This year’s Budget feels notable as much for what didn’t happen as for what did. Pre-Budget speculation hinted at radical changes, such as capping or removing pension tax-free cash, but I am happy to report that this, and many other rumours didn’t materialise.
Instead, the Chancellor signalled a different direction of travel, and some would say a more obvious broken manifesto promise by raising more revenue from working people albeit by taxing wealth and non-earned income while leaving headline income tax rates untouched. From 2026 onwards, those with property, significant savings, or investments outside tax wrappers will see higher tax bills. Measures include:
- Higher tax rates on property, dividends, and savings income
- Inheritance tax on unspent pension pots
- A new annual surcharge on homes worth £2m+
- National Insurance relief on salary sacrifice pension contributions capped from 2029
For most households, day-to-day tax remains unchanged, but fiscal drag continues as income tax thresholds stay frozen until 2031. Meanwhile, cost-of-living support and infrastructure investment aim to improve the poor economic backdrop.
Key Dates and Changes
While the headline rates of income tax remain unchanged, the Budget introduces several significant measures:
From April 2026
- Dividend Tax: Ordinary and upper rates rise by 2 percentage points (to 10.75% and 35.75%).
- State Pension: Up 4.8% from April 2026 under the Triple Lock, adding up to £575 a year for those on the full rate.
- Minimum Wage: £12.71 for ages 21+, £10.85 for 18–20, £8.00 for 16–17.
- Two-Child Limit: Removed for Child Benefit.
From April 2027
- Inheritance Tax: Unspent pension pots brought into IHT scope.
- Savings & Property Income: Tax rates increase by 2 percentage points (Basic: 22%, Higher: 42%, Additional: 47%).
- ISA Changes: Cash ISA allowance cut to £12,000 for under-65s; Stocks & Shares ISA allowance remains £20,000.
From April 2028
- High-Value Property Charge: Annual surcharge on homes worth £2m+ (£2,500–£7,500 depending on value). In addition, it was announced that properties in Council Tax bands F, G & H will be revalued leading to even higher property taxes for some.
From April 2029
- Salary Sacrifice Cap: National Insurance relief on pension contributions limited to first £2,000 of pension contributions.
Other Notables
- Electric Vehicle Mileage Levy from 2028.
- Frozen Income Tax Thresholds until 2031, increasing fiscal drag.