The early release of OBR forecast gave the game away!
After months of speculation, we now understand the Chancellor expects to raise £26 billion in tax take by 2029-30, thanks to the Budget released today.
Many of today’s announcements are not scheduled to come into force until 2027 at the very earliest. In terms of reforms that will be introduced immediately, the list is thankfully short, meaning we have time to consider and plan the best way to respond. After much kite flying this Summer, the Budget does not bring in widespread capital gains tax rises or the wider wealth tax.
Below, we share a headline overview of some of the key announcements. We will share more detailed explanations very soon, including the practical implications for you, your family, and your business.
Income Tax and National Insurance Contributions thresholds
Both rates to be frozen until the end of 2030/31 to increase tax take by fiscal drag.
Pension Salary Sacrifice
Any salary sacrificed above the level of £2,000 will no longer be exempt from National Insurance Contributions from April 2029.
The proposed restrictions have not been extended to include cycle to work schemes or workplace nursery arrangements.
ISA’s
For under 65’s, there will be new rules regarding how individuals can allocate their ISA allowance. From April 2027:
- £12,000 Cash ISA limit.
- £8,000 Stock and Shares ISA limit.
- Over 65’s will not be subject to these limitations and will retain the £20,000 allowance to invest up to all in a Cash ISA.
Property, savings and dividends
Dividends
The tax rate will be raised by 2% on the basic and higher rates on dividends from April 2026, with new rates being 10.75% and 35.75% respectively.
Property income tax and savings income tax
The Government has announced a 2% increase to the basic, higher, and additional bands from April 2027 for this type of income.
This will mean the new bands are as follows:
- Basic: 22%
- Higher: 42%
- Additional: 47%
Employee Ownership Trusts (EOT)
A reduction on the Capital Gains Tax relief on disposals to EOT’s from 100% to 50% from next month.
Gambling
Reforms to Gambling Tax will raise £1.1 billion. This figure is made up of several reforms to the taxation of the gambling industry, including the so-called ‘bingo duty’, and to the ‘remote gambling duty’.
High Value Council Tax Surcharge
A new “mansion tax” on homes valued at above £2 million (to be valued next year). These funds will go directly to the Government, not to local councils as would normally be the case for Council Tax.
Fuel duty
Fuel duty to be frozen until next September.
Agricultural and Business Property Reliefs
Minor reforms to the Agricultural Property Relief (APR) and Business Property Relief (BPR) rules were announced last October and are due to come into force on 6 April 2026. The draft legislation will be amended to allow for the £1 million APR and BPR relief to be transferable between spouses.
Electric vehicles
From 2028/29, the Government will introduce a mileage charge for electric and plug-in hybrid vehicles, at the following rates:
- Electric vehicles – £0.03 per mile
- Plug-in hybrid vehicles – £0.015 per mile
National Minimum Wage
The National Minimum Wage has been lifted to the following, and will come into effect from April 2026:
- Age 18-20: £10.85 (up from £10 per hour)
- Age 21+: £12.71 (up from £12.21 per hour)
Tomorrow morning, we will share a deep dive that will cover these topics in greater detail. This will be shared in advance of our webinar, which will be led by a panel of tax experts and held online at 10am. Register below to join us.
