Now the dust has settled on the Budget, and everyone has had a chance to process the key announcements – you can step back and think about what it all means for you and your finances.
A series of tax and spending measures were unveiled, estimated to raise an extra £26bn a year in taxes by 2029/30.
While immediate changes were limited, as Helen Miller, Director of the Institute for Fiscal Studies (IFS) said, “the Chancellor is relying heavily on tax rises towards the back end of the parliament. More borrowing for the next few years, then a sharp adjustment”.
Significant changes
Some of the changes on the horizon, worth tuning into now, include:
- Income Tax thresholds will remain unchanged until at least 2031, meaning more earners will be in higher tax bands, and National Insurance contributions (secondary threshold) are also frozen to 2031
- Properties in England valued at £2m or more in 2026 will face a new High Value Council Tax Surcharge (HVCTS) of £2,500, with an annual levy of £7,500 owed for homes worth £5m plus, from April 2028
- From April 2029, only the first £2,000 of pension salary sacrifice will be exempt from National Insurance, affecting the tax efficiency of many salary sacrifice arrangements
- A new mileage-based road tax for electric (3p per mile) and plug-in hybrid (1.5p per mile) vehicles will be introduced from 2028
- The annual Cash ISA allowance will be cut to £12,000 for those under 65 from April 2027, with the remaining £8,000 only permitted to be invested in Stocks and Shares ISAs
- Tax on savings and property income will rise by 2 percentage points from April 2027
- Extended the freeze on Inheritance Tax (IHT) thresholds from 2030 to April 2031.
More imminent
From April 2026, the Dividend Tax rate will increase by 2 percentage points. The basic Dividend Tax rate will rise from 8.75% to 10.75%, while the higher rate will increase from 33.75% to 35.75%.
Following repeated cuts to the tax-free annual Dividend Allowance, which now stands at just £500, people who hold investments outside of a Stocks and Shares ISA or SIPP, or who own their own business and pay themselves in dividends, are expected to pay more tax.
With the government pressing ahead with changes to the Inheritance Tax rules regarding unused pensions, which take effect from April 2027, there’s plenty to think about. We’re here to help you navigate the changes.
- Remember: tax legislation and rates can change, and their application depends on individual circumstances. Contact Cailean at hello@cailean.co.uk or call 01577 212577 for advice on your tax and pension planning.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority does not regulate will writing, tax and trust advice and certain forms of estate planning.