The Autumn Budget 2026

After months of speculation, Chancellor John Healey delivered the Autumn Budget on 28 October 2026.

This Budget largely avoided broad-based rises to headline tax rates, focusing instead on targeted changes alongside support for the lowest paid and help with energy and motoring costs. The government says 84% of taxpayers will see no increase in their tax bill.

So, what were the main announcements, and how could they affect your finances? In this guide, we look at the key changes and what they could mean for you.

The Economy

• According to the OBR, real GDP is forecast to grow 1.2% in 2026 and 1.0% in 2027.
• CPI inflation is forecast at 3.1% in 2026 and 3.4% in 2027, peaking at 3.8% in the first quarter of 2027 before easing back towards the 2% target, according to the OBR.
• The Chancellor’s two fiscal rules are both met. The “stability” rule has around £15bn of headroom in 2029-30 (approximately £9bn less than in March 2026), while the investment rule has around £24bn of headroom. Public sector debt is also forecast to be lower at the end of the forecast period than it is today.
• A £15bn Defence Investment Plan is fully funded, with defence spending reaching 2.7% of GDP in 2027-28.

Taxes

• Income Tax rates, bands and the £12,570 Personal Allowance remain frozen. The reduction in the Personal Allowance for incomes above £100,000 is also unchanged. As incomes rise, more people may gradually be drawn into higher tax bands.
• From 6 April 2027, Income Tax on savings income will rise by 2 percentage points, taking the basic rate to 24%, the higher rate to 44% and the additional rate to 49%.
• 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, also rises by 2 percentage points from 6 April 2027, to the same 24%, 44% and 49% rates.
• Dividend tax rates and the £500 Dividend Allowance are unchanged, as are Capital Gains Tax main rates (18% and 24%) and the £3,000 annual exempt amount.
• National Insurance rates are unchanged, with most thresholds frozen until 2030-31.
• From 6 April 2027, the Income Tax Trading Allowance will increase from £1,000 to £3,000. The separate Self Assessment trading-income reporting threshold will also rise to £3,000. The changes aim to simplify tax for people with smaller amounts of trading income.

Benefits & Personal Finance

• The National Living Wage rises by 3.9% to £13.21 an hour from 1 April 2027, around £910 a year more for a full-time worker on the rate.
• A new one-off £100 Household Energy Payment will be made in 2027 to up to 20 million households in council tax bands A to D in England, with equivalent funding elsewhere in the UK.
• The temporary cut to VAT on electricity has been extended until 1 July 2027 and is expected to take around £50 off the typical annual energy bill from April 2027.
• The 5p fuel duty cut has been extended for a further six months, with the planned RPI increase deferred to 1 July 2027; tax-free mileage rates for work use of your own vehicle are also being increased permanently.
• Parental and paternity pay is being extended to more than 160,000 additional parents, including self-employed fathers and partners.
• The new Warm Homes loans scheme aims to help households spread the upfront costs of installing solar panels, batteries and heat pumps, potentially reducing future energy bills.

Savings and Investments

• 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 for all savers. The Junior ISA and Child Trust Fund limits also remain unchanged at £9,000.
• 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. 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%.
• A new incentive for first-time Stocks & Shares ISA investors has been proposed, to be designed with the industry.
• Help to Save is being reformed under a new multi-provider model.

Pensions

• The pension Annual Allowance (£60,000), Money Purchase Annual Allowance (£10,000) and Lump Sum Allowance (£268,275) are all unchanged.
• Separately, 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.
• A new Pension Tax Allowance will apply from April 2027 to people at or above State Pension age with relatively low total incomes. Around 500,000 pensioners are expected to benefit, including approximately 290,000 who will no longer have an Income Tax liability. The allowance is expected to apply for three tax years, to 2029-30.
• As previously announced, most unused pension funds and death benefits will fall within the scope of Inheritance Tax from 6 April 2027 (covered below).
• 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.

Inheritance Tax and Estate Planning

• 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. This is a significant change, so it may be worth reviewing how your pensions and wider estate fit together.
• Changes to Agricultural Property Relief and Business Property Relief are now in force. Since 6 April 2026, a new £2.5 million allowance applies to the combined value of property in an estate that qualifies for 100% agricultural 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.

Property

• The main residential Stamp Duty Land Tax rates and thresholds remain unchanged at this Budget. Stamp Duty Land Tax on the rent element of assured tenancies in England has been removed, effective from 1 May 2026.
• 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; reliefs and deferral arrangements are subject to the detailed rules.
• 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 April 2027, Income Tax on property income such as rental profits will rise by 2 percentage points, to 24%, 44% and 49% at the basic, higher and additional rates respectively. This measure is also outlined in the Taxes section.

Business

• The main rate of Corporation Tax will be maintained at 25%, with the small profits rate held at 19%.
• Business Asset Disposal Relief will see its lifetime limit cut from £1 million to £500,000 for disposals on or after 6 April 2027.
• 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.
• Capital allowances are changing, with the main-rate first-year allowance rising to 50% and the main-rate writing-down allowance falling to 12%; the £1 million Annual Investment Allowance and full expensing are retained.
• Tax-advantaged employee share schemes are being expanded. From 6 April 2027, the individual option limit under the Company Share Option Plan will increase to £120,000, alongside other changes intended to support recruitment and retention.
• The bank Corporation Tax surcharge will rise temporarily from 3% to 6%, before returning to 3% from April 2028.
• From April 2027, the rateable value threshold for 100% Small Business Rates Relief will rise from £12,000 to £18,000 for qualifying retail, hospitality and leisure properties in England. The upper limit for tapered relief rises from £15,000 to £21,000. Eligible businesses will also receive a two-year real-terms freeze on business rates bills.

How Will You Be Affected?

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

For employees and pensioners, the continued freeze on Income Tax thresholds means that rising wages and State Pension payments could gradually lead to higher tax bills, even though the main tax rates remain unchanged. The increase in the National Living Wage and additional support with household energy costs will provide some welcome relief.

Savers and investors may also want to review how their savings and investments are structured. The increase in Income Tax on savings income from April 2027 highlights the importance of considering tax-efficient allowances, including ISAs and pensions, where appropriate.

For those approaching or already in retirement, changes to pension taxation and Inheritance Tax could affect how wealth is managed and eventually passed on to future generations.

Business owners may also be affected by changes to Business Asset Disposal Relief, while the proposed Founders’ Relief could introduce new opportunities for qualifying entrepreneurs. Landlords will face higher Income Tax rates on rental profits from April 2027, and owners of high-value residential properties in England should also consider the planned Council Tax surcharge.

Conclusion

The Autumn Budget 2026 reflects the government’s approach of maintaining the main rates of taxation while introducing more targeted changes to savings, property income and business taxation.

Although some announcements provide additional support for households, frozen tax thresholds and changes to allowances could put further pressure on personal finances in the coming years.

For savers, investors and those approaching retirement, the Budget is another reminder of the importance of taking a long-term approach to financial planning. Understanding how changes to taxation, pensions and Inheritance Tax may affect your circumstances can help you make more informed decisions.

As always, seeking professional financial advice can help you understand the implications of these changes and ensure your financial plans remain on track.

Please don’t hesitate to contact a member of the team to find out more about any of the topics covered.

The content within this article was correct as of 29/10/2026