John Healey delivered his first Budget as Chancellor on 28 October 2026, and for most of our clients the headline is reassuring. The changes many people feared for pensions and investments did not happen. Tax-free cash is safe, capital gains tax is unchanged, and the planned cut to the cash ISA limit has been dropped.
That said, there are two changes that deserve your attention: more tax on savings held outside ISAs, and pensions coming into inheritance tax from April 2027. This Budget calls for planning, not panic. Below, we cover what was announced, what it means in practice, and what to do next.
You can also read the full Autumn Budget 2026 PDF summary for the complete picture.
The Budget at a Glance
The Office for Budget Responsibility cut its growth forecasts to 1.2% this year and 1% next, leaving the Chancellor with little room to manoeuvre. The money comes largely from a bigger tax on bank profits, higher gambling taxes, more tax on savings and rental income, and a lower limit on Business Asset Disposal Relief. The freeze on tax thresholds continues to do much of the heavy lifting.
Here is how the main pre-Budget worries stacked up against what actually happened:
| Before the Budget, people worried about | What happened | Our verdict |
|---|---|---|
| Cuts to 25% tax-free cash from pensions | Left untouched | Good news |
| A rise in capital gains tax | No change to rates | Good news |
| The cash ISA limit cut to £12,000 | Scrapped, stays at £20,000 | Good news |
| Higher income tax rates | No rise, but thresholds frozen to 2031 | As expected |
| A 2-point rise in tax on savings interest | Doubled to 4 points from April 2027 | Watch out |
| Pensions and inheritance tax | Still going ahead from April 2027 | Watch out |
Your Tax, Savings and Investments
Tax thresholds frozen to 2031. The personal allowance stays at £12,570 and the higher-rate threshold at £50,270. As pay rises, more income is taxed at higher rates. Martin Lewis called it “the biggest single tax rise we’ve had for years”. Pension contributions and making full use of your tax allowances are the best defence.
Tax on savings and rental income rising by 4 points. From April 2027, interest earned outside an ISA or pension will be taxed at 24%, 44% or 49%, up from 20%, 40% and 45% today. Last year’s Budget set a 2-point rise; this one doubles it. Large cash balances outside ISAs will cost more, so using your ISA allowances now makes a real difference.
Cash ISA limit stays at £20,000. The plan to cut the limit for under-65s has been scrapped. A sensible U-turn. Cash still has its place for short-term money, but long-term savings usually do better invested.
No change to capital gains tax or dividend tax. Rates stay at 18% and 24% for gains, with the £3,000 annual exemption and £500 dividend allowance unchanged. Using both partners’ allowances each year still pays.
Business owners: timing matters. From 6 April 2027, the lifetime limit for Business Asset Disposal Relief at the 18% rate falls from £1 million to £500,000. A new Founders’ Relief offers a 10% rate on up to £10 million for high-growth company founders. If you plan to sell a business, talk to us and your accountant before April 2027.
A few other points worth noting. The trading allowance for side income triples to £3,000 from April 2027. The Plan 2 student loan repayment threshold is frozen until 2030, which is worth knowing if you are helping children with university costs. A new Starter ISA for first-time investors is planned, though details are still to come.
Pensions and Retirement
State pension up 3.9%. From April 2027, the full new state pension rises to £250.70 a week (£13,036.40 a year). The triple lock is working as promised.
New Pension Tax Allowance. From April 2027 to 2030, pensioners with total income under £13,037 will pay no income tax. It tapers away above that and is worth up to £94 a year, applied automatically. Welcome for those on the lowest incomes, but most of our clients with private pensions will not benefit.
Triple lock changes from 2030. The state pension will still rise by the highest of inflation, earnings or 2.5%, but the earnings measure will be calculated differently from 2030. Slower rises look likely, which makes private pension planning more important. Our pension services can help you check where you stand.
Tax-free cash and pension tax relief untouched. You can still take 25% of your pension tax-free, up to £268,275, and tax relief on contributions is unchanged. Please never take tax-free cash because of Budget rumours. Talk to us first.
Salary sacrifice: make the most of it now. From April 2029, only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance. Nothing changed in this Budget, so the next two years are a good time to make the most of it.
