Autumn Budget 2026 Explained: ISAs, Pensions, Tax

Honestly, it's a mixed Budget. Whether it's good news depends on which side of the fence you're standing on and which bit of the legislation lands on you. And as always, the devil is in the detail, which we don't fully have yet.

Introduction

John Healey delivered his first Autumn Budget on 28 October 2026, and there was a lot in it.

My first reaction? It's a mixed bag. Some people will come out of it well, others won't, and it really does depend on which side of the fence you're on and which part of the legislation touches you. As always, the devil is in the detail. We know some of it now, but some of the clarity is still to come.

So here's what we're going to do. We'll dig through it together in this article: what was confirmed, what each measure actually is, who it affects, and what we're still waiting to see. As more of the fine print comes out, we'll follow up with deeper dives on the bits that matter most. It's general information, not personal advice.

The Headlines

The cash ISA limit stays at £20,000. The planned cut to £12,000 has been dropped.
The Lifetime ISA is being replaced for new savers by a First Time Buyer ISA from April 2029.
A new scheme, Your First Home, offers eligible first time buyers in England a government equity loan.
The lifetime limit for Business Asset Disposal Relief halves, from £1 million to £500,000, for disposals on or after 6 April 2027.
The government has announced a Founders’ Relief, intended to apply from 6 April 2027 and subject to legislation and final eligibility conditions. It would tax qualifying gains at 10%, up to £10 million.
Tax rates on savings and property income reach 24%, 44% and 49% from 6 April 2027, four percentage points above today’s rates.
The triple lock is adjusted from April 2030. This was announced before the Budget.
For deaths on or after 6 April 2027, most unused pensions count towards your estate for inheritance tax. This was set out before the Budget.

Savings And ISAs

Line illustration of a person planting a sapling in a garden, in terracotta

Cash ISA limit stays at £20,000

A cash ISA is a savings account where the interest is tax free. The annual limit for eligible adult savers stays at £20,000. The planned cut to £12,000 will not go ahead. The overall adult ISA allowance across all types of ISA is also £20,000. If you save in a cash ISA, the limit stays where it is today.

A new Starter ISA

The government will work with the investment industry on a possible incentive for people investing in a stocks and shares ISA for the first time, which the Chancellor called a “Starter ISA”. The design has not been set, so there is nothing to act on for now.

Tax on savings and property income

From 6 April 2027, income tax on savings income rises to 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate. Property income is taxed at the same rates, set separately from the main rates. Today the rates are 20%, 40% and 45%, so this is four percentage points higher. If you earn interest on savings held outside an ISA, or you receive rent from a property, then where that income is taxable after any allowances and reliefs that apply, more of it will go in tax. Interest held inside an ISA stays tax free.

The savings rates apply across the UK. The property income rates apply in England, Wales and Northern Ireland, and Scotland and Wales can set property income rates under their existing powers, so the position can differ depending on where you live.

First Time Buyers And Property

Line illustration of a terrace of three town houses, in terracotta

First Time Buyer ISA

The First Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029. It offers a 25% government bonus, capped at £20,000, paid on withdrawal towards a first home worth up to £450,000. Existing Lifetime ISA holders can keep contributing and using their accounts under the current rules. Legislation is due before the launch.

Lifetime ISA withdrawal charge

This is a separate change to existing Lifetime ISAs. From 29 October 2026, the withdrawal charge falls from 25% to 20% for a first-home purchase above £450,000 that otherwise meets the qualifying purchase rules. Other unauthorised withdrawals stay at 25%. For illustration only, £4,000 paid in plus a £1,000 bonus is £5,000, and a 20% charge on £5,000 is £1,000. That takes back the bonus and leaves the £4,000, as long as the balance has not fallen. It is not protection against investment losses.

Your First Home

Your First Home is a new government equity loan scheme for first time buyers in England, with £4.7 billion of government funding confirmed. You can borrow 20% of the purchase price from the government, with a deposit of at least 2.5%. An equity loan is a loan from the government towards the purchase price, which has to be repaid later.

