“A Budget of a lot of words but not much said…”
After weeks of speculation on 28th October, Chancellor John Healey laid out the future of economic policy in the first Autumn Budget under the Andy Burnham administration. It’s safe to say that whilst a series of measures are set to give families and businesses “the breathing space” they need, it wasn’t necessarily the overhaul that many of us expected. That said, there were a series of updates that are worth paying attention to when it comes to your financial planning.
So, what was announced in the latest Autumn Budget and how might it impact your own financial planning? Below, we take you through the confirmed changes and any financial planning actions that might be worth considering.
Note: Budget announcements can change before they become law, and many measures won’t take effect for months or years. That gives you time to respond in an informed and measured way. Book a meeting with an expert to learn more.
How the Budget speculation played out
Over recent weeks, mounting speculation has underscored a few potential changes based on hints and pledges following Andy Burnham’s premiership back in July. We will start by breaking down which of those came into play and those which didn’t.
1) U-turn on Cash ISA changes
The move to cap the Cash ISA has been scrapped and will no longer take effect from 6th April 2027. In the 2025 Autumn Budget, ex-Chancellor Rachel Reeves announced that the Cash ISA allowance would reduce from £20,000 to £12,000 – for savers under 65 – in order to deter savers from storing large sums of cash and divert their funds into investments. However, Healey said “I am taking a new approach today to encourage people on ordinary incomes to save and invest.” To do that, Healey proposed a Starter ISA for first-time investors.
Financial planning tip: Despite no changes being issued to Cash ISAs, it’s always worth regularly reviewing cash balances, understanding how your investments generate income and making full use of tax-efficient wrappers such as Stocks & Shares ISAs before April 2027.
2) A review of Lifetime ISAs
Coming into effect from 29th October 2029, the 25% charge on withdrawn funds from a Lifetime ISA (LISA) has been reduced to 20%. This rule will apply for holders who purchase a property above the £450,000 cap, and is designed to ensure that investors get back what they put in. On top of this, a new First Time Buyer ISA was announced, and will come into effect from April 2029.
Financial planning tip: If you’re already saving into a Lifetime ISA, don’t close it or transfer funds without having a comprehensive understanding of the broader implications first. It’s worth waiting to compare the new ISA’s final terms when they become available, rather than making any knee-jerk changes to your plan.
3) Capital gains tax (CGT)
Despite widespread concerns that capital gains tax (CGT) would fall in line with income tax, CGT rates were left unchanged from the current 18%/24%. This doesn’t guarantee that taxing wealth and assets is fully off the cards in the future.
Financial planning tip: Using ISA allowances efficiently each tax year remains a sensible strategy.
4) Inheritance Tax (IHT) on pensions
There were no new changes to Inheritance Tax (IHT) beyond those already announced by ex-Chancellor Rachel Reeves in the 2024 Autumn Budget. The £325,000 Inheritance Tax nil rate band and £175,000 residence nil rate band remain frozen until 2030 and the inclusion of pensions in the Inheritance Tax net from April 2027 will go ahead as planned. See table below.
Financial planning tip: The old method of leaving pensions untouched should be reviewed. To ensure wealth is passed on to the next generation tax-efficiently, a number of alternative financial planning actions such as life insurance, gifting strategies, and planning to spend your pension are all worth considering.
5) State Pension tax allowance
John Healey has pledged to protect retirees on low incomes, namely those solely relying on the State Pension, from Income Tax. This move comes as the full State Pension rises from £12,570 to £13,036.40 from April 2027, meaning that many people will be subject to tax above the £12,570 Personal Allowance.
6) Rental income tax increases
After already increasing income tax rates from 20% to 22% in the Autumn 2025 Budget, Healey has gone a step further by further increasing income tax rates on property income by an additional two percentage points. The announced rates for 2027/28 are:
- Basic rate: 24%, up from 22%
- Higher rate: 44%, up from 42%
- Additional rate: 49%, up from 47%
Financial planning tip: Rather than simply comparing rental income with property expenses, it makes it particularly important to model returns after tax. A cashflow model can help you understand the impact on rental yields, mortgage costs and how any reduction in cashflow could impact your retirement plans.
7) Mansion Tax changes
The Government confirmed plans for the High Value Council Tax Surcharge (HVCTS) for residential properties in England worth more than £2 million – expected to range from £2,500 to £7,500 (depending on value).
