| Income Tax rates remain unchanged, but tax increases on savings and property income are scheduled from April 2027 | Cash ISA limit remains £20,000 for 2027–28; a First-Time Buyer ISA is planned | State Pension rises 3.9% from April 2027, alongside a temporary Pension Tax Allowance for eligible pensioners |
- There are to be no changes to the basic, higher or additional rates of Income Tax, employee National Insurance contributions (NICs), Dividend Tax or VAT
- The Income Tax Personal Allowance was already frozen at £12,570 and the higher rate threshold at £50,270 until April 2031. National Insurance thresholds are also already frozen until 2031
- There is no change to the starting rate of Income Tax for savings which stays at £5,000 until April 2031
- Rates of Income Tax applied to property income will increase by 2 percentage points. From 2027 to 2028, the property basic rate will be 24%, the property higher rate will be 44% and the property additional rate will be 49%. These rates will apply across England, Wales and Northern Ireland. This newly announced hike comes on top of a 2 percentage point increase previously scheduled in the 2025 Budget
- All rates of Income Tax applied to savings income will increase by 2 percentage points from 6 April 2027. The savings basic rate will be 24%, the savings higher rate will be 44% and the savings additional rate will be 49%. This newly announced hike comes on top of a 2 percentage point increase previously scheduled in the 2025 Budget
- The Trading Allowance, which lets individuals earn an amount of gross trading income tax-free, will triple from £1,000 to £3,000 from 6 April 2027
- The National Living Wage will increase by 3.9% for individuals to £13.21 per hour from April 2027. The National Minimum Wage for 18 to 20-year-olds will also increase by 3.9% to £11.27 per hour and to £8.31 per hour for 16 to 17-year-olds and eligible apprentices.
Pensions and retirement income
- In line with the government’s commitment to the Triple Lock throughout this Parliament, the State Pension will continue to rise by the highest of 2.5%, inflation or earnings growth each year through to April 2029. From April 2030 the State Pension will rise each year by the highest of 2.5%, inflation, or the amount required to maintain its value relative to earnings as reached in April 2029
- From April 2027, this means a 3.9% rise – £250.70 a week for the full, new flat-rate State Pension (for those who reached State Pension age after April 2016) and £192.10 a week for the full, old basic State Pension (for those who reached State Pension age before April 2016)
- A Pension Tax Allowance (PTA) will ensure that pensioners whose total income is up to the value of the full new State Pension do not have the administrative burden of paying small amounts of tax. The value of the PTA is calculated by applying the basic rate of Income Tax (20%) to the difference between the full new State Pension and the Personal Allowance. Individuals over State Pension age are eligible for the automatic tax deduction if their income, regardless of source, is below or at the value of the full new State Pension. For those with incomes just above the value of the full new State Pension, the allowance will be gradually withdrawn through a taper. The allowance will apply from 6 April 2027 until 5 April 2030 and will be uprated in line with the full new State Pension across this Parliament
- Budget 2026 proposes three pension tax changes: expanding serious ill-health lump sum access, simplifying tax collection on excess lump sum death benefits and removing the two-year rule that can make death benefits taxable if paid late. Implementation dates vary, with some changes applying retrospectively or from 28 October 2026.
Inheritance Tax (IHT)
- The IHT nil-rate bands are already set at current levels until April 2031. The government will amend IHT rules to clarify when liabilities relating to trust property may reduce the value of assets for IHT purposes, align the treatment of liabilities affecting trust property with personal liabilities and strengthen anti-avoidance provisions. As previously outlined, from April 2027 most unused pensions and death benefits will be subject to IHT.
ISAs
- The annual cash Individual Savings Accounts (ISA) subscription limits remain at £20,000 for the 2027-28 tax year (this was due to reduce to £12,000 for under-65s from April 2027)
- Annual subscription limits remain at £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031
- The government will introduce a new First-Time Buyer ISA from April 2029. The product will replace the Lifetime ISA (LISA) for new savers and provide a 25% government bonus, paid on withdrawal, towards the purchase of a first home worth up to £450,000. The maximum value of the bonus will be capped at £20,000
- Existing LISA holders will be able to continue contributing to and using their accounts under the current rules. In addition, from midnight 29 October 2026 the withdrawal charge for purchases of properties above the LISA property price cap will be reduced to 20%. The charge for unauthorised withdrawals will remain at 25%
- The government will work with industry to explore a new ISA incentive for people investing in a stocks and shares ISA for the first time. The detailed design will be developed with industry.
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding of the Budget taxation and HMRC rules and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.
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.
All details are believed to be correct at the time of writing (28 October 2026)
