Autumn Budget 2026: Detailed Guide

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Important note: This guide is based on the Budget announced on 28 October 2026. Many measures still need to be made law through the Finance Bill or other regulations, and some details are subject to consultation, so they may change. Tax rules can change, and their effect depends on your individual circumstances. This is not personal advice.

Overview

Chancellor John Healey delivered his first Budget on 28 October 2026, the first under Prime Minister Andy Burnham. He described it as a Budget to give households "breathing space" while keeping to the government's fiscal rules, against a backdrop of higher energy prices and borrowing costs linked to the conflict in the Middle East.

For most of our clients, the headlines are:

No change to income tax rates on earnings, National Insurance, VAT or dividend tax.
Good news for ISA savers: the planned cut to the cash ISA allowance has been scrapped.
Good news for state pensioners: a 3.9% rise from April 2027, and a new allowance so that those whose income is no more than the full new state pension are not brought into income tax.
A tax rise for savers and landlords: tax on savings interest and rental income will rise by a further 2 percentage points from April 2027.
Pensions still come into inheritance tax from April 2027, as previously announced.
Help with household bills, including a £100 energy payment for many households this winter.

This guide explains each area in more detail. Where official figures have not yet been published, we say so.

The economy and public finances

The Office for Budget Responsibility (OBR) expects modest growth, inflation staying above target until 2028, and a smaller safety margin for the government's finances. Its main forecasts are:

Economic growth: 1.2% in 2026, 1.0% in 2027 and 1.6% in 2028.
Inflation: peaking at 3.8% in early 2027, back to the 2% target by Q3 2028.
Government borrowing: 4.2% of GDP this year, falling to 1.8% by 2030/31.
Net financial debt: peaking at 83.8% of GDP, falling to 81.7% by 2031/32.
Fiscal headroom: £15bn in 2029/30, down from £23.6bn in March.
Extra debt interest: £14bn, compared with the March forecast.

What this means for you: higher inflation for longer can erode the real value of cash savings, and the smaller headroom leaves less room for manoeuvre in future Budgets. Long-term, diversified investing and regular reviews remain important.

Income tax and National Insurance

There is no change to income tax on earnings, National Insurance or VAT.

Thresholds stay frozen. The personal allowance (£12,570) and higher-rate threshold (£50,270) remain frozen until April 2031, as announced in last year's Budget. As wages and pensions rise, more of your income is drawn into tax or into higher bands, a process known as "fiscal drag".
Self-assessment payments. From April 2029, people who make Payments on Account will pay smaller, more regular amounts through the year instead of large lump-sum bills. From April 2028, employees will no longer need to file a self-assessment return solely to claim tax relief on work expenses of over £2,500.
Business mileage. From 6 April 2027, the tax-free rate for business mileage above 10,000 miles rises from 25p to 35p a mile, and this year's increase to the standard rate is made permanent. This helps people who use their own car for work.
HMRC enforcement. HMRC receives extra funding and stronger powers to collect overdue tax.

What this means for you: with thresholds frozen, check which tax band you are in after any pay rise or new income. Pension contributions and other planning can help keep income within a lower band.

State pension

The state pension will rise by 3.9% in April 2027, in line with wage growth under the triple lock.

Full new state pension: from £241.30 a week (about £12,547 a year) now, to about £250.70 a week (about £13,036 a year) from April 2027.
Full basic state pension: from £184.90 a week now, to about £192.10 a week from April 2027.

A new pension tax allowance. From April 2027 the full new state pension will be higher than the standard £12,570 personal allowance for the first time. To stop pensioners being drawn into paying small amounts of tax, a new Pension Tax Allowance will apply for three tax years, 2027/28 to 2029/30. For 2027/28, pensioners with total income up to £13,037 (the value of the full new state pension) get the full allowance. Above that, it is withdrawn at £1 for every £3 of extra income and disappears at £13,319. Pensioners with higher incomes, for example from private pensions, will continue to pay tax in the normal way.