Financial planning tip: Cashflow modelling, and a longer-term estate planning strategy ahead of April 2028, can help you prepare for any additional costs you might incur if you own a high-value residential property.
8) State Pension age
Contrary to the rumours, the increase in State Pension age from 67 to 68 will still take effect from 2044 as planned.
Financial planning tip: Despite no changes, it’s always worth checking your State Pension forecast on GOV.UK to understand where your private pension can bridge any gaps.
9) Income tax, National Insurance and VAT
Committed to the Government’s manifesto pledge to not to hike the headline rates of income tax, employee National Insurance or VAT, there was no mention of a change to thresholds.
Financial planning tip: Regular reviews of your financial plan help ensure you’re making the most of tax-efficient allowances and investments, such as ISAs and pension contributions. Furthermore, be mindful of your tax bands when drawing down from your pensions to ensure tax-efficiency.
10) Extension of the VAT cut on electricity bills
The VAT cut on domestic electricity bills previously announced by Andy Burnham, which has been in place since 1st October 2026, will be extended from 31st March to July 2027. This will result in an estimated £50 reduction in the annual energy price cap.
Financial planning tip: Although relatively modest, consider the best way to utilise this saving elsewhere, whether it’s topping up an ISA or putting it towards an emergency fund.
What we know from previous Budgets
Several key measures were already locked in from previous Budgets, and have not been subject to change following Healey’s latest announcements:
1) Pensions and Inheritance Tax (IHT)
One of the most significant changes we’ve seen in recent years is that pensions will fall into the Inheritance Tax net from 6th April 2027. This announcement, made by ex-Chancellor Rachel Reeves back in 2024, is prompting many people to rethink the role pensions play in their estate planning strategy. What was once was considered a largely untouched asset which could be passed down the generations tax-free, will now be subject to 40% Inheritance Tax. The government has been exploring an Inheritance Tax credit on inherited pensions that are also taxable under income tax, and more detail is expected ahead of April 2027.
Financial planning tip: Many people will now need to revisit how they plan to draw down retirement income, when to draw from ISAs and what they leave behind.
2) Savings and rental income
As announced in the 2025 Budget, a 2% increase across all tax bands was due to apply to interest from savings income and rental income from April 2027. As mentioned above, this has now risen by four percentage points across all tax bands. Please see the new tax rates above.
Financial planning tip: To assess your tax exposure, it’s worth reviewing your savings interest ahead of April 2027. Working with a Financial Adviser can help you determine which tax-efficient measures you can adopt, such as making full use of your Stocks & Shares ISA allowance.
Note: A change to dividend tax rates, was also announced in the 2025 Autumn Budget. Implemented in April 2026, the ordinary rate rose from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. Meanwhile, the additional rate remained unchanged at 39.35%. This is important to be aware of ahead of the upcoming tax return season (2025/26), as it’s the first round with the rates taking effect.
What the Autumn Budget announcements mean for your financial planning
How you respond to any Budget should be tailored to your own set of unique circumstances.
- Are you focussed on saving and investing?
- Are you approaching retirement?
- Are you already in retirement?
- Are you unsure what to do with your pensions and Inheritance Tax?
- Do you plan to pass on wealth?
- Do you own a property over £2million?
No two people will be affected by the Budget in the same way, so your answers to these questions matter. It’s also essential not to make hurried decisions based on the headlines alone. A post-Budget review with a Financial Consultant is therefore a natural next step and can help you make confident and informed decisions about your own financial plans. It can also help you assess whether there’s anything you should be acting on before the end of the 2026/27 tax year – particularly given that pensions will be falling into the Inheritance Tax net from April 2027.
[i] Seeking further clarity on what the Budget announcements mean for your own financial planning? Book a meeting with a Financial Consultant by calling 03300 564 446 or by filling out our contact form.
This article is for general information only and does not constitute financial or tax advice. It reflects our understanding of the announcements at the date of writing; details may change between when the Budget was delivered on 28th October, and before the scheduled date of change. You should not make financial decisions based on this article alone. Speak to a suitably qualified adviser about your own personal circumstances. Lumin Wealth Limited is authorised and regulated by the Financial Conduct Authority (registration number 775068). The FCA does not regulate tax and estate planning.