The guidance says you will normally need to buy a new build home within the local price cap, with total household income of £110,000 or less outside London and £140,000 or less in London. You also need a repayment mortgage from a participating lender. The equity loan is interest free for the first five years. Interest is then 1.5% in year six and 3% from year seven, and those payments are separate from your mortgage and do not reduce the equity loan. It is normally repaid when you sell the home, and you can repay early in full or in part. The amount you owe is 20% of the home’s value at an independent valuation, so it can rise or fall. The scheme is expected to open for applications in February 2027, with first sales in April 2027. The details of minimum repayments, valuations and fees are due to be published before applications open.

Example

For illustration only, on a home within the local price cap costing £300,000, a 2.5% deposit is £7,500 and a 20% equity loan is £60,000.
That would leave a mortgage of about £232,500, if a lender agrees to lend on that basis.

My view: we welcome the support, but the detail matters. I was never a big fan of the Help to Buy equity loan. I have helped a large number of clients who found it hard to find the equity in their property to pay it off. So I will be reading the repayment terms and the price caps very closely, and weighing the interest that starts after year five. For clients buying their first home, those details shape the planning around the deposit and the mortgage.

More homes

An extra £1.5 billion was announced to deliver around 10,000 homes in England.

Pensions

Line illustration of a couple walking hand in hand holding balloons, in terracotta

The triple lock is adjusted from April 2030

The triple lock is the rule that decides how much the State Pension rises each April. At the moment it rises by the highest of average earnings growth, inflation or 2.5%. From April 2030 the government will adjust it. The basic State Pension and the full rate of the new State Pension will each rise by the highest of inflation, 2.5%, or the amount required to return or maintain the value of the State Pension relative to earnings, as reached in April 2029. This was announced at the Labour conference on 29 September, before the Budget. The change starts in 2030, so it does not affect the rises before then.

My view: 2030 is a way off, so I do not think there is any need to panic. It is worth watching, and we will pick through the detail as it arrives. For any clients it affects, we make sure we account for it in our planning and annual reviews.

State Pension increase in April 2027

The government has confirmed that the basic State Pension and full new State Pension will increase by 3.9% from April 2027.

State Pension and income tax

The government says people above State Pension age, or reaching State Pension age during the tax year, with total income up to the full annual value of the new State Pension will not pay income tax, thanks to a new Pension Tax Allowance. It starts with the 2027/28 tax year, on 6 April 2027, and is announced for 2027/28 to 2029/30, with arrangements beyond April 2030 to be considered in the usual way. Around 500,000 pensioners are set to benefit in 2027/28, and around 290,000 of them will not pay any tax because of it.

The change coming in April: pensions and inheritance tax

This is the pension change closest to home. The core reform was legislated before this Budget, which also announced minor technical amendments, including provisions for prospective personal representatives to direct payment of the tax, and for how the pension is treated when calculating the reduced rate of inheritance tax where part of an estate goes to charity. Finance Act 2026 received Royal Assent on 18 March 2026.

For deaths on or after 6 April 2027, most unused pension funds and pension death benefits are brought into scope for inheritance tax. Until now, most pensions have sat outside a person’s estate. In practice, that means the pension is added to the value of the rest of the estate, such as the home and any ISAs, when working out the tax. Whether any tax is payable depends on the size of the estate and the allowances, reliefs and exemptions that apply. Where tax is due, the standard rate of 40% is charged on the taxable value above the available thresholds.

A few things stay outside. Death in service benefits paid from a registered pension scheme are excluded from the estate. Dependants’ scheme pensions and certain joint life annuities are also excluded. Benefits passing to a spouse or civil partner are generally exempt, subject to the applicable residence rules, and benefits passing to a registered charity are exempt. That does not extend to an unmarried partner, so a pension left to a partner you are not married to or in a civil partnership with may add to an inheritance tax bill.

