Chancellor John Healey delivered his first Budget on 28 October 2026. Compared with the uncertainty that surrounded the 2024 and 2025 Budgets, this year's statement was relatively uneventful for most households.
There were no changes to the headline rates of Income Tax, National Insurance or VAT. However, investors with taxable savings and property income will see higher tax rates from April 2027.
Importantly, many of the measures announced will not take effect until April 2027 or later. That gives us time to consider any implications and adjust your financial plan where appropriate.
Last year's Budget announced a two-percentage-point increase in the tax charged on savings interest from April 2027. This year's Budget adds a further two percentage points.
From 6 April 2027, savings interest above your available allowances will be taxed at:
For example, someone receiving £5,000 of taxable savings interest each year could pay around £200 more tax than under today's rules.
The same rates will apply to rental income from 6 April 2027. This represents a further increase beyond the changes already announced last year and may have a noticeable impact on landlords' after-tax returns, particularly where borrowing costs remain significant.
The Government estimates that around 84% of income taxpayers will not be affected. However, savers holding substantial cash balances outside ISAs or pensions may wish to review how those assets are structured.
The proposed reduction in the Cash ISA allowance has been abandoned.
This means savers can continue to contribute up to £20,000 each tax year to a Cash ISA, regardless of age. With tax on savings interest increasing from April 2027, retaining full ISA flexibility is likely to become even more valuable.
The Government has also confirmed that it will work with the investment industry to develop a new incentive designed to encourage first-time investors to use Stocks & Shares ISAs.
The full new State Pension is expected to increase by 3.9% in April 2027, taking it to just over £13,000 per year.
As a result, the Government has announced a new Pension Tax Allowance, ensuring that pensioners whose total income does not exceed the full new State Pension will not pay Income Tax between April 2027 and April 2030.
The Triple Lock has also been extended until April 2029.
From April 2030, the State Pension will increase by whichever is highest:
From 6 April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) will be reduced from £1 million to £500,000.
The Government has also proposed a new Founders' Relief, offering a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for founders of qualifying high-growth businesses.
The detailed rules are still being consulted on, and early commentary suggests the relief may apply to a relatively limited number of entrepreneurs. One proposed condition is that a business must have achieved annual revenues of at least £10 million, a threshold many founder-led businesses never reach before sale.
For business owners considering an exit in the coming years, these developments may warrant early planning.
A new First-Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029.
The proposed features include:
Existing Lifetime ISAs will remain available for current account holders.
In addition, from today, the withdrawal charge for using a Lifetime ISA to purchase a property valued above £450,000 falls from 25% to 20%, reducing the penalty faced by some aspiring homeowners.
The Budget leaves several key areas unchanged.
Income Tax thresholds and the Personal Allowance remain frozen, meaning that inflation and rising earnings will continue to pull more people into higher tax brackets over time through so-called "fiscal drag".
There were no further changes to:
Several measures announced in earlier Budgets remain on track, including:
Despite speculation ahead of the Budget, the £2 million property threshold for the surcharge remains unchanged.
While the Budget introduces relatively few immediate changes, it reinforces the importance of proactive financial planning.
Higher taxes on savings and property income may increase the value of tax-efficient wrappers such as ISAs and pensions. Business owners approaching a future sale may also wish to consider how changes to Business Asset Disposal Relief could affect their plans.
Some measures still require consultation and further detail, particularly the proposed Founders' Relief and the new ISA incentives. We will continue to monitor developments and assess any implications as the legislation progresses.
As always, tax rules are only one element of a successful financial plan. The relevance of these changes will depend on your own circumstances, objectives and long-term goals.
We will discuss anything relevant to your situation at your next planning meeting. However, if you would like to talk through any aspect of the Budget sooner, please do not hesitate to get in touch.
This article is intended for information purposes only and does not constitute financial advice. Tax treatment depends on individual circumstances and may change in the future.
