Fairstone
Welcome to our round-up of The Budget 2026.
Here we list the key announcements with analysis from experts within Fairstone and some potential actions for you to consider.
To talk to one of our advisers today about any of the issues raised, simply call 0800 884 0840 or click here.
Adviser analysis
“This was a fairly vanilla Budget overall. It was reassuringly boring in the main, but at least it hasn’t delivered any negative shocks and was reasonably well received by the markets. It was important for the Chancellor to demonstrate fiscal responsibility and the markets have reacted well to that.” – Harry Scargill, Portfolio Manager
“It was a small-time Budget, anti-climactic in many respects but after the last few Budgets it was a welcome respite for clients after being a source of anxiety for them over the last three years as they have been in the firing line for a lot of the measures introduced.” – Harry Sims, Chartered Financial Planner
“I went in with low expectations and I wasn’t disappointed!” – Mike Palmer, Corporate Financial Adviser
Actions to consider
If you are close to one of the current tax thresholds, there is a good chance that pay rises over the next few years could take you into a higher rate of tax.
This could affect not just your take-home pay but also access to things such as childcare vouchers, which offer up to 30 hours of free childcare per week.
If you or your partner earns over £100,000 a year, your entitlement to this, and other childcare assistance will be reduced.
Talk to an adviser about how you could divert some of your salary into pension savings, which could avoid this “cliff-edge” scenario, enable you to reclaim some of this childcare support, and help boost your retirement pot.
For more information on the £100,000 a year cliff edge, read our blog on the subject.
Adviser analysis
“It was good to see no changes to the regime around tax-free lump sums, despite the rumours which seem to occur every year. I was keen to see if they were going to reverse the change to bring unused pensions into estates for inheritance tax, but that now looks like it’s going to go ahead as planned. That change turns all the previous pension planning strategies on its head.” – Harry Sims
Actions to consider
If you haven’t yet talked to your adviser about the change in pensions and Inheritance Tax being introduced in April 2027, now is the time to do so.
Everyone’s needs, circumstances, objectives and financial goals are different so this is where getting expert personal financial advice is very important.
Also, with no change to plans to reduce the scope of salary sacrifice schemes in 2029, time is starting to run out on making the most of these schemes.
If you are an employee saving into a workplace pension, talk to an adviser on potentially restructuring how you save for your retirement, particularly taking into account the extension of the freeze on income tax thresholds.
If you are an employer operating a salary sacrifice pension scheme, this is a good opportunity to review the scheme in consultation with an adviser since its continuing operation could have quite an impact on your bottom line.
You can find out more information about the changes by reading our article here.
From April 2027:
Adviser analysis
“On the Starter ISA, it’s always positive to get people interested in investing and getting access to markets and doing that in a tax-efficient way. As far as things which didn’t happen, it was good to get clarity around Capital Gains Tax and to see no changes there.” – Harry Scargill
“I would be interested to hear how the Starter ISA is structured because typically if you are just starting out investing then the £20,000 a year ISA allowance is normally enough. Also, how do they decide who is investing for the first time?” – Harry Sims
“The change to penalties for existing Lifetime ISA holders will be welcome for many, particularly clients in places like London and the South East where prices are higher.” – Emily Cadmore, Mortgage & Protection Adviser
Actions to consider
If you have a Lifetime ISAs and are looking to buy a house over the £450,000 barrier, you may want to consider whether this is now the right time to buy. If this is the case, then talk to your adviser about your options.
With tax on savings interest increasing again and plans to limit cash ISAs to £12,000 a year now scrapped, if you have substantial savings, consider consulting with your adviser and looking at more tax-efficient ways of managing your money and mitigating the potential tax increases on your income.
Adviser analysis
“The additional increase in tax on property rental income will push landlords still further. It’s already less attractive to be a landlord and this will only exacerbate it.” – Emily Cadmore
Actions to consider
If you are looking to buy your first property, or looking to help children or other family members to buy, the introduction of the ‘Your First Home’ scheme may present a good opportunity for you.
While the full details of the scheme have yet to be announced, talk to your adviser about your options when it comes to the value of house which you can afford and the mortgages available to you.
If you are coming up to remortgaging your property, talking to a mortgage adviser could help you to find the most competitive mortgage rates and get a good deal.
