It can be easy to get caught up in the detail at Budget time, but our financial planning process starts with understanding your plans: how to maintain your financial security and what you would like to happen to your assets when you die.

Financial planning is an ongoing process, and plans evolve in response to changes in tax rules and personal circumstances. Regular reviews help ensure your plans continue to reflect your needs as the tax landscape changes.

• Income Tax rates, tax bands and the £12,570 Personal Allowance remain frozen. The reduction in the Personal Allowance for incomes above £100,000 is also unchanged.

Frozen thresholds can increase your tax bill even when tax rates stay the same. As income rises, more of it may become taxable or falls into a higher tax band. Tax Policy Associates, a firm of tax journalists, estimates that the additional tax raised as a result of thresholds being frozen since April 2022 could reach £45 billion in the current tax year and rise still further. A rather useful stealth tax for the government.

Families, particularly spouses and civil partners, may wish to review how their investments are held so that each person’s available Personal Allowance, Personal Savings Allowance, Dividend Allowance and starting-rate or basic-rate tax bands are used appropriately. Any changes should reflect ownership, individual circumstances and potential tax consequences.

• From 6 April 2027, Income Tax on savings income will rise by a total of 4 percentage points compared with current rates. The basic, higher and additional rates will therefore be 24%, 44% and 49% respectively.
• The Personal Savings Allowance remains at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, with no allowance for additional-rate taxpayers.
• Income Tax on property income, such as rental profits, will also rise by a total of 4 percentage points compared with current rates from 6 April 2027. This combines the 2 percentage point increase announced in 2025 with a further 2 percentage points announced in 2026, taking the basic, higher and additional rates to 24%, 44% and 49% respectively.

The proposed increases could reduce the income savers and landlords retain after tax. The impact will depend on your tax band, available allowances and how your savings and investments are held.

• Dividend tax rates (10.75%, 35.75% and 39.35%) and the £500 Dividend Allowance are unchanged in this Budget, following the 2 percentage point increase for basic-rate and higher-rate taxpayers that took effect from April 2026.

When reviewing your investments, consider how to make appropriate use of your Dividend Allowance and Personal Savings Allowance alongside your wider financial goals.

• The main Capital Gains Tax rates (18% and 24%) and the £3,000 annual exempt amount remain unchanged.

It remains worth reviewing opportunities to hold savings and investments tax-efficiently, including through ISAs, pensions and other tax wrappers, where suitable for your circumstances.

• The Chancellor has reversed plans announced in the 2025 Budget to reduce the annual cash ISA allowance from £20,000 to £12,000 for savers under 65 from April 2027. The allowance will instead remain at £20,000. The Junior ISA and Child Trust Fund annual limits remain at £9,000. The Lifetime ISA annual contribution limit remains at £4,000 until the proposed replacement takes effect.

Rather than reducing the cash ISA allowance, the government is exploring incentives for first-time stocks and shares ISA investors with the industry. These proposals are still being developed. The choice between cash and investments should reflect your goals, timescale and willingness and ability to accept investment risk.

• A new First Time Buyer ISA is planned for April 2029, replacing the Lifetime ISA for new savers. The scheme will offer a 25% government bonus on a qualifying first-home purchase of up to £450,000, capped at £20,000 in total bonus. While the terms of the scheme are similar to the current Lifetime ISA, the bonus will be added to the first time buyer ISA when the money is withdrawn, rather than the current system where bonuses are added on investment, but incur a charge if the money is not used to buy a property. Existing Lifetime ISA holders will be able to continue under the current rules.
• The Lifetime ISA withdrawal charge is cut from 25% to 20% for withdrawals used to buy a first home above the £450,000 price cap; other unauthorised withdrawals remain at 25%.

Reducing tax liabilities is an important part of financial planning. Many of you hold investments within pensions and Individual Savings Accounts (ISAs), which can provide tax advantages on income and gains within the account. This is different from the tax treatment of withdrawals: pension withdrawals may be taxable. The proposed increase in tax on savings income from April 2027 makes it particularly important to review your available allowances and suitable tax wrappers.

Investments held outside pensions and ISAs may give rise to additional tax. Depending on your circumstances and the size of your investments, we are also considering other tax wrappers, including onshore and offshore investment bonds, for housing long term wealth in light of the upcoming tax changes.

Investment bonds have the ability to defer some or all taxes over time, with a potential tax payment only falling due when you make withdrawals above a certain level or once the bond is encashed. The tax considerations of such bond wrappers also have to be balanced with their increased complexity and cost.

Your financial planner can help you assess whether an investment bond has a suitable role in your financial plan.

• The basic and new State Pension will increase by 3.9%, bringing the full new State Pension to £250.70 a week, or £13,036.40 a year. A new Pension Tax Allowance is expected to apply from April 2027 for people at or above State Pension age. This will ensure that those who only have income from the state pension do not have a tax liability on this. The allowance will initially apply for three tax years, ending in 2029–30. For those with total income above the full new State Pension level, the allowance will be reduced by £1 for every £3 of income above that level so will not apply for most of our clients.
• As previously announced, most unused pension funds and death benefits will fall within the scope of Inheritance Tax (IHT) from 6 April 2027. Pension planning should be reviewed in light of these changes, whether you are considering additional contributions, taking withdrawals or are already retired.
• The pension Annual Allowance (£60,000), Money Purchase Annual Allowance (£10,000) and Lump Sum Allowance (£268,275) are unchanged. These are maximum allowances: the amounts available to you personally depend on your circumstances, including your income, previous pension withdrawals and any relevant protections.

