24 October 2025
Quilter sets out its four asks for the Budget
Ahead of Rachel Reeves’ second Budget just over a month away, Quilter is urging the Chancellor to take a long-term, strategic approach to reform that prioritises fairness, simplicity, and predictability for households and investors. Here are its four asks:
- Simplify and strengthen ISAs to rebuild savings and investment confidence
- Modernise gifting rules to promote intergenerational fairness
- Create a long-term tax policy commission
- Develop a sustainable alternative to the triple lock
Rachael Griffin, tax and financial planning expert at Quilter, said:
1. Simplify and strengthen ISAs to rebuild savings and investment confidence
The ISA system has long been one of Britain’s biggest success stories, helping millions of people save and invest tax-efficiently. But over time, constant tweaks have made it more complicated and harder for people to navigate. The priority now should be simplifying and strengthening the regime, not adding further layers of complexity.
Recent speculation has suggested the Chancellor is exploring ways to boost UK share ownership by overhauling the ISA system, potentially including rules that require part of people’s investments to be held in British companies or offering a stamp duty tax break for doing so.
While encouraging investment in UK businesses is a positive ambition, structural reforms of this kind risk confusing savers and undermining confidence in one of the country’s most trusted products. People value ISAs because they are straightforward and accessible, and introducing new restrictions could make them feel forced into a particular route, something that would likely prove unpopular and open to political attack.
Beyond confusing consumers, such proposals would be extremely complex to implement in practice. Providers would need to adapt systems, products and client processes to accommodate new qualifying rules, diverting resource away from innovation. Rather than supporting the government’s aim of encouraging investment, these changes could slow progress by consuming the very resource that could otherwise be used to help more people save and invest more effectively, such as through innovative initiatives like the new targeted support regime.
Instead of structural reform, the government focus on behavioural approach. That means working closely with the industry to actively promote the long-term benefits of investing, while offering targeted support to help people move some of their cash savings into assets that can grow their wealth over time. By focusing on education and confidence-building rather than new restrictions, more people will be encouraged to put their money to work in the market.
There is still room for improvement and simplification within the current framework. The Lifetime ISA, for example, should be made fit for purpose by reforming the punitive 25% withdrawal penalty, which often punishes savers for accessing their own money. And given the long-term horizon of children’s savings, the government could consider making the Junior ISA equity-only to promote long-term investing, though this change alone would have only a modest impact.
Simplifying the ISA landscape, rather than fragmenting it further, remains the best way to rebuild savings and investment confidence across the UK.
2. Modernise gifting rules to promote intergenerational fairness
Our Retirement Lifestyle Report shows that the average retiree gifts £2,498 every year to children and grandchildren, with one in three helping to pay for education costs. Gifting has quietly become one of the most powerful tools of intergenerational support but the rules governing these transfers are stuck in the 1980s.
Given that IHT revenues are set to rise as pensions come into scope, now is the time to revisit gifting rules. Younger generations face mounting challenges with housing deposits and education costs, yet the current rules remain too restrictive and out of step with modern family needs.
The £3,000 annual gifting exemption hasn’t been updated for more than 40 years. If it had kept pace with inflation, it would now be £12,000. While a full uprating might be unrealistic in the current fiscal climate, a modest increase to, for example, £9,000, would better reflect modern financial realities and would make the system more equitable, simpler, and reflective of how families now share wealth.
Modernising the gifting regime would not only help people pass on wealth more effectively and reduce future inheritance tax exposure, but it would also put capital to work support consumer spending and align with Labour’s aim of creating a more financially mobile economy.
At a time when nearly half of retirees say they regularly provide financial help to family members, the government should recognise how important these transfers are to the real economy. If the government’s goal is to foster a high-growth, investment-led economy, then reducing friction around intergenerational wealth transfer is not just aligned with that vision, it is essential to it.
Jon Greer, head of retirement policy at Quilter adds:
3. Create a long-term tax policy commission
This budget is an opportunity for the government to move from firefighting to future-proofing. If the government remains steadfast in its decision to not raise the headline rates of tax, then now is the time to set out a clear plan for tax reform that fosters predictability helping people plan with confidence and avoids piecemeal reactive changes that are insufficiently thought through.
