2026 Autumn Budget aftermath: What is changing?

Chancellor John Healey’s Autumn Budget on Wednesday (28 October) contained few major surprises. But that doesn’t mean changes are not ahead. The government will be relying on measures announced in previous budgets to increase tax revenues and it’s worth investors being aware of what is coming down the line.

As Claire Trott, head of advice at St. James’s Place, says: “This week, Healey didn’t deliver any major changes. But it’s essential to recognise the effect of the small changes, as well as previously announced measures that will take place in the next few years.

“In an ever-changing, increasingly complex tax and regulatory landscape, financial advice is there to validate and strengthen important decisions that need to be made down the line.”

Here, we outline some of the main taxation changes coming up in the 2027/28 and 2028/29 tax years. 

Note: some of these measures may apply differently across the devolved nations of the UK. 

April 2027

A sharp increase to property and savings income tax

Who it affects: those receiving income from savings and rental business

From next year, the rates applied to income from savings outside of an ISA are set to increase.

Under Rachel Reeves, this was due to increase by two percentage points across all income tax bands. But Healey is introducing an extra two percentage points on top of that.

This translates into a 24% rate for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers, up from 20%, 40% and 45% respectively.

Rental income remains taxable as non-savings income and will be subject to the same rates.

Basic rate taxpayers still benefit from up to £1,000 of savings interest before tax is due. For higher rate taxpayers, that allowance is £500. Additional rate taxpayers are not entitled to a personal savings allowance. 

Business asset disposal relief reduced

Who it affects: business owners and entrepreneurs

Business owners looking to sell their business will see the lifetime limit for capital gains eligible for business asset disposal relief (BADR) reduced by half to £500,000.

Eligible owners may pay: 

• 10% on qualifying gains realised before 6 April 2025
• 14% on gains realised between 6 April 2025 and 5 April 2026
• 18% on qualifying gains realised from 6 April 2026. 

The government said this reduction in the BADR allowance still ensures that three-quarters of BADR claimants will still receive relief on their entire gains. 

Rates relief and valuation thresholds increased

Who it affects: small businesses

From 1 April 2027, the threshold for small business rates relief will rise from £12,000 to £18,000, and from £15,000 to £21,000 for tapered relief. The Treasury estimates this will mean as many as 70,000 smaller businesses will no longer have to pay any business rates.

As expected, Healey announced the government will provide an additional 20% relief for pubs, social clubs and a large number of music venues from 1 April 2027.

Based on the current support the government introduced earlier this year, this brings the total relief to 35%.

Your First Home scheme

Who it affects: first-time buyers with limited household earnings

The government is launching a new scheme next spring to help first-time buyers purchase newly built homes using smaller deposits and mortgages.

Under the new scheme, which is similar to the predecessor scheme Help to Buy, eligible buyers will need a deposit of at least 2.5% of the purchase price. The government would provide an equity loan worth 20% of the purchase price, interest free for five years.

Eligible buyers will need a total annual household income of no more than £110,000 outside of London, or £140,000 within London. 

Pensions falling into the scope of IHT calculations

Who it affects: individuals and families with large pension pots or estates; those thinking about estate planning

From April next year, most unused pension funds and pension death benefits will count towards the value of an estate for inheritance tax (IHT) purposes.

Traditionally, pensions have been designed to provide income in retirement. However, because for decades they have generally fallen outside an estate for IHT purposes, some people have used them to pass wealth on to future generations. The forthcoming change is intended by the government to reduce the use of pensions as a vehicle to pass on wealth free from IHT.

Assets passed between spouses and civil partners are generally exempt from IHT. Unused allowances may also be transferable, meaning a qualifying couple could potentially pass on up to £1 million without IHT. The amount available will depend on their circumstances. Death in service benefits paid from a registered pension scheme will remain outside the scope of the new rules. 

Reversal of the cash ISA limit reduction

Who it affects: under-65s using their cash ISA allowances

As part of the 2025 Budget, Healey’s predecessor Rachel Reeves announced a reduction to the annual cash ISA subscription from £20,000 to £12,000 for savers under the age of 65, starting April 2027. This was intended to encourage investment.

Reeves expected that savers affected by the reduced cash ISA subscription limit would allocate a greater proportion of their savings into stocks and shares ISAs or to other qualifying investments.

But Healey has reversed these plans, maintaining the cash ISA limit at £20,000 for all savers. Healey said that the proposed reduction risked limiting consumer choice and that savers should retain flexibility over how they use their annual ISA allowance. 

Making Tax Digital expands

Who it affects: self-employed individuals and landlords

Since April 2026, landlords and sole traders earning more than £50,000 from property and self-employment must use recognised software to keep digital records of their books as part of HMRC’s Making Tax Digital (MTD) for income tax.

From 2027, these requirements will become mandatory for those with a qualifying income over £30,000.

In 2028, the MTD threshold will fall to £20,000, bringing many more traders and landlords into the regime.

Taxpayers will need to maintain digital records and submit updates using compatible software, potentially increasing compliance requirements for smaller landlords and sole traders. 

April 2028

Mansion tax

Who it affects: those who have property valued at £2 million or above

While most of the significant changes take effect from April 2027, a further property-related tax measure is scheduled to come into force the following year.

A “high value council tax surcharge” on properties worth £2 million or more will be applied from April 2028.

A house worth between £2 million and £2.5 million will face an annual council tax surcharge of £2,500. This will rise to a maximum of £7,500 for a property worth more than £5 million.

The mansion tax is expected to raise around £400 million for the government per year from 2028/29, according to the government.¹ 

April 2029

Introducing a first time buyer ISA

Who it affects: first time buyers

From April 2029, the government will replace the lifetime ISA with a new first time buyer (FTB) ISA. The FTB ISA will allow contributions of up to £4,000 a year and savers will receive a 25% government bonus, up to a maximum of £20,000. There will be no age limit for savers taking out the ISA.

The government has also said that those using a lifetime ISA will see withdrawal charges reduced from 25% to 20%, effective immediately, where savers withdraw the money to buy a property that is above the price cap limit under the scheme. The property price cap remains at £450,000.

Help to Buy ISAs will close in December 2030, and savers using these accounts will be able to transfer their full account balance into an FTB ISA.

What should you consider? 

Depending on your circumstances, it may be worth reviewing: 

Many of these changes will add more complexity to household and business finances. A financial adviser can help you navigate what the changes mean for you so you can move forward with confidence.

• Estate plans if your pension is part of your assets
• The tax efficiency of savings held outside of ISAs
• Plans to sell a business or business assets
• Whether Making Tax Digital requirements will affect you and when
• Property ownership structures where high value residential property is involved. 

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.   

Source 
¹UK government, High value council tax surcharge – October 2026 

SJP Approved 29/10/2026