The triple lock. The triple lock stays in place for this Parliament. The government plans to adjust it from the next Parliament (Labour has said from April 2030, if it wins the next election), with the savings helping to fund a new National Care Service in England. The Budget document says the state pension will still rise every year but will track earnings over time, saving an estimated £15bn a year by the late 2030s.

What this means for you: the state pension remains a valuable foundation for retirement income. If you are approaching retirement, check your state pension forecast on GOV.UK and any gaps in your National Insurance record.

Private and workplace pensions

There were no major new changes to private pensions, but earlier announcements still apply.

Tax-free cash. Despite speculation that the maximum tax-free lump sum could be cut from £268,275 to £100,000, the Chancellor left it unchanged. Most people can still take up to 25% of their pension tax free, subject to that limit.
Pension tax relief. The annual allowance (£60,000) and Money Purchase Annual Allowance (£10,000) are unchanged for 2027/28.
Salary sacrifice. From April 2029, the National Insurance saving on pension contributions made through salary sacrifice will be limited to the first £2,000 a year. This was announced in last year's Budget and remains in place.
Inheritance tax on pensions. From 6 April 2027, most unused pension funds and death benefits will count towards your estate for inheritance tax. See the inheritance tax section below.
Death benefits paid late. Tax-free pension death benefits will no longer become taxable simply because they are paid more than two years after the scheme learned of the death. This applies to payments made from 28 October 2026.
Terminal illness. New legislation will confirm that a serious ill-health lump sum can be paid where a member is expected to live for less than a year, whatever their age, and will accept medical evidence from a doctor overseas where the member lives in that country.

What this means for you: pensions remain one of the most tax-efficient ways to save, especially for higher-rate taxpayers. Avoid taking tax-free cash early simply because of Budget speculation, as this can leave money outside the pension's tax shelter. Speak to us before making any irreversible decisions.

Savings and ISAs

ISAs come out of this Budget well, but tax on savings interest held outside an ISA or pension is going up.

Cash ISA cut scrapped. Last year's plan to limit cash ISA payments to £12,000 a year for under-65s from April 2027 will not go ahead. You can continue to put the full £20,000 annual allowance into cash, stocks and shares, or a mix. The related anti-avoidance rules have also been dropped: there will be no 22% charge on interest earned on cash held in a stocks and shares ISA, and you can still transfer from a stocks and shares ISA to a cash ISA. The change will be made through regulations to be laid before Parliament in November 2026.

New Starter ISA. The government will work with the investment industry to explore a new incentive for people investing in a stocks and shares ISA for the first time. The detailed design is still to come.

First Time Buyer ISA. A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029. It will pay a 25% government bonus on the final balance, up to £20,000, towards a first home worth up to £450,000. Existing Lifetime ISA holders can keep contributing under the current rules. Separately, from 29 October 2026, the Lifetime ISA withdrawal charge when buying a first home above the £450,000 cap falls from 25% to 20%. The 25% charge still applies to other unauthorised withdrawals.

Higher tax on savings interest. From April 2027, tax rates on savings income rise by a further 2 percentage points, on top of the 2-point rise already legislated. The Budget document confirms the new rates, which apply across the UK and will be legislated in the Finance Bill 2026-27:

Basic rate: 20% today, 22% already planned, 24% from April 2027.
Higher rate: 40% today, 42% already planned, 44% from April 2027.
Additional rate: 45% today, 47% already planned, 49% from April 2027.

The Personal Savings Allowance (£1,000 for basic-rate and £500 for higher-rate taxpayers) is unchanged, as is the £5,000 starting rate for savings. The Chancellor said 88% of people will pay no more tax on their savings.

What this means for you: interest earned inside an ISA or pension stays tax-free. If you hold significant cash outside these wrappers, now is a good time to review how it is held before April 2027.

Investments, dividends and capital gains

Investors were largely left alone this time.

Dividend tax unchanged. The Chancellor confirmed no further rise in dividend tax. Rates stay at 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate), following last April's increase. The dividend allowance remains £500.
Capital gains tax. Despite speculation, capital gains tax rates stay at 18% and 24%, and the annual exempt amount remains £3,000. Changes for business owners are covered in the business section below.
Encouraging investment. The planned new ISA incentive for first-time investors is intended to help more people move from cash savings into investing. Separately, stamp duty on share purchases will be replaced by a new Securities Transfer Tax from late 2027, at the same rates.

