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News & Insights | 30th October 2026
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Dan McKissock, one of our Chartered Financial Planners, shares a quick summary and then his broader observations on this week’s Autumn Budget.
Chancellor John Healey’s first Budget, delivered under a Prime Minister just over three months into the job, was always going to be a political occasion. A new team, keen to capitalise on the so-called ‘Burnham bounce’, set out to show that the cost of living is firmly in its sights, and ‘breathing space’ for households was the stated theme. We are pleased to share a quick summary of yesterday’s announcements, together with a more detailed guide for those who want to dive a little deeper into the specifics.
Highlights
Pensions
Investing
Business owners
After a summer of political upheaval which saw the appointment of both a new Prime Minister and a new Chancellor, yesterday’s Budget was eagerly awaited. In contrast to the steady drip of leaks, hints and reversals which marked the previous two Budgets, the Treasury kept a mostly tight grip on proceedings, with only one major headline slipping through the net at the eleventh hour.
The overall tone was one of a government keen to ease the cost of living while insisting that the numbers still add up. This is no small feat considering that government borrowing costs have risen this year to multi-decade highs, alongside a fragile economic backdrop and a determination to stick to existing manifesto pledges not to raise headline rates of Income Tax, National Insurance or VAT.
The Chancellor has promised families and businesses ‘a bit of breathing space’ following the rise in prices since the conflict with Iran began, and breathing space, unfortunately, costs money. Tax decisions in the Budget amount to a net giveaway of c.£1.6bn this year but a net raise of c.£7bn by 2031-32. Rather than a promise of ‘jam tomorrow’, in this case the sweeteners come first with the inevitable bill to follow.
Part of this cost will fall on banks, whose Corporation Tax surcharge rises from 3% to 6% for 15 months from 1st January 2027 – a smaller increase than many commentators had anticipated. The Treasury says the surcharge will not be extended, but banks are a politically convenient donor, and we would not be surprised to see the definition of ‘temporary’ being tested.
Starting with cost of living measures, the 0% rate of VAT on domestic electricity has been extended to 1st July 2027, as has the 5p cut in fuel duty. Households in council tax bands A to D in England are to receive a £100 Household Energy Payment from January 2027.
Turning to personal finance, the real news is often what has not changed. Once again, the headline rates of Income tax, National Insurance and VAT are untouched, the personal allowance stays at £12,570, and thresholds remain frozen until April 2031 as previously announced. ‘Fiscal drag’ (rising incomes pulling more of us into tax while the bands stand still) therefore continues quietly in the background.
Although usual pre-Budget speculation was much more subdued, we were still reassured to note that there were no changes announced regarding pension tax-free cash or the annual allowance, Capital Gains Tax (CGT) main rates or Inheritance Tax thresholds. Income Tax rates for earnings and dividends are also unchanged.
The major changes were reserved for Income Tax on savings income and property income. From 6th April 2027 these rates will rise by a further 2 percentage points at every band, on top of the increases announced last year, reaching 24%, 44% and 49% (property rates apply in England, Wales and Northern Ireland, savings rates across the UK).
The Treasury says 84% of income tax payers will be unaffected and that about half the revenue should come from the top 10% of households: not a tax on work, but on owning things. The personal savings allowance and starting rate for savings continue, and interest held within ISAs remains tax-free, further enhancing their value,
Private landlords, already adjusting to new renters’ rights legislation, may feel the change most keenly, and it is reasonable to assume that some smaller-scale landlords will conclude that selling is easier than staying, with possible consequences for the supply of rental homes. As financial planners, we anticipate conversations with former landlords seeking to replace that income stream.
The one major leak ahead of the Budget speech, the dropping of the planned cut to the cash ISA limit, proved to be accurate. This will retain the simplicity of the existing £20,000 annual contribution limit across both cash and investment ISAs and is good news for savers, although a limit held steady in cash terms is worth a little less each year while inflation runs at 3.5%.
A starter incentive for first-time stocks and shares ISA investors was floated, but the government has only committed to explore this with industry. Something for us to watch, but no rabbit has yet left the hat.
More concrete is the First Time Buyer ISA, due in April 2029, which replaces the Lifetime ISA (LISA) for new savers. This will have a contribution limit of up to £4,000 a year with a 25% government bonus paid on withdrawal towards a first home worth up to £450,000. The bonus will be capped at £20,000 and, unlike the current LISA, there is no upper age limit.
Existing LISA holders keep their current rules, but with a new and very helpful concession. From 29th October 2026 the withdrawal charge on a LISA used to buy a property above the £450,000 price cap falls from 25% to 20%.
This addresses a long-recognised flaw in the system for individuals who have saved into a LISA in good faith but have subsequently been caught out by rising house prices. In these circumstances £100 of savings has become £125 once the 25% LISA bonus is added. Using this money to buy a property worth more than the £450,000 cap is treated as an unauthorised withdrawal subject to a 25% charge, leaving the saver with just £93.75 (assuming no interest or investment growth).
Reducing the withdrawal charge in these circumstances to 20% has the effect of negating the initial 25% bonus, but without leaving the saver any worse off.
A new ‘Pension Tax Allowance’ will apply from 6th April 2027 to ensure that anyone over State Pension age whose total income, from any source, is at or below the full new State Pension (£13,036.40 in 2027-28) is not brought into tax simply because the State Pension has outgrown the £12,570 personal allowance.
The allowance is a relief that tapers rather than a cliff edge: it is worth up to £93.28, then reduces by £1 for every £3 of income above £13,036.40, disappearing at c. £13,319. Nobody is worse off for it, though the more income a pensioner has above the State Pension, the less of the benefit they keep.
Sticking with the State Pensions the already-publicised changes to the triple lock were confirmed. The triple lock will continue to apply in full until April 2029, after which it becomes the higher of 2.5%, inflation or the amount needed to maintain the State Pension’s value relative to earnings, a change the Treasury expects to save c.£15bn a year by the late 2030s and which will help fund a National Care Service.
On CGT, Business Asset Disposal Relief (BADR), which grants a reduced rated of tax on qualifying business sales (18% today, up from 10% before April 2025), will have its lifetime limit halved from £1m to £500k for disposals after 6th April 2027. This reflects a further reduction from the previous £10m limit which applies until March 2020.
Set against this is the new Founders’ Relief, a 10% CGT rate on up to £10m of lifetime gains for founders of ‘high-growth, innovative companies’ from 6th April 2027. Legislation is expected in the 2026-27 Finance Bill following a technical consultation. The design of the scheme and the qualifying conditions are yet to be confirmed but an initial review suggests that this will be much more narrow in scope and, in our view, it is doubtful that this will compensate for the reduction in BADR for many owner-managers.
Also from 6th April 2027, the trading allowance (the amount of trading income you can receive tax-free) rises from £1,000 to £3,000, a small but welcome gain for anyone making modest income (before expenses) from a hobby business or selling through eBay, Etsy and the like.
On balance, this was a Budget of stability on the headline rates and allowances, with a sprinkling of media-friendly giveaways and change where it is least conspicuous. The Treasury may have kept a tight grip on the headlines, but, as the Chancellor will no doubt remind us, breathing space comes with small print, and it is there, rather than in the headlines, that most of the changes relevant to savers and investors are to be found.
