The five questions Finura clients are asking after the Budget

The Chancellor’s Budget on 28 October 2026 turned out to be notable for having little to discuss. The Labour party’s self-imposed manifesto promises precluded changes to several primary sources of taxation, these being income tax, national insurance, and VAT, whilst the rumoured changes to capital gains tax rates never materialised.

What remained were limited new headline policies alongside several examples of tinkering around the edges. Since the announcement, we have received several questions from Finura clients on the same resultant themes, and so wanted to share some answers to these questions to help you make sense of the changes – or lack thereof.

1. Is my tax bill likely to go up?

For many individuals, the answer is “not directly”, as Labour hold fast to their fiscal rules. However, further increases to the taxation of savings income and property income were indeed announced. From the 6th April 2027, the surcharge rates on both savings and rental income will increase by a further two percentage points on top of what was already planned, resulting in effective rates of 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers.

The Budget also provided further detail on the previously announced High Value Council Tax Surcharge (HVCTS). While news of the surcharge itself is not new, the government confirmed that it will proceed and is consulting on the final details before a planned delivery date of 1 April 2028.²

It is also worth remembering that the impact of taxation is not limited to changes in tax rates, and the freeze on key tax thresholds and allowances will continue until at least April 2031. As individuals’ earnings increase over time they will undoubtedly be drawn into higher tax bands, increasing fiscal drag and bolstering the government’s annual tax receipts.³

We have had questions about the introduction of a new Pension Tax Allowance. This new allowance ensures that pensioners on relatively modest incomes do not face an income tax charge where their total retirement income is only slightly above the personal allowance. It does not apply to anyone with total income above £13,319 (inclusive of their State Pension), and the maximum benefit available is relatively small. Whilst we will take this into account where relevant, it is unlikely to have a material impact on the vast majority of Finura clients.⁴ Note that whilst technical changes to the pension triple lock are planned, these are not set to be implemented until at least April 2030.

2. What changes will impact me as a business owners or founder?

Several of the Budget announcements are particularly relevant for entrepreneurs and business owners.

First, the government will reduce the lifetime limit for Business Asset Disposal Relief (BADR) from £1 million to £500,000 from 6 April 2027. For qualifying disposals, BADR provides a reduced 18% rate of Capital Gains Tax, meaning the reduction in the lifetime allowance could increase the tax payable on a future business sale for some individuals.

Alongside this, the government has announced a new Founders’ Relief. Subject to legislation, this would provide a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies from 6 April 2027.

At present, however, there is still considerable uncertainty around how the relief will operate in practice. The government has launched a technical consultation and has not yet published the detailed qualifying conditions. As a result, it remains unclear which businesses, founders and transactions will ultimately be eligible.

From April 2027, a new EMI2 scheme doubles the amount of tax-advantaged share options an employee can hold from £60,000 to £120,000. For business owners, this means it may be easier to offer meaningful equity participation, and for employees it grants greater opportunity to benefit from the growth of the business they are helping to build.

Finally, the trading allowance will increase from £1,000 to £3,000 from April 2027, providing additional flexibility for those taking their first steps into self-employment or entrepreneurship.

3. What has changed for inheritance tax and passing on wealth?

There were no major structural changes to Inheritance Tax (IHT) in the Budget, and the nil-rate band remains at £325,000 per person, where it has remained since 2009. With asset values having risen significantly over that period these frozen thresholds mean Inheritance Tax receipts have seen a prolonged upwards trend, and this is set to continue into the foreseeable future. ^{5 6}

One notable Budget measure concerns pension death benefits. The government will remove the “two-year rule”, meaning beneficiaries will no longer become taxable solely because tax-free pension or lump-sum death benefits are paid more than two years after the member’s death. This change applies to payments made on or after the 28th October 2026. Whilst this will naturally ease some of the burden on administrators seeking probate, with the context of pensions being brought into IHT scope in April 2027, the change may hint at an expected increase in the complexity and time taken to administer estates once pensions are included in these calculations.

Finally, the government has also reaffirmed its intention to establish a National Care Service in England. However, uncertainty remains regarding its design, timing and eventual implementation. The Independent Commission on Adult Social Care is not expected to report until 2027.

4. What has changed for ISAs and other methods of saving?

One of the more notable announcements for savers is what has not changed, as the government has reversed its previously announced reduction to cash ISA limits. Consequently, the cash ISA limit will remain at £20,000 per year for all ages, as will the overarching ISA subscription annual allowance.

The Budget also announced that the government will work with the investment industry to explore a new incentive for individuals investing in a Stocks and Shares ISA for the first time, although the detailed design has yet to be confirmed.

Importantly, there are no stated changes to pensions whatsoever, besides the inheritance tax changes noted above which were announced in late 2024.

5. How could the budget impact my children and grandchildren?

Several measures announced in the Budget are aimed at younger generations seeking to save, invest and purchase their first property.

The government has announced a new First Time Buyer ISA, due to launch in April 2029. The product will allow contributions of up to £4,000 per year and provide a 25% government bonus when funds are withdrawn towards a qualifying house purchase. The scheme will replace the Lifetime ISA for new savers and will not have an upper age restriction.

The Budget also introduced additional flexibility for existing Lifetime ISA holders. From the 29th October 2026, individuals purchasing a property worth more than £450,000 can withdraw funds subject to a 20% charge rather than the existing 25% charge. However, unauthorised withdrawals for other purposes will continue to be subject to the standard 25% charge.

In addition, the government has announced the Your First Home scheme, which will provide equity loans of up to 20% for qualifying first-time buyers from April 2027. This is expected to be broadly similar to the Help-to-Buy Equity Loan scheme discontinued in October 2022, although further details on the scheme and eligibility criteria are yet to be announced.

Sources:

1. HM Treasury, Budget 2026: Breathing Space for Today, Fresh Hope for the Future (28 October 2026). Available at: https://www.gov.uk/government/collections/budget-2026-in-full
2. HM Treasury, High Value Council Tax Surcharge: Summary of Responses (2026). Available at: https://assets.publishing.service.gov.uk/media/6ae0e337779378370fd80a85/HVCTS_Summary_of_Responses.pdf
3. HM Treasury, Income Tax: Maintaining the Personal Allowance and the Basic Rate Limit for Income Tax and Equivalent National Insurance Contributions Thresholds until 5 April 2031. Available at: https://www.gov.uk/government/publications/maintaining-income-tax-and-equivalent-national-insurance-contributions-thresholds-until-5-april-2031/income-tax-maintaining-the-personal-allowance-and-the-basic-rate-limit-for-income-tax-and-equivalent-national-insurance-contributions-thresholds-unt
4. HMRC, Pension Tax Allowance Explainer. Available at: https://www.gov.uk/government/publications/pension-tax-allowance-explainer/pension-tax-allowance-explainer
5. HMRC, Tax Receipts and National Insurance Contributions for the UK. Available at: https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin
6. Office for National Statistics, Inheritance Tax Receipts (Series ACCH). Available at: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/timeseries/acch/edp2

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