1. OVERVIEW
The Autumn Budget keeps tax thresholds frozen, pulling more earners into higher bands through fiscal drag.
Cash remains attractive in the short term thanks to high SONIA-linked rates, but long-term growth still belongs to global equities.
Inflation (RPI) erodes real returns, so tax-efficient wrappers (ISA, pension) matter more than ever.
Core message: stay diversified, stay invested, and ignore political noise.
None of this is financial advice of course - you must always d y o r do your own research
2. TAX & HOUSEHOLD IMPACTS
Personal Allowance and higher-rate thresholds stay frozen.
As wages rise with inflation, more people fall into higher tax brackets.
Net take-home pay is squeezed in real terms (after inflation).
Glossary: fiscal drag = stealth tax rise via frozen thresholds.
2.2 Allowances Still Matter
ISA allowance unchanged: vital for shielding returns.
Pension contributions remain the most tax-efficient way to invest.
Dividend and CGT allowances remain historically low, making wrappers even more valuable.
3. SAVINGS, MARKETS & RETURNS
3.1 Cash (Short Term)
SONIA-linked cash accounts remain competitive.
Rate cuts expected in 2025–26 may reduce cash yields.
Glossary: SONIA = overnight interest rate between UK banks.
3.2 Equities (Medium–Long Term)
Global equities (FTSE All-World) continue to outperform over long periods.
Volatility expected but historically rewarded.
Glossary: global equities = shares across developed & emerging markets.
3.3 Inflation & Real Returns
- RPI remains above pre-pandemic levels.
- Real returns depend on staying above inflation over time.
- Glossary:
real return = investment return minus inflation.
4. PRACTICAL ACTIONS
Maximise ISA and pension contributions where possible.
Keep a cash buffer for emergencies; invest the rest for long-term growth.
Stick to diversified portfolios rather than reacting to political cycles.
Avoid trying to time interest-rate moves or election news.
SUMMARY
5. NOTES
Cash returns use SONIA (Sterling Overnight Index Average), tracking overnight UK bank lending rates.
Global shares use the FTSE All-World Index, assuming dividends are reinvested.
Inflation uses the UK Retail Price Index (RPI), a measure of price level changes.
Real return = nominal return minus inflation.
Source: Vanguard UK analysis of the Autumn Budget (link provided).
AI generated from Vanguard handout
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