What this means for you: with savings interest now taxed more heavily than dividends, the balance between cash and investments may be worth revisiting. Using your ISA allowance each year and your spouse's or partner's allowances can reduce tax on both income and gains.

Inheritance tax and estate planning

There were no headline inheritance tax changes in the speech, but significant changes already in law take effect over the next year, alongside some technical changes announced today.

Pensions come into inheritance tax from 6 April 2027. For deaths on or after this date, most unused pension funds and death benefits will count as part of your estate. Personal representatives will be able to direct pension schemes to pay inheritance tax due to HMRC in certain circumstances.
Thresholds stay frozen. The nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen until 5 April 2031. The residence band tapers away for estates over £2 million.
Business and agricultural relief. Since 6 April 2026, 100% relief has been limited to the first £2.5 million of qualifying assets per person, with 50% relief above that.
Charitable giving. The reduced 36% rate still applies where at least 10% of an estate is left to charity.
Trusts. New rules, effective for deaths and other chargeable events from 28 October 2026, stop certain liabilities funded from a beneficiary's own estate from reducing inheritance tax charges on trust property.

What this means for you: if you were relying on your pension to pass wealth on free of inheritance tax, your plans may need updating before April 2027. Options can include reviewing nominations, making gifts from surplus income, and considering how and when you draw your pension. We recommend an estate planning review, rather than withdrawing large sums from your pension in haste.

Property, landlords and first-time buyers

Landlords face a second tax rise. Tax on rental profits rises by a further 2 percentage points from April 2027, on top of last year's 2-point increase. The Budget document confirms property income will be taxed at 24% (basic rate), 44% (higher rate) and 49% (additional rate) in England, Wales and Northern Ireland.

Your First Home scheme. A new £4.7bn equity loan scheme replaces Help to Buy for first-time buyers of new-build homes in England. Pre-registration is expected to open by the end of 2026.

Deposits from 2.5%, with a government equity loan of up to 20% of the price.
The equity loan is interest-free for an initial period and must be repaid under the scheme terms.
Local property price caps and a household income cap apply; check the official scheme details for the limits in your area.
The government expects it to help around 70,000 households.

Already scheduled. A High Value Council Tax Surcharge on homes in England worth £2 million or more starts in April 2028.

What this means for you: landlords, especially higher-rate taxpayers, should review the after-tax returns on their properties and how they are owned. Parents helping children onto the ladder may want to look at how the new scheme fits alongside any gift or loan.

Business owners and the self-employed

Business Asset Disposal Relief halved. From 6 April 2027, the lifetime limit on gains qualifying for the 18% rate falls from £1 million to £500,000. The Chancellor said this means no change for three in four claimants. For a higher-rate taxpayer with a £1 million qualifying gain, that means around £30,000 more tax. Special rules apply to sales contracted, but not completed, before 6 April 2027.
New Founders' Relief. Also from 6 April 2027, founders and early investors in qualifying high-growth companies can benefit from a 10% capital gains tax rate on up to £10 million of lifetime gains. Any Business Asset Disposal Relief claimed from April 2027 reduces this limit. A technical consultation on the eligibility rules closes on 30 November 2026.
Higher trading allowance. From 6 April 2027, the tax-free trading allowance rises from £1,000 to £3,000, and the self-assessment reporting threshold for trading income rises to match.
Capital allowances. The main first-year allowance rises from 40% to 50% for spending from 1 January 2027, while the main writing-down allowance falls from 14% to 12% from April 2027.
Business rates. In England, a higher Small Business Rate Relief threshold means a further 70,000 retail, hospitality and leisure businesses will pay no business rates. Rates for other properties in those sectors are frozen in real terms for two years, and pubs, music venues and social clubs get an extra 20% reduction.
Employee share schemes. From 6 April 2027, the Company Share Option Plan limit doubles to £120,000 per employee, with further changes to make CSOP and EMI schemes more flexible.
Banks. The bank surcharge rises from 3% to 6% from 1 January 2027 to 31 March 2028, to fund energy bill support.
Company distributions. The rules on how distributions from companies to individual shareholders are taxed will be modernised from April 2028, with protection for genuine changes of ownership such as passing a business down the family. Draft legislation will be consulted on first.

