By Dominic McLoughney FPFS, Director and Chartered Financial Planner at Becketts. Published 28 October 2026.
Chancellor John Healey delivered the Autumn Budget on 28 October 2026. The main rates of income tax, National Insurance and VAT are unchanged. Instead, the government is raising money through targeted changes, including higher tax on savings interest and rental income, and most of these changes start in April 2027 or later.
We’ve been through the announcements and the HM Treasury documents published alongside them. This guide sets out what’s changed, what’s staying the same and when each change begins, in plain English. If you’d like to talk through what it could mean for you, we’re always happy to help.
Autumn Budget 2026: the key points
- Main tax rates: income tax, National Insurance and VAT rates are unchanged, and income tax thresholds stay frozen until April 2031
- Savings and rental income: tax on savings interest held outside an ISA, and on rental income, rises by four percentage points from 6 April 2027
- Cash ISAs: the planned cut to the Cash ISA allowance has been reversed, so everyone can still save up to £20,000 a year
- Pensions: the two-year time limit for paying out tax-free pension death benefits has been scrapped, and unused pensions will still count towards estates for inheritance tax from April 2027
- Business owners: the lifetime limit on Business Asset Disposal Relief halves to £500,000 from 6 April 2027, and a new 10% Founders Relief is on the way
- Inheritance tax, Capital Gains Tax and dividends: no changes to rates or allowances.
What was announced in the Autumn Budget 2026?
The Autumn Budget 2026 avoids rises to the main rates of income tax, National Insurance and VAT. Instead, the government is raising money in targeted areas: savings interest, rental income, Business Asset Disposal Relief and a temporary higher tax on bank profits. Some of that money goes towards help with energy and motoring costs.
According to HM Treasury, the government expects borrowing to keep falling. Its headroom against its main borrowing rule is £15 billion in 2029/30. That’s £9 billion less than in March 2026, which the Treasury puts mostly down to higher debt interest costs linked to the conflict in the Middle East.
Many of the rumours in the run-up to the Budget, including cuts to pension tax-free cash, higher Capital Gains Tax rates and new limits on gifting, didn’t come to pass.
Has income tax or National Insurance changed?
No. The Autumn Budget 2026 doesn’t change the main rates of income tax or National Insurance. The £12,570 personal allowance, the higher rate threshold, the additional rate threshold and the main National Insurance thresholds all stay frozen until April 2031, as previously planned.
Frozen thresholds matter more than they might first appear. As pay and pensions rise over time, more of your income can fall into a higher tax band even though the rates themselves stay the same. This is often called fiscal drag, and it’s one reason regular tax planning tends to pay off over the long term.
A few smaller changes affect people with side income or work expenses:
- Trading allowance: from 6 April 2027, the trading allowance triples from £1,000 to £3,000 a year, so people earning up to £3,000 from self-employment or a side business won’t need to report it through Self Assessment
- Mileage: from 6 April 2027, the tax-free rate employers can pay for business miles over 10,000 rises from 25p to 35p
- Self Assessment payments: from the 2029/30 tax year, people who make payments on account will move to automated payments during the year. The government will publish more detail by the end of 2026.
What does the Budget mean for savers and ISAs?
From 6 April 2027, tax on savings interest held outside an ISA rises by four percentage points. It will be taxed at 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers. Interest earned inside an ISA, or covered by your tax-free savings allowances, isn’t affected.
The government says 84% of taxpayers will see no increase in their tax bill as a result. Even so, the gap between how interest is taxed inside and outside an ISA has widened, so it’s worth knowing how your own savings are held.