Although the IHT changes affect estate planning, pension contributions can remain a tax-efficient way to save, particularly for those paying higher rates of Income Tax. Their suitability depends on your wider financial position and retirement needs.

• From 28 October 2026, the two-year payment rule for certain pension death benefits is being removed. Previously, where someone died under age 75, delays in paying qualifying lump sum death benefits could result in an Income Tax charge. Removing this rule should provide greater flexibility for beneficiaries, although other conditions will continue to apply.

This change may provide greater flexibility for beneficiaries and scheme administrators. However, IHT payment deadlines and the timing of pension distributions are separate matters. From April 2027, families and personal representatives will need to consider both when administering an estate; an IHT deadline should not be assumed to require the pension itself to be distributed by the same date.

• The Inheritance Tax nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen, as does the £2 million threshold at which the residence nil-rate band begins to taper away. The 40% rate, reduced to 36% where at least 10% of an estate is left to charity, is also unchanged.
• From 6 April 2027, most unused pension funds and death benefits will be included in the value of your estate for Inheritance Tax purposes. This is a significant change, so it may be worth reviewing how your pensions and wider estate fit together.

We have written about these changes over recent years, but the practical details of how pensions and IHT will interact are still being finalised. We will continue to explain the implications for you and your family in the months leading up to April 2027.

• Changes to Agricultural Property Relief and Business Property Relief are now in force. Since 6 April 2026, a £2.5 million allowance applies to the combined value of property in an estate that qualifies for 100% Agricultural Property Relief or Business Property Relief. Above £2.5 million, relief is given at 50% rather than 100%. Any unused allowance can be transferred between spouses and civil partners.

• From 6 April 2027, Income Tax on property income, including rental profits, will rise by a total of 4 percentage points compared with current rates. This combines the 2 percentage point increase announced in 2025 with a further 2 percentage points announced in 2026, taking the basic, higher and additional rates to 24%, 44% and 49% respectively.

Landlords have faced increased regulation, restrictions on mortgage interest relief and changes to tenancy legislation in recent years. The proposed tax increase could further reduce after-tax rental income, making it worth reviewing how a rental property fits into your wider financial plan.

• A High Value Council Tax Surcharge will apply from April 2028 to residential properties in England valued at £2 million or more. Annual charges will be £2,500 for homes valued at £2 million to £2.5 million, £3,500 for £2.5 million to £3.5 million, £5,000 for £3.5 million to £5 million, and £7,500 for homes above £5 million. The surcharge will be additional to existing Council Tax.

Despite speculation before the Budget about a lower property-value threshold, the proposed threshold and charges remain unchanged. This measure applies to residential properties in England, not across the whole UK.

• The government has announced the Your First Home scheme in England, aimed at eligible first-time buyers of new-build homes. It is expected to allow deposits from 2.5%, alongside a government equity loan worth 20% of the purchase price, interest-free for five years. Applications are expected to open in February 2027, with further eligibility details to follow.

• From 6 April 2027, the Income Tax rate for trustees on savings and property income will rise by a total of 4 percentage points to 49%.
• Rates for other income sources will remain unchanged.

Settlors and trustees of discretionary trusts holding investment property may wish to review whether this remains suitable. Any review should consider the tax consequences and costs of selling investments, as well as whether considering giving beneficiaries with lower tax rates an entitlement to income if permitted by the trust terms and appropriate for their circumstances. Such changes may improve the overall tax position, but this is not guaranteed. Trusts are complex, so specialist legal and tax advice is important before making changes.

• Business Asset Disposal Relief (BADR) will see its lifetime limit cut from £1 million to £500,000 for disposals on or after 6 April 2027. Formerly named ‘Entrepreneurs relief’ this is a relief that reduces the rate of Capital Gains Tax on the sale of a business for qualifying shareholders. Both the rate of relief and the limit has come down in recent years.
• A new Founders’ Relief has been proposed, offering a 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains, subject to consultation.

Our specialists have written about the proposed relief but initial thoughts are the relief is complex and there are narrow qualifying conditions. You can read their article here.

• The £2,000 annual cap on National Insurance relief for pension contributions made via salary sacrifice, announced in the 2025 Budget, remains unchanged at this Budget and still takes effect from 6 April 2029.

Employees using salary sacrifice may wish to review their arrangements before April 2029. Any decision about additional contributions should take account of affordability, pension contribution limits and the tax relief available in their circumstances.

The impact of the Autumn Budget 2026 will depend on your individual circumstances, including your income, savings, investments and retirement plans.

Professional financial advice can help you understand what the changes mean for you and whether your financial plans need to be adjusted.

Don’t hesitate to contact your usual Old Mill Financial Planner to find out more about any of the topics covered.

Please note: This article is for general information only and does not constitute personal financial, tax or investment advice. Tax treatment depends on your individual circumstances and may change in the future. Many of the measures announced are subject to consultation or future legislation and could change before they take effect. The value of investments can fall as well as rise, and you may get back less than you invest. Past performance is not a reliable indicator of future results. Pension benefits are normally not accessible until age 55, rising to 57 from 6 April 2028. Some areas, including Inheritance Tax planning, trusts and estate planning, are not regulated by the Financial Conduct Authority. Please seek regulated financial advice before making any decisions.