Wednesday’s Budget brought welcome news for cash ISA savers, higher future tax bills on savings and rental income, and changes affecting pensioners, business owners and homebuyers.
Here are the announcements we think deserve your attention.
Your £20,000 cash ISA allowance stays
The planned reduction in the cash ISA allowance has been cancelled.
You will still be able to use your full £20,000 annual ISA allowance for cash, or divide it between eligible ISA types within the overall limit.
That matters because tax on savings outside an ISA is set to rise. However, an ISA is not automatically the best account for everyone: interest rates, access requirements and your available tax allowances still matter.
Higher tax on savings and rental income from April 2027
From 6 April 2027, the announced tax rates on taxable savings income will be 24%, 44% and 49%.
The same rates are announced for property income in England, Wales and Northern Ireland.
These are four percentage points above the current corresponding rates. Wednesday’s announcement adds another two percentage points to increases already planned.
What could that mean? If £5,000 of savings interest remains fully taxable at the higher rate after allowances, tax would increase from £2,000 at 40% to £2,200 at 44%: an extra £200 a year.
For landlords, the change concerns property income held personally. Property owned through a limited company follows different tax rules. Your actual bill also depends on allowable expenses, finance costs and your other income.
Pension tax free cash: the feared cut did not happen
Despite the speculation, the standard pension Lump Sum Allowance remains £268,275.
You can generally take up to 25% of eligible pension benefits as tax free cash, subject to your available allowance and scheme rules. Some people have protected entitlements.
There is therefore no announced reduction requiring pension savers to rush into taking their lump sum. When you withdraw should depend on your retirement needs and wider financial plan.
Targeted tax protection for pensioners
The Budget sets out how the previously announced Pension Tax Allowance will work from April 2027.
It is designed to prevent eligible pensioners whose total income is no more than the full new State Pension from facing small income tax bills.
This is targeted relief, rather than an increase in everyone’s personal allowance. It reduces as income rises above that level, so additional private pension or other income can affect entitlement.
Inheritance tax and your pension
The Budget leaves the standard inheritance tax rate at 40%, with the main allowance remaining at £325,000 and the additional residence allowance at £175,000, subject to eligibility. However, the previously announced inclusion of most unused pension funds and pension death benefits within estates for inheritance tax purposes still takes effect from 6 April 2027. If you intend to pass wealth to your family, it remains important to review your pension and estate plans together.
Buying your first home? A Lifetime ISA change is already in effect
From 29 October, the Lifetime ISA withdrawal charge for an otherwise qualifying first home purchase above the £450,000 property price cap falls from 25% to 20%.
For example: £4,000 of contributions plus a £1,000 government bonus gives £5,000, ignoring investment movements and interest. Previously, a 25% charge left £3,750. A 20% charge leaves £4,000.
You still lose the bonus, but this example shows how the change removes the additional loss of your original contribution.
Other unauthorised withdrawals remain subject to the 25% charge.
Business owners: review your exit plans
The Business Asset Disposal Relief lifetime limit is due to fall from £1 million to £500,000 for qualifying disposals from 6 April 2027.
A proposed 10% Founders’ Relief is also being developed, with qualifying conditions subject to consultation. It should not be assumed to apply to every business sale.
If you are considering selling or transferring your business, review the timing and structure with your financial adviser and accountant before making commitments.
And what about your mortgage?
The bank tax surcharge will temporarily increase from 3% to 6%. That does not translate into an automatic increase in your mortgage rate.
If your current deal is ending, the useful step is to compare your available options in good time. Waiting for a particular market reaction is not a reliable mortgage strategy.
What should you review?
The most relevant question is which announcements affect your own plans.
Contact your usual TPD adviser if you would like to review your savings, retirement arrangements, mortgage or plans for your business.
We can help you understand what deserves attention now and what can be considered at your next review.
Kind regards,
The TPD Wealth Management Team
Information checked as at 30 October 2026. Some announced measures require legislation and may change. This article provides general information, not a personal recommendation. Tax treatment depends on individual circumstances. Investment values and income can fall as well as rise, and you may get back less than you invest. Your home may be repossessed if you do not keep up repayments on your mortgage.
