Looking ahead to the Autumn 2026 Budget

The Autumn 2026 Budget will be on Wednesday 28 October 2026.

Backdrop

Andy Burnham’s initial time in office has given us little information on what to expect. His policy announcements so far have concentrated on reducing the cost of living for households, with a 5% cut in VAT for electricity, the reinstatement of the £2 bus fare cap, and a reduction in business rates for pubs, clubs and music venues.

We know he is an advocate for greater public ownership, but he has also committed to Rachel Reeves’ fiscal rules, which enable borrowing for long-term investment but not for day-to-day spending.

He has also said he will honour the Labour manifesto promises from 2024 not to increase the main rates of tax: Income Tax, VAT and National Insurance. With rising inflation and increased government borrowing, the new Chancellor has a delicate balancing act for the nation’s finances.

As Budget Day approaches, there is likely to be further speculation about tax changes.

Taxing times

Recently, a paper entitled Taxing Times from the Institute for Public Policy Research (IPPR), a left-leaning think tank, has been in the press with its thoughts on what the Chancellor should do.

The paper suggests the tax system is too tilted in favour of age and wealth, and proposes a number of measures to address this.

Capital taxes

Equalise Capital Gains Tax (CGT) with Income Tax, which would mean rates of 20%, 40% and 45% applying for basic, higher and additional rate taxpayers.

National Insurance (NI)

Extend the 2% NI rate paid by higher and additional rate taxpayers under 65 to pensioners. It was recently reported that over 1 million people now pay higher rates of Income tax in retirement.

Property taxes

It has been widely speculated for some time that the higher rate of Council Tax and high value surcharges announced in the last Budget, to be paid on properties worth over £2 million and coming into effect from April 2028, may have the limit on property value reduced to £1.5 million.

The IPPR report suggests the government goes further and that Council Tax and Stamp Duty Land Tax (SDLT) could be abolished completely and replaced by a proportional property tax of approximately 0.65% pa. While this idea has been backed by Andy Burnham in the past, along with a Land Value Tax, he was quoted after taking office that now was not the time to make changes of this scale.

In addition to the report, there are many other areas suggested for change which have been rumoured in previous years:

Pensions

Pensions remain valuable, but the April 2027 IHT changes mean it is increasingly important to plan how and when pension funds may be used in retirement. We think the forthcoming changes mean further tinkering is unlikely, but not impossible.

Tax-free lump sum

There is regular speculation that the tax-free lump sum could be restricted. We think removal is unlikely, but a lower cap remains a possibility.

Currently, it is possible to take 25% of your accumulated fund as a tax-free lump sum, up to £268,275 or 25% of the old lifetime allowance of £1,073,100. Some people may have protected amounts that allow them to take higher tax-free sums. While the benefit could be removed altogether, this is highly unlikely.

Pension contribution tax relief

Pension tax relief is another area often discussed before Budgets. Any move to a flat rate of relief could affect higher and additional rate taxpayers in particular.
In the past, Rachel Reeves has been in favour of a flat rate of pension tax relief – 30% is often speculated, which would save a considerable amount for the government. The tax benefit of pension contributions for employees has already been eroded, as from 6 April 2029, the NI exemption for salary-sacrificed pension contributions will be capped at £2,000 per year. Contributions above this threshold will still receive Income Tax relief, but both the employee and employer will pay NI on the excess.

Inheritance Tax (IHT)

As mentioned earlier, recent Budgets have already brought significant changes to IHT, including pension pots being included in estates from April 2027 and reform to APR and BPR, with a cap of £2.5 million per individual introduced in April this year.

With a focus on capital taxes rather than taxes on working people, we may see further reform for IHT.

Gifts

Gifts to individuals can fall outside the estate if the donor survives seven years. There has previously been speculation about changes to this rule, so if you are thinking about larger gifts it may be a good time to take advice on timing and the wider family implications.

Property

As we discussed above, speculation about property-related tax rises has continued. In the absence of a broad wealth tax, targeting property may be seen by the Chancellor as an alternative way to raise revenue.

Our view is simple: do not act on rumours, but do review any plans you already have. If you are considering pension contributions, gifts, investment sales, ISA funding or estate planning, it may be sensible to discuss this with your Old Mill Financial Planner before Budget day to understand what could affect existing plans and avoid rushed decisions.
With any decision based on speculation, there is the risk of unforeseen consequences and the possibility that you may end up being disadvantaged.

Changes are possible, but the details will not be known until Budget day. The best approach is to review existing plans calmly, rather than taking action purely because of headlines.
If you were already planning to use allowances or reliefs, you may wish to consider acting before the Budget, but only after taking professional advice.

Possible pre-Budget actions

We have written about utilising the reliefs and allowances available to you here. Included in this are some actions that may be worth discussing with your Old Mill Financial Planner before the Autumn 2026 Budget, particularly if you were already planning to act.

Good planning should be based on your long-term goals, not Budget rumours. Please speak to your financial planner before taking action.

Based on main UK tax rates and allowances for the 2026/27 tax year; not Scotland.