The technical questions keep on coming post-Budget. Julia Peake, Technical Manager at Nucleus, has selected some of the most common and interesting received by the Nucleus team.
Q: With the upcoming changes to ISAs from April 2027 what would stop you transferring what has been paid into stocks and shares (S&S) ISA to a cash ISA under these new rules?
A: HMRC issued a tax-free savings newsletter the day after the Budget confirming no transfers from S&S ISA to cash ISA can take place after the new rules come in for under 65-year olds. It also confirmed that it will seek to limit “cash-like’ investments in S&S ISAs when the rules change. For those who try to circumvent these rules, investors will face charges on any interest earned from cash or cash-like savings from 2027. There will be a consultation with the financial services industry to define what “cash like” investments are, so we await further information and final legislation on this. Please see Tax-free savings newsletter 19 — November 2025 – GOV.UK for more information.
Q: With immediate changes relating to capital gains tax (CGT) and Employee Ownership Trusts (EOT), if an EOT has already happened but payments are still to be made, how will these be impacted moving forward?
A: The change announced in the Autumn Budget amends the legislation to provide that where the conditions for relief on disposal of shares to the trustees of an Employee Ownership Trust are met and a claim is made under Section 236H of Taxation of Chargeable Gains Act 1992, 50% of the gain on disposal will be treated as the disposer’s chargeable gain for CGT purposes. Neither Business Asset Disposal Relief nor Investors’ Relief will be available on disposals where relief is claimed. The remaining 50% of the gain will not be chargeable at the time of disposal but will continue to be held over and deducted from the trustees’ acquisition cost, so that it will come into charge on any future disposal (or deemed disposal) of the shares by the trustees of the Employee Ownership Trust. Please see draft legislation which states it is disposals made on or after 26 November 2026. Draft Finance (No. 2) Bill Measures.
If you are working with clients where this applies, they should speak to their regulated tax adviser at the earliest opportunity to see how this change affects them.
Q: The Chancellor mentions a focus on investing in the UK within ISAs, will there be restriction on the type of investments and investment choice? Can they insist clients invest into only UK funds?
A: Firstly, we’re awaiting further information on this which is due in 2026. We don’t believe there will be an investment restriction for UK investments only, and more of a “carrot” approach compared to that of a “stick.”
From what we’ve seen, there has been a commitment from the Investment Association (IA), Barclays, Hargreaves Lansdown, Fidelity International, Freetrade, HSBC UK, Lloyds Banking Group, NatWest Group, and Vanguard to help guide people into investing in the UK markets and funds. These online “investing in the UK hubs” are currently in development and set to launch next year with the aim to help guide investors to invest in UK companies.
This initiative will involve an investment campaign and targeted support designed for clients of differing risk levels, but we have not seen details on this as of yet.
The IA has also committed to gather industry-wide data to track how much retail money is going into UK equities over time to provide a clearer picture of how consumers are investing. They will coordinate with the Association of Investment Companies (AIC), the Platforms Association, investment platforms, and the wider industry, as well as data providers to establish a single data set that will be compiled to show the levels of investment in UK companies, whether directly in shares or through funds or investment trusts.
Please also see the letter shared with the Chancellor on the ‘Investing in Britain’ initiative, see here: Investing in Britain letter.
Q: Will business owners paying employer pension contributions now pay employers National Insurance contributions (NICs) on these sums over £2k?
A: We need to see the draft legislation, though it’s important to note this is not being introduced until 2029. However, the positioning in the Budget documentation shows that only employer contributions as a result of a salary/bonus sacrifice arrangement for pensions are capped at the £2,000 level. So if an employer is simply making straightforward employer contributions not related to any salary sacrifice arrangement, they shouldn’t be affected.
How exactly they will measure and police this is probably the interesting aspect. It will also be interesting to see how/if employers can ‘reclassify’ contributions after 2029 as genuine employer contributions, rather than related to salary sacrifice. There should be more clarity in the coming months and years as the implementation is over three years away.
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