There’s also some welcome news for savers:
- Cash ISA allowance stays at £20,000: the plan to cut the Cash ISA limit to £12,000 for under-65s from April 2027 has been reversed. Everyone can still save up to £20,000 a year in a Cash ISA, and the overall ISA allowance stays at £20,000
- A new First Time Buyer ISA: from 6 April 2029, this replaces the Lifetime ISA for new savers. People can save up to £4,000 a year, with a 25% government bonus when the money is used to buy a first home costing up to £450,000. There’s no maximum age to open one, and the total bonus is capped at £20,000. Anyone with a Lifetime ISA can keep using it under the current rules
- Lower Lifetime ISA charge: from 29 October 2026, the charge for using Lifetime ISA money to buy a home worth more than £450,000 falls from 25% to 20%
- Stocks and shares ISAs: the government will explore a possible incentive for first-time stocks and shares ISA investors, although no decision has been made yet.
What does the Autumn Budget mean for pensions?
The Budget doesn’t announce any change to the amount you can take tax-free from your pension. The main pension changes are the removal of a time limit on tax-free death benefits, a new tax allowance for pensioners on lower incomes, and confirmation that unused pensions will count towards estates for inheritance tax from April 2027.
Pension death benefits: the two-year rule is scrapped
When someone dies before age 75, their pension can usually be paid to their beneficiaries free of income tax. Until now, that only applied if the lump sum was paid within two years of the pension scheme learning of the death. For payments made after 28 October 2026, that two-year rule no longer applies, as long as the person had enough of their lump sum and death benefit allowance left. It gives families more breathing space at an already difficult time.
A new Pension Tax Allowance for lower-income pensioners
From 6 April 2027 until 5 April 2030, people over State Pension age whose total income is no more than the full new State Pension won’t pay income tax. People with income a little above that level will get a reduced allowance. HM Treasury estimates around 500,000 pensioners will benefit in 2027/28. Details of how the allowance tapers away are still to be published.
The State Pension and the ‘adjusted triple lock’
The Budget documents refer to an ‘adjusted triple lock’ for the State Pension. The Department for Work and Pensions (DWP) will confirm the details, along with the April 2027 increase, in a separate publication. We’ll update this guide once it does.
Pension changes already on the way
- April 2027: most unused pension funds and death benefits will count towards a person’s estate for inheritance tax. The Budget documents confirm this is going ahead
- 6 April 2028: the earliest age most people can take money from a personal pension rises from 55 to 57
- 6 April 2029: only the first £2,000 a year of pension contributions made through salary sacrifice will be free of employee and employer National Insurance.
Has inheritance tax changed?
No. The Autumn Budget 2026 announces no new inheritance tax changes. The £325,000 nil-rate band and the £175,000 residence nil-rate band stay frozen until April 2031, as does the £2.5 million allowance for 100% Business and Agricultural Property Relief. The rules on gifts, including the seven-year period, are unchanged.
The bigger change for families remains the one announced at the 2024 Budget. From April 2027, most unused pensions and pension death benefits will count towards a person’s estate for inheritance tax, and the Budget documents confirm this is still going ahead. For many families, this is the change most worth understanding, because pensions have often been treated as a way to pass on wealth outside the estate.
Has Capital Gains Tax or dividend tax changed?
No. Capital Gains Tax stays at 18% for gains within the basic rate band and 24% above it, after a £3,000 tax-free annual exempt amount. Dividends stay tax-free up to the £500 dividend allowance. Above that, they’re taxed at 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers and 39.35% for additional rate taxpayers.
One change affects people who buy UK shares directly. Stamp Duty and Stamp Duty Reserve Tax on shares will be replaced by a single Securities Transfer Tax from late 2027. The documents don’t suggest a change to the rate.
What changes for business owners?
The main changes for business owners are a lower lifetime limit on Business Asset Disposal Relief, a new Founders Relief for people who started high-growth companies, and new rules on how profits are taken out of owner-managed companies. Most start on 6 April 2027.
Business Asset Disposal Relief limit halves to £500,000
Business Asset Disposal Relief lowers the Capital Gains Tax on selling all or part of a qualifying business, from 24% to 18%. From 6 April 2027, the lifetime limit on this relief halves from £1 million to £500,000. Gains above the limit will be taxed at the normal Capital Gains Tax rates. If a sale is on your horizon, the timing may affect how much tax is due.