Adviser analysis
“There weren’t many positive things to come out of this Budget for business, although it could have been worse as there were rumours about aligning CGT with income tax but that seems to have gone away. The reduction in business disposal allowance relief was a bit of a smack in the face for business owners, particularly those looking to sell their business. The ‘Founder’s Relief’ is welcome, but the devil will be in the detail such as how do you define a founder and what are the qualifying criteria and the same applies to the Young Entrepreneurs Allowance.” – Mike Palmer
Actions to consider
If you are a business owner considering a business sale or asset disposal, now is a good time to get in touch with your advisers and consider your options.
Talk to your adviser to make sure that the timing is right and that you have considered factors including taxes, allowances, market conditions and other variables.
The rise in the minimum wage will add further cost to businesses. Talk to an adviser about other workplace benefits which you could put in place to recruit and retain employees – such as group life assurance and private medical cover – but which will cost your business less than a larger across the board pay rise on top of the minimum wage increase to maintain wage differentials to your competitors.
Get in touch today to speak to us about any of the issues raised in this article.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER LOAN SECURED AGAINST IT.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. Protection policies are subject to terms, conditions and exclusions. Whether a claim is paid will depend on the policy terms and individual circumstances. Always seek professional advice before making financial decisions.
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Income tax thresholds in England, Wales and Northern Ireland will remain frozen until the end of the 2029/30 financial year. The personal allowance remains £12,570, with the basic rate of 20% applying to income between £12,571 and £50,270, the higher rate of 40% between £50,271 and £125,140, and the additional rate of 45% above £125,140. Scotland sets its own income tax rates.
Frozen income tax thresholds mean that if your salary increases while the thresholds remain unchanged, you could move into a higher tax band or pay tax on a greater proportion of your earnings. This is known as fiscal drag. If you earn close to £100,000, additional income could also reduce your eligibility for certain childcare support. Pension contributions may help mitigate these effects, depending on your circumstances.
No. The maximum tax-free pension lump sum remains £268,275, and the Budget did not change how tax-free lump sums are administered. However, most unused pension funds and pension death benefits are still scheduled to be included in estates for Inheritance Tax purposes from April 2027. Reviewing your retirement and estate planning arrangements with a financial adviser may help you prepare.
The planned reduction in the annual cash ISA allowance from £20,000 to £12,000 for under-65s has been scrapped. The overall annual ISA allowance remains £20,000, with the cash ISA and stocks and shares ISA limits frozen at £20,000 a year. A new First-time Buyer ISA will replace the Lifetime ISA, while a Starter ISA is also planned to encourage first-time investors.
Yes. From April 2027, the tax rates on savings interest are due to increase by two percentage points for each income tax band: to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. If you hold substantial cash savings, it may be worth reviewing whether tax-efficient options, such as ISAs, could help reduce the tax you pay.
From April 2027, the withdrawal penalty for existing Lifetime ISA holders buying a first home costing more than the current £450,000 property price limit will fall from 25% to 20%. This could benefit some buyers in higher-priced areas, although eligibility and the wider implications will depend on individual circumstances. The Government also plans to introduce a First-time Buyer ISA to replace the Lifetime ISA.
The Government plans to introduce a backed equity loan scheme called ‘Your First Home’ in spring 2027 to help first-time buyers purchase a property. The full details have yet to be announced, so prospective buyers should review the eligibility criteria, available support and mortgage options once further information becomes available.
From April 2027, the tax rates on property rental income are due to increase by two percentage points, reaching 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. Landlords may therefore wish to review their expected rental income, expenses and tax position to understand the potential effect on their returns and whether their current investment strategy remains appropriate.
From April 2027, the Business Asset Disposal Relief lifetime allowance is due to fall from £1 million to £500,000. The Budget also introduces a new Founder’s Relief, with a 10% Capital Gains Tax rate on qualifying share disposals up to a lifetime limit of £10 million in gains per person. The eligibility criteria and detailed rules will be important, so business owners considering a sale should review the timing and structure of their exit with a financial adviser.
A financial adviser can help you understand how the Budget’s changes may affect your personal finances, retirement plans, investments, property decisions or business interests. This could include reviewing pension contributions, making use of tax-efficient savings allowances, preparing for changes to Inheritance Tax rules or planning a business sale. Personalised advice can help you assess the options available in the context of your financial goals and circumstances.
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