraph with correct grammar and style.

It would be a mistake to get rid of human-verified editing tools. Current AI services are strong suggestion engines, but they are not always correct or truthful. If you rely only on AI for accuracy, you could make significant errors that a basic spell checker would easily catch.

The Problem with “Hallucinations”

A main issue with current AI models is “hallucination.” AI predicts the most likely next word in a sequence. This usually results in fluent, relevant text. However, when the model lacks information or the prompt is unclear, it creates believable-sounding falsehoods.

A standard spell checker checks if a word is in the dictionary and used correctly. An AI might “correct” a technical term to a common synonym, which changes the meaning of a sentence. It might make up statistics, quote sources that do not exist, or include names of people who were not involved in an event. These errors often sound correct but are factually wrong.

Context is Key (and AI Can Miss It)

Consider a business communication where a specific internal acronym is vital. A traditional spell checker might flag the acronym but offers the simple option to “Add to Dictionary.” An AI, trained on large public datasets, might try to “fix” that unique term with a generic, incorrect replacement because it’s unfamiliar with a specific context.

AI also struggles with nuance, tone, and the legal or compliance requirements of specific industries. A human editor or a dedicated, rule-based editing suite understands the fixed rules of internal policy or legal jargon.

A Powerful Partnership, Not a Replacement

AI is a strong first-draft generator and brainstorming partner. It speeds up the creative process and helps with writer’s block. However, it does not replace the crucial final step of human review and verification.

Use AI as a smart assistant, not the editor-in-chief. Keep traditional spell checkers, grammar tools, and critical thinking skills sharp. The best method in 2025 is not AI instead of spell check; it’s AI plus careful human oversight. Do not get rid of a spell checker; it’s the last defence against convincing, and incorrect AI output.

The chancellor Rachel Reeves announced as part of the Autumn Budget measures that the Income Tax thresholds will be maintained at their current levels for a further three years until April 2031. This will see the personal tax allowance frozen at £12,570 through to April 2031 across the UK. In addition, the higher rate threshold will remain at £50,270 (there are differences in Scotland). National Insurance thresholds will also remain frozen until 2031.

This means that more taxpayers will be pushed into paying higher taxes as income increases at a far faster rate than the frozen tax bands. This phenomenon is known as fiscal drag. The freezing of most of the Income Tax allowance and rates at current levels until 2031 means that many taxpayers will pay more Income Tax as their income increases with no corresponding increases in their allowances and more taxpayers will see their taxable income boosted into the 40%, or 45%, Income Tax bands.

The existing thresholds for the basic rate, higher rates and additional rates of tax have also been frozen where income is derived from employment or self-employment. However, the government will create separate tax rates for property, savings & dividend income.

• Tax on most dividend income will increase by 2% from April 2026. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. The additional rate will remain unchanged at 39.35%.

The changes to the tax rates for property and savings income will take effect from April 2027.

• From 2027-28, the property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%. These rates will apply across England, Wales and Northern Ireland.
• From 2027-28, the savings basic rate will be increased to 22%, the savings higher rate will be increased to 42% and the savings additional rate will be increased to 47%.

The current rules that allow Basic Rate taxpayers to receive £1,000 of interest without paying tax, and Higher Rate taxpayers to receive £500 without paying tax are set to remain as is the Starting Rate for Savings of up to £5,000 for lower earners.

The Chancellor of the Exchequer, Rachel Reeves announced increases to the Minimum Wage rates on the eve of the Budget. The Chancellor confirmed that the government has accepted in full the proposals of the Low Pay Commission (LPC) for increasing minimum wage rates from 1 April 2026.

The National Living Wage (NLW) rate will increase from £12.21 to £12.71 on 1 April 2026 and represents an increase of 50p or 4.1%. The NLW is the minimum hourly rate that must be paid to those aged 21 or over. The increase represents a pay rise of £900 a year for someone working full-time and earning the NLW.

It was also announced that the National Minimum Wage (NMW) – for 18-20 year olds – will increase from £10.00 to £10.85 an hour. This is an 8.5% increase and will see younger workers having their pay boosted by up to £1,500 next year. This increase is part of moves to narrow the gap in wage rates for 18-20 years olds and the NLW and ultimately create a single adult wage rate for all those aged 18 and up.

The NMW rates for 16 to 17 years old will increase from £7.55 to £8.00 – an increase of 45p or 6% per hour – from next April. The Apprentice Rate will mirror this increase in line with earlier recommendations by the LPC.

At the Budget, the government also announced two new measures aimed at supporting young people’s employment and skills development.

1. The Youth Guarantee: Jobs Guarantee Scheme will provide a six-month paid work placement for eligible 18-21 year group, who have been on Universal Credit and searching for work for at least 18 months. This scheme will cover 100% of employment costs for 25 hours a week at the minimum wage, alongside other support measures.
2. The Youth Guarantee and Growth and Skills Levy will allocate more than £1.5 billion over the spending review period to improve employment and skills support. This funding will help ensure that young people have access to high-quality training opportunities and streamline the apprenticeship system to make it more efficient.

The Chancellor has kept the main pension allowances unchanged but has confirmed a new cap on salary sacrifice arrangements that will apply from April 2029.

There had been heated speculation that the Chancellor would change the pension rules to help the government raise taxes, but no changes were announced to the annual allowance (which remains at £60,000) or to the carry-forward rules which can use up previous year’s annual allowances. The lump sum allowance has also remained unchanged at £268,275.