Pensions and Inheritance Tax: Act Before April 2027
This is the most important change for many of our clients, even though it is not new. From 6 April 2027, most unused pension money left when you die will be added to your estate for inheritance tax. At the same time, the £325,000 nil-rate band and £175,000 residence nil-rate band stay frozen until 2031.
To put it in real terms: a widowed parent who leaves a home worth £450,000, savings of £250,000 and a pension of £300,000, with the standard £500,000 of allowances, faces a very different outcome depending on when they die.
- Before April 2027: inheritance tax bill of £80,000.
- From April 2027: inheritance tax bill of £200,000.
That is £120,000 of extra tax. If they die aged 75 or over, the children may also pay income tax on whatever pension money remains after inheritance tax. For a higher-rate taxpayer, around half of the pension could be lost to tax. (Illustration only, based on current allowances and assuming the full residence nil-rate band applies.)
Pension money left to a spouse or civil partner, death-in-service benefits, dependants’ pensions and gifts to charity are not affected. You can find out more about how we approach inheritance tax planning and tax planning together.
Your executors have a new responsibility. From April 2027, the people dealing with your estate must report your pensions and pay any inheritance tax due on them. They can be personally liable if this is done incorrectly, and interest builds up on late payments. You can make their job easier by keeping an up-to-date list of your pensions, reviewing your nominations, making sure your will is current, and letting your executors know what to expect.
Consider life cover written in trust. Inheritance tax usually has to be paid before an estate can be shared out. The right protection can pay that bill, so your family does not have to sell the home or cash in investments in a hurry. Whole of life cover in trust, cover for gifts made within seven years, and existing policies placed in trust are all worth reviewing. Reviewing cover now is usually cheaper than reviewing it later.
Homes, Families and Bills
A few practical changes for families and first-time buyers:
- Lifetime ISA penalty reduced from 25% to 20% for first homes over £450,000, from 29 October 2026.
- New First Time Buyer ISA from April 2029, replacing the Lifetime ISA for new savers, with up to £4,000 a year and a 25% government bonus. Existing Lifetime ISAs carry on. Our mortgage advice can help you think through the options.
- “Your First Home” equity loans replace Help to Buy, with up to 20% of a new-build’s price interest-free for five years and deposits from 2.5%. Applications open in February 2027. The loan grows with the property value, so it needs careful thought.
- £100 off energy bills for around 20 million households in council tax bands A to D in England, paid automatically from January 2027.
- Gas standing charges will move into the unit price from 2027.
- 0% VAT on electricity and the 5p fuel duty cut both continue until the end of June 2027.
- Mileage: the tax-free rate for business miles above 10,000 a year rises from 25p to 35p from April 2027.
- National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027.
Your Key Allowances for 2026/27
With most tax bands frozen until 2031, using every allowance available to you and your family is the best way to keep more of what you have.
| Allowance | 2026/27 | What it means |
|---|---|---|
| Personal allowance | £12,570 | Lost gradually between £100,000 and £125,140 |
| ISA allowance | £20,000 | Each, every tax year, tax-free growth and income |
| Pension annual allowance | £60,000 | Or 100% of earnings if lower |
| Capital gains tax exemption | £3,000 | Gains above this taxed at 18% or 24% |
| Dividend allowance | £500 | Above this, taxed at 10.75%, 35.75% or 39.35% |
| Personal savings allowance | £1,000 / £500 | Basic and higher-rate taxpayers; none for additional-rate |
| Inheritance tax nil-rate band | £325,000 | Plus £175,000 when your home passes to children or grandchildren |
| Annual gift allowance | £3,000 | Unused amounts carry forward one year |
What to Do Next
- Book an inheritance tax review. We will look at your estate, including your pensions, and show you what your family could face from April 2027 and what you can do about it.
- Review your protection. Check whether your life cover is in trust, whether it is enough, and whether it could pay an inheritance tax bill.
- Check your pension nominations and let us know if anything has changed.
- Use this year’s allowances before the tax year ends on 5 April 2027: ISAs, pension contributions, gifts and capital gains.
- Plan your retirement income with frozen tax bands in mind.
- Update your will so it works alongside your pensions.
Every family’s situation is different. The best decisions come from a clear, personal financial plan. Call us on 0161 388 8875, email office@neofp.co.uk, or visit our Knowledge Lab for more guides and updates. You can also read the full Autumn Budget 2026 PDF summary.