Budget offers breathing space, but little relief from tax pressures
28 October 2026
Today's Autumn Budget arrived against a difficult global backdrop and - unlike last year's announcement - did not contain another wave of broad-based personal tax changes. Instead, the Chancellor opted for a smaller number of targeted measures alongside support designed to ease pressure from higher energy and living costs.
Need to Know:
Tax on savings income and property income will increase to 24%, 44% and 49%
The planned reduction in the Cash ISA allowance has been scrapped
Pensioners with total income no higher than the full new State Pension will pay no Income Tax
Business Asset Disposal Relief will fall from £1 million to £500,000, but a new Founders’ Relief will apply a 10% CGT (Capital Gains Tax) rate on up to £10 million
For savers and investors there are several important announcements to digest.
More flexibility for ISA savers and first-time buyers
The Government has reversed its proposed restriction on the Cash ISA allowance, confirming that adult savers will retain the full £20,000 annual allowance. Instead, it has chosen to explore alternative measures to encourage investment, including a new “Starter ISA”. The proposal is still to be shaped in consultation with the industry but is expected to provide an incentive for those investing in a Stocks and Shares ISA for the first time.
A change to the Lifetime ISA was also announced, which will allow first-time buyers (purchasing qualifying properties valued at over £450,000) to withdraw their funds subject to a 20% charge. This effectively removes the government bonus while preserving their original contributions. Under the previous rules, withdrawals for properties above the price cap were subject to a 25% charge, meaning savers could lose part of their original contributions as well as the government bonus.
Capital at Risk
Capital at Risk
Please do remember that as with all investments, your capital is at risk. Tax treatment depends on individual circumstances and may be subject to change.
State Pension protections today, Triple Lock changes to come
The Government has confirmed an important longer-term change to the State Pension Triple Lock. The existing Triple Lock will remain in place for the rest of this Parliament, but from April 2030 it will be adjusted, with the Government seeking to maintain the State Pension's value relative to average earnings, rather than allowing it to consistently grow faster than wages.
From April 2027, a new Pension Tax Allowance will also be introduced. This is designed to ensure pensioners with income at or below the full new State Pension are not brought into paying Income Tax simply because their State Pension has increased.
Higher taxes ahead for savings and property income
While earnings and dividends were left untouched, taxes will increase for income from cash and property. This is in addition to the 2% increases announced in last year’s Budget.
Interest on cash
An additional 2% increase was announced for savings income (i.e. interest on cash and fixed income instruments), effective from 6th April 2027. This takes basic, higher and additional rates to 24%, 44% and 49% respectively. These rates will apply across the UK.
Individuals holding high levels of cash have benefitted from the increase in cash interest rates. However, with a 4% tax increase from April 2027, now may be the time to reassess levels of cash, whether it is held in the right products and whether any excess is better allocated elsewhere.
Short-dated gilts continue to be a good alternative to cash for higher and additional rate taxpayers.
Tax on property
Landlords also face an additional 2% tax increase on property income, effective from 6th April 2027. Basic, higher and additional rates of property income tax rise to 24%, 44%, and 49%, respectively. These rates will apply across England, Wales and Northern Ireland.
Following a consultation on the High Value Council Tax Surcharge, this measure will be introduced through Finance Bill 2026-27. The surcharge applies to England only.
With the prospect of even higher rates of tax from next year - and following regulatory changes in recent years - some property investors may want to reconsider their position. There may be simpler investments offering a more attractive use of capital.
New support for founders, but tighter relief on business sales
The Chancellor has proposed a new relief for founders and significant early investors in high-growth, innovative UK companies. This is 10% Capital Gains Tax on up to a £10 million lifetime limit per individual.
However, changes to the existing Business Asset Disposal Relief (BADR) will see this allowance reduce from £1 million to £500,000 with no change to the 18% CGT rate.
For any business owner who might be considering a future sale, the eligibility requirements for Founders’ Relief are quite specific, so it will be important to establish which relief may be available and consider the position well in advance of any disposal.
The Chancellor also plans to introduce parental pay for the self-employed from April 2029 onwards. Eligible self-employed fathers, partners and adopters will all benefit for the first time.
The bottom line
With tax pressures on savings, property and wealth increasing, joined-up financial planning matters more than ever. Reviewing investments, retirement income, business interests and inheritance plans together can help families make the most of available reliefs and protect wealth over the long term.
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