The tax system has become a web of complexity built on years of political short-termism. Each new budget tinkers around the edges, often creating unintended consequences that have to be unpicked later. With a significant fiscal hole to address, some think tanks and business groups argue that sticking rigidly to the manifesto pledge of not raising the main taxes risks making the problem worse, forcing yet more patchwork fixes and adding complexity rather than clarity. A more pragmatic approach, including broader tax rises, to deliver stability and simplicity might be the lesser of two evils.
To break that cycle, the government should establish an independent Tax Policy Commission, a standing body to both assess areas of the tax code that are unnecessarily complex and could be removed without fiscal implication, and the longer-term impacts of proposed tax measures before they’re introduced.
When the UK government announced the abolition of the Office of Tax Simplification (OTS) in September 2022, it claimed the move would help embed tax simplification directly into the institutions of government, namely HM Treasury and HMRC.
The rationale was that rather than having a separate, arms-length body overseeing simplification, the government would give a direct mandate to its own departments to focus on simplifying the tax code. Since then, we have seen no such simplification.
However, we have seen the fallout from policymaking on the hoof. The abolition of the Lifetime Allowance was announced without a replacement framework in place, leading to widespread confusion among savers and providers. Similarly, the upcoming change to the inheritance tax treatment of pensions from 2027 has been administratively more complex to introduce than assumed, whilst creating uncertainty and speculation from retirees that other changes could be made that damage the ability of people to plan properly. Both are prime examples of how well-meaning reforms can backfire when they’re rushed or lack adequate consultation on how to achieve a policy aim.
A Tax Policy Commission would help prevent these issues by ensuring new rules are designed with clarity, fairness and economic growth in mind. Whilst the Government’s approach to Tax Policy Making (published in June 2025) shares core principles with that of previous governments, it prioritises adaptability and speed to the process potentially at the cost of some upfront rigor in consultation and policy design. Embedding that kind of rigour into policymaking helps prevent the uncertainty that has become such a feature of fiscal events, while boosting public confidence in the system.
4. Develop a sustainable alternative to the triple lock
The triple lock has delivered real protection for pensioners, but it was designed for a different economic era. With the cost of maintaining it rising rapidly, we need a more sustainable model that still provides predictability for retirees.
The Office for Budget Responsibility estimates the triple lock could cost taxpayers £15.5 billion annually by 2030, more than three times higher than was initially expected. This is largely because the policy allows pensions to ratchet upwards faster than either inflation or earnings in volatile years, meaning costs compound over time.
The triple lock also lacks a clear benchmark for what constitutes an adequate State Pension, making long-term planning difficult. Because of the way inflation and wage data move, pensioners can sometimes benefit twice, first when prices spike, and again when earnings rebound, which makes the system increasingly expensive and unpredictable.
The government should bring forward a consultation to determine the most appropriate uprating mechanism, and a full appraisal of State Pension income levels should be conducted to set it at an appropriate level. As part of this, UK political parties should commit to a cross-party agreement on what the level of the State Pension should be relative to mean full time earnings, and what change is required to the uprating mechanism to ensure a minimum standard of living in retirement. Too long has the uprating mechanism been used as a political football – the electorate deserves better.
A more sustainable approach, and one that would help align pension increases with the economic prosperity of the country, would be to link the State Pension to a fixed proportion of average earnings, with an inflation safeguard in place for years when wage growth lags. This ‘earnings link with a temporary CPI trigger’ would protect retirees’ living standards while providing fiscal discipline and long-term stability.
Our Retirement Lifestyle Report found that the State Pension now accounts for around half of total income for those over 80, underlining just how vital it remains. Reform must therefore be carefully phased and clearly communicated to avoid panic or confusion.
The triple lock shouldn’t be a political trap, it should be a policy designed to provide long-run confidence, balance intergenerational fairness, and keep pension spending sustainable. Better to reform it thoughtfully now than face more abrupt change later.
Next steps
This budget should be about building trust and stability. People need to know that the rules won’t change every year and that the system encourages, rather than punishes, good financial behaviour.
Establishing a tax policy commission, modernising gifting, reforming the triple lock, and simplifying ISAs would show the government is serious about taking a long-term, joined-up approach to tax and savings policy, one that helps households plan for their futures and supports growth for the UK as a whole.
