Highlights from the UK Budget Statement 2026: Chancellor stays closely tethered to the Labour manifesto

Yesterday, UK Chancellor of the Exchequer, John Healey, delivered an autumn budget announcement that had an upbeat tone of sorts, even if fiscal forecasts were not as good as he may have hoped. Mr Healey presented one of the most detailed budget speeches of recent years, albeit one with few significant consequences. With over 95 different scored measures, the focus was on creating “breathing space” on cost-of-living pressures in an uncertain global climate, rather than swingeing reform.

Issues that might have impacted wealthy individuals and families – pensions, Capital Gains Tax and Inheritance Tax – have largely been left alone. However, the previously announced increase to the rates of tax on savings and property income from April 2027, has been further extended by an additional 2%, to 24%, 44% and 49%.  

For wealthy people and their families, consideration should be given as to how excess cash is held. Some structures, like an offshore investment bond, allow interest to roll up gross, deferring the income tax. Alternatively, some gilts may offer a return largely consisting of tax-free capital gain, with only a modest yield subject tax. The changes, with effect from April 2027, make gilts appear even more attractive than they already are. 

For those with property portfolios, following various changes to income tax and renter’s rights over the past few years, they may also be considering whether to restructure holdings via a limited company, or to exit the asset class entirely.  Any decision to retain property should balance current market conditions against the tax implications of a sale and the potential return from redeploying the capital. Professional advice should be sought.  

There were no significant changes to pensions, although from 28th October 2026, the two-year rule is removed so that beneficiaries will no longer be taxable solely because tax-free pension and lump sum death benefits are paid more than two years after the member’s death. With the previously announced introduction of inheritance tax on pensions due to take effect from 6th April 2027, planning should already be underway.

The Chancellor dispensed with the complex Cash Individual Savings Account (ISA) changes, that had been due to be introduced in April 2027, instead announcing a new “Starter ISA” to help make investment more accessible. 

More detail emerged about the new first time buyer ISA, with bonuses capped at £20,000 and changes to withdrawal penalties for Lifetime ISAs when used to buy a new home in excess of the property price cap.  The cap remains at £450,000 for all versions of these ISAs, albeit now extended to across the UK. 

Otherwise, there was targeted relief in the face of rising energy and motoring costs, including a roadmap for wholesale energy market reform. There was entrepreneur support; a new young entrepreneur’s allowance, scale-up support for female founders, and a new Founders’ Relief of 10% Capital Gains Tax, but subject to stricter conditions than Business Asset Disposal Relief.  

Overall, it was a budget with lots of detail but no headline-grabbing measures, and very few surprises. This may have been a precursor to a more detailed spending review in the Spring, as Prime Minister, Andy Burnham begins the process of claiming his own mandate for government.

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