What this means for you: if you are planning to sell all or part of a business, the timing of a sale relative to April 2027 could make a material difference. Speak to us and your accountant early.

Cost of living and household support

£100 energy payment. Around 20 million households in council tax bands A to D in England will receive a £100 payment from January 2027, delivered through the council tax system, with funding for the devolved governments to provide similar support.
Gas standing charges to go. Ofgem has been asked to abolish standing charges on household gas bills by the end of 2027, or as soon as possible after, with the costs moved into the unit price. Similar reform for electricity will follow.
Electricity VAT cut extended. The cut to VAT on electricity is extended to July 2027, which the Chancellor said takes £50 off the annual price cap.
Fuel duty. The 5p fuel duty cut and the reduced rate on red diesel are extended to 1 July 2027. Bus fares will also be capped at £2 during 2027.
Minimum wage up 3.9%. The National Living Wage rises from £12.71 to £13.21 an hour for those aged 21 and over, and the 18–20 rate rises to £11.27, benefiting around 2.3 million workers.
Carer's Allowance. The government confirmed it will end the Carer's Allowance "cliff edge", where earning slightly over the limit means losing the whole benefit. Details and timing are still to be set out.

Key dates

28 October 2026: pension death benefits two-year rule removed; new inheritance tax rules on trust liabilities.
29 October 2026: Lifetime ISA withdrawal charge for homes above the price cap falls to 20%.
November 2026: regulations to keep the £20,000 cash ISA limit laid before Parliament.
30 November 2026: Founders' Relief consultation closes.
By end of 2026: Your First Home pre-registration expected to open.
January 2027: £100 energy payment for council tax bands A to D; bank surcharge rises to 6% for 15 months.
6 April 2027: state pension rises 3.9% and the new Pension Tax Allowance begins; savings and property income tax up 4 points in total; unused pensions count for inheritance tax; BADR limit falls to £500,000 and Founders' Relief begins.
July 2027: electricity VAT cut and 5p fuel duty cut due to end.
End of 2027: target date for abolishing gas standing charges.
Late 2027: Securities Transfer Tax replaces stamp duty on shares.
April 2028: High Value Council Tax Surcharge on homes worth £2m or more.
April 2029: self-assessment payment reform; salary sacrifice National Insurance cap; First Time Buyer ISA launches.
April 2030: triple lock adjusted, if Labour wins the next election.
April 2031: current freeze on income tax and inheritance tax thresholds due to end.

What to consider now

Use your ISA allowance. With the full £20,000 allowance preserved and savings tax rising, sheltering cash and investments in ISAs is more valuable than ever.
Review cash held outside ISAs and pensions before April 2027, particularly if you are a higher- or additional-rate taxpayer.
Review your estate plan if pensions form part of what you intend to pass on, ahead of the April 2027 inheritance tax change.
Make the most of pension contributions and the tax relief they attract, and of salary sacrifice before the April 2029 cap.
Landlords: reassess rental yields after the higher tax, and whether your ownership structure still makes sense.
Business owners planning a sale: consider timing relative to the April 2027 changes to Business Asset Disposal Relief.
Avoid rushed decisions. Many details are still to be confirmed, and some choices, such as taking pension tax-free cash, cannot be undone.

If you would like to talk through how any of these changes affect you, please get in touch.

Important information

This guide is based on announcements made in the Budget on 28 October 2026 and on reporting published that day. Some details, including eligibility for the new Pension Tax Allowance and Founders' Relief and the design of the new ISA incentive, are still to be published and may change as legislation is brought forward. Tax rules can change, and their effect depends on your individual circumstances. This guide is for general information only and does not constitute financial, tax or legal advice. The value of investments can fall as well as rise, and you may get back less than you invest.