The Chancellor’s Autumn Budget introduced a number of measures that could affect savers, investors, property owners, business owners and retirees over the coming years.
While many allowances remain unchanged, several tax changes are planned from 6th April 2027 onwards. Understanding these changes now can help ensure your financial plans remain on track.
Savings Income Tax Changes
From 6th April 2027, the tax payable on savings income will increase.
The new rates will be:
- 24% for Basic Rate taxpayers
- 44% for Higher Rate taxpayers
- 49% for Additional Rate taxpayers
The Personal Savings Allowance remains unchanged at:
- £1,000 for Basic Rate taxpayers
- £500 for Higher Rate taxpayers
- £0 for Additional Rate taxpayers
Property Income
From 6th April 2027, the same increased tax rates will apply to rental income:
- 24% for Basic Rate taxpayers
- 44% for Higher Rate taxpayers
- 49% for Additional Rate taxpayers
However, Scotland and Wales will have the ability to set property income rates in line with their current income tax powers, therefore, there may be changes to the above, depending on where you reside. The Scottish Budget is expected on 3rd December 2026.
Cash ISA Allowance Retained
One of the most welcome announcements for savers was the decision not to proceed with previously proposed restrictions on Cash ISAs.
This means:
- The overall ISA allowance remains at £20,000 per tax year.
- Individuals can continue to hold the full allowance in Cash ISAs if they choose.
- Plans to reduce the Cash ISA allowance for those under age 65 have been withdrawn.
Changes For First-Time Buyers
The Government has confirmed plans for a new First-Time Buyer ISA, which is expected to launch in the future and eventually replace the Lifetime ISA.
Further details are expected over the coming years, but the intention is to provide a simpler savings vehicle designed specifically to help people save towards their first home.
The Government has also indicated that additional support for first-time buyers will form part of its longer-term housing strategy.
State Pension And Pension Tax Allowance
The full new State Pension will rise from 6th April 2027 by 3.9% to £250.70 a week (or £13,036.40 a year), however, the Budget included measures designed to support lower-income pensioners.
A new Pension Tax Allowance is expected to be introduced from 6th April 2027, helping to ensure that individuals who rely solely on the State Pension do not become liable for Income Tax as pension payments increase over time.
Pension Planning And Salary Sacrifice
Previously announced changes to pension salary sacrifice arrangements remain scheduled to take effect from 6th April 2029.
Under the revised rules, National Insurance savings will be limited, potentially reducing the overall benefit of larger salary sacrifice contributions.
Inheritance Tax And Pensions
The Government has reaffirmed its intention to bring most unused pension funds and pension death benefits within the scope of Inheritance Tax from 6th April 2027.
There are no other changes to Inheritance Tax.
Considerations For Business Owners
The Budget also introduced measures affecting business owners and entrepreneurs.
From 6th April 2027:
- A new Founders’ Relief is expected to provide a 10% Capital Gains Tax rate on qualifying business gains.
- The lifetime limit for Business Asset Disposal Relief will reduce from £1 million to £500,000.
Others
A couple of other points to note:
- Income tax and National Insurance thresholds will remain frozen until 5th April 2031 (i.e., the end of the 2030/31 tax year).
- Capital Gains Tax remains unchanged: The CGT allowance now sits at £3,000 per annum, per individual. The tax rates for capital gains above this allowance: 18% for basic rate taxpayers and 24% for higher rate and additional rate taxpayers.
- There are no changes to Corporation Tax.
As always, we are here to guide you through how these changes may affect you and your wider Financial Planning, please contact Val or Claire, to discuss further.