The thresholds have not changed. The nil rate band is £325,000 and the residence nil rate band is up to £175,000, both frozen until 5 April 2031. If the person who has died was 75 or over, the people who inherit the pension may also pay income tax when they take money from it. HMRC says the part of the benefits that matches the inheritance tax and interest paid does not count towards taxable pension income, so the two taxes do not simply stack on the whole fund. HMRC guidance on how this works where beneficiaries pay the tax themselves is still to come.

It also changes the paperwork. The people dealing with the estate, called personal representatives, are responsible for reporting and paying any inheritance tax due on the pension. That means identifying every pension, contacting each provider and getting a valuation at the date of death. To help with this, a personal representative who knows or reasonably believes that inheritance tax may be due on the pension can instruct a pension scheme to withhold up to 50% of a beneficiary’s entitlement, with notices possible until 15 months after the end of the month of death. HMRC says this is not meant for routine or precautionary use. It does not extend the normal deadline, because any inheritance tax is still due at the end of the sixth month after death. The more pensions someone has, the more of that work there is.

My view: I encourage everyone with a pension to seek a pension review and to seriously consider consolidating, to reduce the administrative burden. Consolidation is not right for everyone, because some older pensions carry guarantees or other benefits that could be lost, which is why a review comes first. It is the kind of thing we look at with clients as part of their planning.

Business Owners And Founders

Line illustration of three people in a paper boat, one pointing ahead, in terracotta

Business Asset Disposal Relief

This relief lowers the rate of capital gains tax when someone sells all or part of a qualifying business. The rate stays at 18%. There is a lifetime limit on the gains that qualify, and for qualifying disposals on or after 6 April 2027 it falls from £1 million to £500,000. Gains above the lower limit do not benefit from the relief, and because it is a lifetime limit, relief claimed in the past matters when working out what is left. The Chancellor said there is no change for three in four claimants.

A new Founders’ Relief

The government has announced Founders’ Relief, intended to apply from 6 April 2027, subject to legislation and final eligibility conditions. As announced, it would apply a 10% rate of capital gains tax to qualifying disposals of shares, up to a lifetime limit of £10 million of gains per individual. It is aimed at founders of, and significant early investors in, high growth, innovative UK companies, not founders in general. The government has published proposed conditions for consultation, which closes on 30 November 2026, and the final design will follow in legislation.

My view: I think this is mostly reassuring for most owners. Three in four claimants are unaffected. For larger exits, the lower limit means planning earlier matters more, and with clients who may sell one day we build it into the plan well ahead of time.

Corporation tax allowances

Full expensing stays for eligible assets. Full expensing lets a company deduct the cost of qualifying equipment from its profits in the year it buys it. The first year allowance on main rate assets rises to 50% for spending from 1 January 2027, and the main writing down allowance falls to 12% from April 2027. If your company buys equipment, these rates set how quickly the cost can be set against profits.

Small business rates relief

In England, the rateable value thresholds for qualifying retail, hospitality and leisure properties rise from £12,000 and £15,000 to £18,000 and £21,000 from 1 April 2027. Relief is 100% up to a rateable value of £18,000, then tapers to nothing at £21,000. If you run a small shop, café or leisure business in England, your rateable value is the figure to look at.

Tax Administration

HMRC gets investment in an additional 670 compliance officers. From April 2029, taxpayers who already make payments on account will make smaller, more regular payments. If you complete a tax return, that could mean paying in smaller, more regular amounts rather than in larger lump sums.

Households And Energy

A £100 Household Energy Payment goes to households in England in council tax bands A to D, up to 20 million households, at a cost of £2.6 billion. It is paid directly into bank accounts from January 2027. Funding is provided for Northern Ireland and the other devolved governments to give their own support.
The temporary zero rate of VAT on domestic electricity in Great Britain is extended by three months, to 30 June 2027. It already applied from 1 October 2026 to 31 March 2027. In Northern Ireland, the government is funding comparable support with electricity bills, and extended VAT relief is expected to apply from April 2027.
The government has asked Ofgem to abolish gas standing charges, by the end of 2027 or as soon as possible after. The costs will move into unit rates, so not every household will save.
The 5p fuel duty cut is extended to 1 July 2027.
From 1 April 2027 the National Living Wage rises by 3.9%, to £13.21 an hour, and the National Minimum Wage rates rise by 3.9% too. Around 2.3 million workers are expected to benefit.
The bank corporation tax surcharge rises from 3% to 6% from 1 January 2027 until 31 March 2028.

