In contrast to recent Budgets, there was relatively little pre-Budget speculation ahead of Chancellor John Healey’s Autumn Budget announcement. Much of the traditional “kite-flying” was absent, but the government had already indicated that there would be no further changes to Capital Gains Tax, whilst reports published on Budget day confirmed a reversal of the previously proposed reduction in the Cash ISA allowance.
For investors, savers and retirees, this was largely a Budget of continuity rather than change. Key investment and pension tax allowances remain unchanged, there were no increases to Capital Gains Tax or dividend tax rates, and no changes to income tax rates. Whilst some targeted reforms have been announced for ISAs, savings taxation and Lifetime ISAs, the overall framework for long-term financial planning remains largely intact.
Income Tax
The Chancellor confirmed there will be no changes to the main rates of income tax. This means the current income tax system remains unchanged for employees, pensioners and investors.
The government has also confirmed that pensioners with income broadly equivalent to the full new State Pension will not be brought into paying tax due solely to future State Pension increases through the introduction of a temporary Pension Tax Allowance from April 2027.
ISAs
One of the most anticipated announcements was the future of the Cash ISA.
Following proposals announced in the 2025 Budget to reduce the Cash ISA allowance from £20,000 to £12,000 for those under age 65 from April 2027, the Chancellor has now reversed course. The Cash ISA allowance will remain at £20,000.
Alongside this, the government announced plans to work with the investment industry on a new incentive designed to encourage first-time investors to use Stocks & Shares ISAs, although full details have yet to be confirmed.
Current ISA allowances therefore remain:
- Cash ISA: £20,000
- Stocks & Shares ISA: £20,000
- Junior ISA: £9,000
- Lifetime ISA: £4,000 (plus government bonus)
Lifetime ISA Changes
The government has announced further reforms to support first-time buyers.
From April 2029, a new First Time Buyer ISA will be introduced for new savers. The account will broadly replicate the current Lifetime ISA benefits, allowing contributions of up to £4,000 each year and providing a 25% government bonus towards the purchase of a first home. Unlike the current Lifetime ISA, there will be no upper age restriction. Existing Lifetime ISA holders will be able to continue using their accounts under current rules.
In addition, from 29 October 2026, Lifetime ISA investors purchasing a qualifying first property costing more than £450,000 will face a reduced withdrawal charge of 20% rather than 25%, protecting the value of their own contributions.
Savings Interest
Whilst savings remain tax-efficient when held within an ISA, the government announced a further increase in tax rates on savings income from April 2027.
Savings tax rates will increase by a further 2% to:
- Basic rate taxpayers: 24%
- Higher rate taxpayers: 44%
- Additional rate taxpayers: 49%
This follows the increases previously announced in the 2025 Budget and reinforces the value of using ISA wrappers and other tax-efficient investment arrangements wherever possible.
Capital Gains Tax
Investors will welcome the absence of any further Capital Gains Tax changes.
The Chancellor confirmed there will be no changes to the main Capital Gains Tax rates applicable to investment assets and no changes to the annual CGT exemption.
For many investors this provides valuable certainty and allows long-term investment planning to continue without the need for immediate restructuring.
Dividends
It was announced that dividend taxation remains unchanged.
There are no further changes to dividend tax rates and the dividend allowance remains at £500. ISAs continue to offer an important shelter for those generating dividend income from investments.
Pensions
The pension system was largely untouched by this year’s Budget, providing welcome certainty for retirement planning.
There were no changes to:
- The £60,000 Annual Allowance
- Pension tax relief
- The Lump Sum Allowance (£268,275)
- Tax-free cash rules
Importantly, the government has also confirmed that it will proceed with the previously announced measure to bring most unused pension funds and death benefits within the scope of Inheritance Tax from April 2027. As this measure had already been announced and consulted upon, there were no further changes or extensions announced in this Budget.
Whilst pensions continue to offer valuable income tax and capital gains tax advantages during an individual’s lifetime, clients should be aware that from April 2027 pension wealth will generally no longer sit outside their estate for Inheritance Tax purposes.
However, it remains the government’s intention to introduce a £2,000 cap on salary sacrifice pension contributions exempt from National Insurance Contributions from 2029, as previously announced in the 2025 Budget.
What does this mean for investors?
From an investment planning perspective, the most significant aspect of this year’s Budget may be what did not happen.
There were:
- No increases to Capital Gains Tax
- No increases to dividend tax
- No reductions to ISA allowances
- No changes to income tax rates
- No reductions to pension contribution allowances
Whilst some targeted changes have been made to savings taxation and ISA arrangements, the core framework for tax-efficient investing remains in place. For most investors, the Budget delivers a welcome degree of stability and allows long-term financial plans to continue largely unchanged.