Solomon Global: Is Rachel Reeves’ Budget About to Make Gold the UK’s Hottest Investment?

Chancellor Rachel Reeves’ 2025 Budget on November 26th is hotly anticipated, but not for good reasons. A year of modest UK growth, persistent inflation (nearly double the Bank of England’s target of 2%), and a rising domestic tax burden mean Reeves faces a difficult task. Some of the big questions this raises are what this all means for everyone’s hard-earned money and how best to protect it.

Tax U-Turn?

Labour’s manifesto pledge ahead of last year’s general election said it would not raise taxes such as income tax and National Insurance. However, the government has repeatedly refused to rule out an increase in income tax. Even a new ‘exit tax’ on individuals leaving the UK while owning assets that have appreciated has been mooted.

In 2024’s Budget, Reeves announced (and immediately implemented) increases in both the lower and higher rates of Capital Gains Tax (CGT) – 10% to 18% and 20% to 24% respectively. The government could increase these again or reduce the CGT annual allowance, which currently stands at £3,000 per annum, down substantially from the £12,300 level of the 2022/2023 tax year.

In contrast, UK gold and silver coins such as Sovereigns and Britannias that are issued by the Royal Mint and therefore legal tender remain exempt from CGT. There is no cap on the amount of gain that can be realised on these coins. Additionally, gold bullion is not subject to VAT, making gold coins exceptionally tax efficient. Solomon Global’s July 2025 new customer research revealed that 41.89% of registrants stated that gold’s ‘tax-free’ status was the primary reason they were considering the asset. Investors appear to be preparing for a scenario in which the value of cash and other assets could be eroded further by incoming policies and inflation.

Interest Rates and Gold

The Chancellor is under scrutiny, but the Bank of England’s role is also crucial. The next rate decision is Thursday, 18th December 2025, and many market commentators expect a cut. If rates fall from their current 4% to 3.75%, this will negatively impact interest earned on savings accounts. On the flipside, lower interest rates reduce the opportunity cost of holding non-yielding assets like silver and gold. This, coupled with ongoing inflationary pressure, can push investors further towards tangible assets such as gold.

Cash ISAs Under Attack (again)?

Reports suggest that the Chancellor may again be considering changes to ISAs, potentially reducing the current £20,000 annual limit for cash ISAs to £10,000 in a move designed to funnel savers towards stock market investments to boost economic growth. For ordinary savers, ISAs are not about playing the markets; they’re about security. If the cash ISA allowance does dwindle, investors are likely to look for alternative stores of value, those that remain outside the government’s control. While ISA rules can be tinkered with at every Budget, the tax treatment of UK legal tender bullion coins has remained consistently favourable, making them a robust choice for long-term investors.

Uncertainty prevails

Few expect Reeves’ Autumn Budget to deliver many positives. With subdued growth, inflation well off the 2% target and high public debt, confidence in traditional financial instruments is waning in the UK (as well as globally). Added to the melee is poor jobs data that will create further instability. As announced on November 11th, unemployment now sits at 5%, and this increases the likelihood of a December rate cut. At the last Budget, the chancellor simultaneously increased National Insurance for businesses and the national living wage. As Danni Hewson, AJ Bell head of financial analysis, said: “That tax on jobs has undoubtedly forced some businesses to pare back their workforce or to reconsider hiring more staff, at least until the dust settles on the upcoming Budget.”

Against this austere backdrop, investors may well focus their attention on physical assets. Gold has a reputation as a hedge against inflation and market volatility and can also act as a stabilising force in portfolios, whilst offering tax advantages and independence from government policy.

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