New Founders Relief
From 6 April 2027, a new Founders Relief will apply a 10% Capital Gains Tax rate, on up to £10 million of gains over a lifetime, for people who founded a high-growth, innovative UK company. The criteria are significant. The company must have reached at least £10 million in annual revenue, and the founder must have held at least 25% of the shares from the very start of the business, kept them for at least five years and been UK resident throughout. The government is still consulting on the finer detail, with legislation to follow.
It’s aimed at a fairly narrow group, but if it sounds as though it might apply to you, it would be well worth a conversation.
Taking profits out of a company
From 6 April 2028, the rules on company distributions will change. The aim is to stop shareholders taking profits out of a company in a way that’s taxed as a capital gain when it should be taxed as a dividend. Genuine changes of ownership, including families passing down a business, will still get capital gains treatment. The government will publish more detail by the end of 2026.
Other changes for businesses and employers
- Employee share options: from 6 April 2027, the Company Share Option Plan becomes Enterprise Management Incentives 2 (EMI2). The limit one employee can hold doubles from £60,000 to £120,000, and the time to exercise options rises from 10 to 15 years
- Capital allowances: the first-year allowance on new plant and machinery rises from 40% to 50% for spending from 1 January 2027
- National Living Wage: rises by 3.9% to £13.21 an hour from 1 April 2027
- Business rates: more small shops, pubs, cafés and leisure businesses in England will pay no business rates from 1 April 2027
- Benefits through payroll: from 6 April 2027, employers must report and pay tax on company cars, vans, fuel and medical benefits through payroll rather than on a P11D form
- Making Tax Digital: sole traders and landlords joining Making Tax Digital for Income Tax in April 2027 won’t be fined for late quarterly updates during the 2027/28 tax year.
What changes for landlords and homeowners?
From 6 April 2027, tax on rental income rises by four percentage points for landlords who own property in their own name, to 24%, 44% or 49% depending on their tax band. Stamp Duty Land Tax on homes is unchanged, and the council tax surcharge on homes worth £2 million or more still starts in April 2028.
- Rental income: the higher rates apply to property owned personally rather than through a company. Tax relief on mortgage interest and other finance costs stays at the property basic rate of 24%
- Landlord registration: from 15 December 2026, private landlords in England will pay a £65 fee to register on the new ‘Register your rental property’ service, part of the Renters’ Rights reforms
- High Value Council Tax Surcharge: a new yearly charge applies from April 2028 to homes in England worth £2 million or more. The Budget confirms a scheme to defer payment for people who meet certain criteria, along with some discounts and exemptions. The charge will rise with inflation each year
- Help for first-time buyers: from April 2027, a new Your First Home scheme will offer 20% equity loans to first-time buyers of new-build homes, with deposits as low as 2.5%. Price and income caps are still to be published. It may be relevant if you’re helping children or grandchildren onto the property ladder
- Property abroad: the UK is joining an international agreement to share information about property ownership automatically. The rules take effect from January 2029.
What help is there with household costs?
The Budget includes several measures aimed at everyday costs:
- £100 Household Energy Payment: from January 2027, households in council tax bands A to D in England will get £100 off their council tax, with similar support funded in Scotland, Wales and Northern Ireland
- No VAT on electricity: VAT on household electricity is zero from 1 October 2026 until 1 July 2027
- Gas standing charges: the government will ask Ofgem to scrap gas standing charges and move those costs into the price per unit, aiming for the end of 2027
- Fuel duty: the 5p per litre cut now runs until 1 July 2027
- Bus fares: single bus fares in England outside London are capped at £2 throughout 2027
- Student loans: interest on Plan 2 and Plan 3 student loans is capped at 6% until 31 August 2027.