However, the Chancellor announced changes to the salary sacrifice arrangements for pension contributions. Salary sacrifice allows employees to reduce part of their salary or bonus in exchange for pension contributions, which is tax-efficient and helps save for retirement. However, this arrangement has disproportionately benefited higher earners with salary sacrifice costs expected to rise from £2.8 billion in 2016-17 to £8 billion by 2030-31.

From April 2029, the government plans to introduce a cap on salary sacrifice contributions which will limit the amount that can be sacrificed without incurring National Insurance Contributions (NICs) to £2,000 per employee. Salary sacrifice contributions above this amount will be subject to employer and employee NICs. Pension contributions that are not part of a salary sacrifice will remain unchanged.

The Chancellor reaffirmed the government’s commitment to maintaining the Triple Lock on the State Pension throughout this parliament. This means that in April 2026, the State Pension will increase by 4.8%. The Triple Lock ensures that the State Pension rises by the highest of three measures: inflation, wage growth, or 2.5%, helping to protect pensioners’ income against rising costs of living.

Also, starting from 6 April 2027, the government will close a loophole that allows individuals to use pensions for inheritance tax (IHT) planning. Under the new rules, any unspent pension pots will be brought within the scope of IHT.

A demerger involves splitting the trading activities of a single company or group into two or more independent entities. This can be facilitated by distributing the assets of a holding company to its shareholders.

There are special statutory demerger provisions that are designed to make it easier to divide and put into separate corporate ownership the trading activities of a company or group of companies. An exempt demerger will be deemed to occur under these provisions. As a result, the distribution is typically exempt from Income Tax and usually does not trigger any Capital Gains Tax, as the gains are effectively rolled over.

The provisions do not apply where a trading activity is to be sold or becomes owned by a person other than the existing member of the original company.

The provisions allow for the removal of the distribution charge in appropriate circumstances, making the distribution an ‘exempt distribution’. This applies to trading activities only. Companies that utilise the demerger provisions range from small private businesses to some of the largest public companies in the UK.

The legislation also provides for a clearance procedure. Under this a company that wants to demerge trading activities can obtain advance confirmation from HMRC that the distribution that will arise will be an exempt distribution.

1 December 2025 – Due date for Corporation Tax payable for the year ended 28 February 2025.

19 December 2025 – PAYE and NIC deductions due for month ended 5 December 2025. (If you pay your tax electronically the due date is 22 December 2025).

19 December 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2025. 

19 December 2025 – CIS tax deducted for the month ended 5 December 2025 is payable by today.

30 December 2025 – Deadline for filing 2024-25 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2026-27.

1 January 2026 – Due date for Corporation Tax due for the year ended 31 March 2025.

19 January 2026 – PAYE and NIC deductions due for month ended 5 January 2026. (If you pay your tax electronically the due date is 22 January 2026).

19 January 2026 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2026. 

19 January 2026 – CIS tax deducted for the month ended 5 January 2026 is payable by today.

31 January 2026 – Last day to file 2023-24 self-assessment tax returns online.

31 January 2026 – Balance of self-assessment tax owing for 2024-25 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2025-26.

The Chancellor’s Autumn Budget, delivered on November 26, 2025, sets the stage for a period of considerable fiscal change over the coming years. While headline income tax rates on earned income remain unchanged for now, the extensions of existing tax threshold freezes, and the introduction of targeted tax increases elsewhere, amount to a significant tax-raising event through “fiscal drag”.

For individuals and businesses, the key takeaway is a need for proactive financial planning. The measures announced create specific windows of opportunity and highlight the growing importance of using tax-efficient structures. Here are the immediate planning opportunities to consider.

1. Revisit Your Pension Strategy

Significant changes to pension rules are on the horizon. From April 2029, National Insurance relief on salary sacrifice pension contributions will be capped at £2,000 annually per employee. Additionally, from April 2027, most unused defined contribution pension funds will be subject to Inheritance Tax (IHT).

• Action Point: Higher earners using salary sacrifice should review contribution levels and potentially accelerate contributions before the cap. To mitigate future IHT, consider withdrawing the tax-free lump sum during your lifetime to spend or gift.

2. Optimise Your ISA and Savings Strategy

Changes to savings rules encourage a move towards investments over cash. From April 2027, the annual cash ISA allowance for those under 65 will be reduced from £20,000 to £12,000, although the overall £20,000 ISA limit remains. Tax rates on savings interest and property income will increase by two percentage points across all bands from April 2027, with dividend tax rates increasing for basic rate and higher rate tax payers by the same amount, two percentage points, from April 2026. Dividend income falling into the additional rate band is unchanged.

• Action Point: Consider low-risk investments within a Stocks and Shares ISA to utilize the full allowance. Maximize contributions to ISAs and pensions to shield savings from rising taxes, and business owners may consider bringing forward dividend payments before the rate increase.

3. Review Business and Property Structures

Immediate changes impact business owners and property investors. Capital Gains Tax relief on selling a business to an Employee Ownership Trust (EOT) was immediately halved from November 26, 2025. A new annual surcharge on properties in England valued over £2 million will apply from April 2028. Capital allowances are also changing, with a new 40% First-Year Allowance for plant and machinery in January 2026 and a decrease in the main Writing Down Allowance rate from April 2026.

• Action Point: Business owners considering an EOT exit should seek immediate advice. Owners of high-value properties should consider the long-term impact of the surcharge. Businesses should review capital expenditure plans to align with the new allowances.

Conclusion

The Autumn Budget 2025 signals a strategic shift in the tax landscape over the medium term, with the freeze on income tax thresholds until 2031 expected to bring more individuals into higher tax brackets. Effective financial planning requires adapting strategies to this new multi-year reality, making it crucial to consult with your qualified financial or tax advisor.