Related: Take-home pay calculator.

The Wider Picture

The Office for Budget Responsibility forecasts growth of 1.2% in 2026 and 1.0% in 2027. The Chancellor’s headroom against the stability rule rises to £22 billion in 2030/31. The government has set a target date of 2030 for defence spending of 3% of GDP, and the NATO commitment of 3.5% of GDP by 2035 stands. Mayors will receive a share of income tax and business rates.

What We Are Still Waiting To See

Some detail was not clear in the documents we have seen, and we are not going to guess at it. As it arrives, we will pick through it and reflect it in how we plan with clients.

How the Starter ISA will work, and when it starts.
The legislation for the First Time Buyer ISA, due before its April 2029 launch.
The final conditions and legislation for Founders’ Relief, after the consultation closes on 30 November 2026.
The full eligibility rules, repayment details and complete list of local price caps for Your First Home, due before applications open.
Further HMRC guidance on inheritance tax and pensions, including where beneficiaries pay the tax themselves.

Frequently Asked Questions

Is The Cash ISA Limit Changing?

No. The annual cash ISA limit stays at £20,000 for eligible adult savers. The planned cut to £12,000 has been dropped, and the overall adult ISA allowance across all types of ISA is also £20,000.

What Is Replacing The Lifetime ISA?

A First Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029. It offers a 25% government bonus, capped at £20,000, paid on withdrawal towards a first home worth up to £450,000. Existing Lifetime ISA holders can keep contributing under the current rules.

How Does Your First Home Work?

Your First Home is a government equity loan scheme for eligible first time buyers in England. You can borrow 20% of the purchase price from the government, with a deposit of at least 2.5%. The loan is interest free for five years, then interest is 1.5% in year six and 3% from year seven. The scheme is expected to open for applications in February 2027.

Is Tax On Savings And Property Income Going Up?

Yes, from 6 April 2027. Savings and property income tax rates rise to 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate, four percentage points above today’s 20%, 40% and 45%. The savings rates apply across the UK. The property income rates apply in England, Wales and Northern Ireland, and Scotland and Wales can set their own under existing powers. The rates apply to income that is taxable after any allowances and reliefs, and interest held inside an ISA stays tax free.

Do Pensions Count Towards Inheritance Tax From April 2027?

For deaths on or after 6 April 2027, most unused pension funds and pension death benefits are brought into scope for inheritance tax. That does not mean a 40% bill on every pension. Whether tax is payable depends on the estate, the allowances, reliefs and exemptions available, and the standard rate of 40% applies to the taxable value above the relevant threshold. Benefits passing to a spouse or civil partner are generally exempt, subject to the applicable residence rules, and benefits passing to a registered charity are exempt. The nil rate band of £325,000 and residence nil rate band of up to £175,000 are frozen until 5 April 2031.

What Is Happening To Business Asset Disposal Relief?

The rate stays at 18%, but the lifetime limit on qualifying gains halves from £1 million to £500,000 for disposals on or after 6 April 2027. The Chancellor said there is no change for three in four claimants.

What Is Founders’ Relief?

Founders’ Relief is a proposed 10% rate of capital gains tax on qualifying share disposals, up to £10 million of lifetime gains per individual. It is intended to apply from 6 April 2027, subject to legislation, and is aimed at founders of and significant early investors in high growth, innovative UK companies. The consultation closes on 30 November 2026.

When Does The Triple Lock Change?

The government will adjust the triple lock from April 2030. Before that, the basic State Pension and full new State Pension rise by 3.9% in April 2027.

Official Guidance

Official guidance on gov.uk: Budget 2026 overview of tax legislation and rates; Individual Savings Accounts; Inheritance Tax; Business Asset Disposal Relief; and the new State Pension.