Autumn Budget 2026: key dates at a glance
| Date | What changes |
| 28 October 2026 | Two-year rule on tax-free pension death benefits removed for later payments |
| 29 October 2026 | Lifetime ISA charge for homes over £450,000 falls to 20% |
| 15 December 2026 | £65 landlord registration fee in England |
| January 2027 | £100 Household Energy Payment in England |
| 1 April 2027 | National Living Wage rises to £13.21 |
| 6 April 2027 | Higher tax on savings interest and rental income; Business Asset Disposal Relief limit falls to £500,000; Founders Relief and Pension Tax Allowance begin; trading allowance rises to £3,000 |
| April 2027 | Unused pensions start to count towards estates for inheritance tax |
| 1 July 2027 | Zero VAT on electricity and the fuel duty cut end |
| Late 2027 | Securities Transfer Tax replaces Stamp Duty on shares |
| 6 April 2028 | Minimum pension age rises to 57; new rules on company distributions |
| April 2028 | High Value Council Tax Surcharge starts |
| 6 April 2029 | Salary sacrifice National Insurance limit of £2,000; First Time Buyer ISA launches |
| April 2031 | Income tax and inheritance tax thresholds frozen until this date |
What should you do after the Budget?
For most people, nothing needs doing straight away. Most of the Autumn Budget 2026 changes start in April 2027 or later, several details are still to be published, and Budget proposals need to pass through Parliament before they become law. That leaves time to understand how the changes apply to you.
Budget day can bring a lot of headlines in a short space of time, and it’s natural to want to respond. Decisions made in a rush, particularly with pensions, can be hard to reverse. Taking tax-free cash from a pension early, for example, is a decision you can’t undo.
A financial plan that brings your income, savings, pensions and family wishes together makes changes like these easier to adjust to. It may be worth speaking to a financial planner if you:
- Hold a significant amount in savings outside an ISA
- Let out property that you own in your own name
- Are thinking about selling a business, or taking money out of your company, in the next few years
- Have pension savings you may not use in your lifetime and want to understand the April 2027 inheritance tax change.
At Becketts, it all starts with a cuppa and a chat, with no obligation and no jargon. Our Chartered Financial Planners can help you see exactly where you stand. And if your needs are more straightforward, Becketts Connect offers a simpler, lower-cost service.
Arrange a free, no-obligation call
Autumn Budget 2026: frequently asked questions
Did the Autumn Budget 2026 raise income tax?
No. The main rates of income tax, National Insurance and VAT are unchanged. Income tax thresholds, including the £12,570 personal allowance, stay frozen until April 2031, which means more income can fall into higher tax bands over time as earnings rise.
Is the Cash ISA allowance still £20,000?
Yes. The planned cut to £12,000 for under-65s from April 2027 has been reversed. Everyone can still save up to £20,000 a year in a Cash ISA, and the overall ISA allowance stays at £20,000.
Can I still take tax-free cash from my pension?
Yes. The Autumn Budget 2026 doesn’t announce any change to pension tax-free cash. Most people can take up to 25% of their pension tax-free, up to a lifetime limit of £268,275.
When do pensions become subject to inheritance tax?
From April 2027, most unused pension funds and pension death benefits will count towards a person’s estate for inheritance tax. This was announced at the 2024 Budget, and the 2026 Budget documents confirm it’s going ahead. Pensions left to a spouse or civil partner remain exempt.
Has Capital Gains Tax gone up?
No. Capital Gains Tax rates stay at 18% and 24%, with a £3,000 annual exempt amount. Business owners should note that the lifetime limit on Business Asset Disposal Relief halves from £1 million to £500,000 from 6 April 2027.
How much tax will I pay on savings interest from April 2027?
From 6 April 2027, savings interest held outside an ISA will be taxed at 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers. Interest inside an ISA, or covered by your tax-free savings allowances, isn’t affected.
This article is for general information and education only, and isn’t financial advice or a recommendation to take any action. It’s based on HM Treasury’s Budget 2026 documents published on 28 October 2026. Budget proposals may change before they become law, and tax treatment depends on individual circumstances and may change in future. Becketts is a trading name of Becketts FS Ltd. Company No. 5122604. Authorised and regulated by the Financial Conduct Authority, No. 409051.
