Author:
Amanda Ruggles
Higher taxes on savings and property income, changes to business reliefs and a new pension tax allowance were among the announcements in the Autumn Budget.
This year’s Budget offered some breathing space, but there are still changes ahead for individuals and businesses. Several headline tax rates remain unchanged, while frozen thresholds and adjustments to reliefs could have a less obvious effect on tax bills.
From April 2027, tax rates on savings income will rise to 24%, 44% and 49% for basic, higher and additional rate taxpayers respectively. The same rates will apply to property income in England, Wales and Northern Ireland. Scottish property rates have yet to be announced.
Meanwhile, the personal allowance remains at £12,570, with the main income tax thresholds frozen until the end of 2030/31. As incomes rise, those freezes can bring more income into tax or push taxpayers into a higher band.
There was better news for cash savers. The proposed restriction on cash ISA subscriptions for under-65s has been abandoned, and the overall annual ISA limit will remain at £20,000 for 2027/28.
The full new state pension will increase by 3.9% to £250.70 a week from April 2027. This takes the annual amount to £13,036.40, above the frozen personal allowance.
A new pension tax allowance will therefore be introduced for 2027/28 to 2029/30, intended to prevent those whose total income does not exceed the full new state pension from paying income tax. The allowance will be withdrawn gradually where income exceeds that level.
For first-time buyers, a new First Time Buyer ISA is planned for April 2029. It will allow contributions of up to £4,000 a year and provide a 25% government bonus, subject to limits.
Corporation tax rates remain unchanged at 25% for the main rate and 19% for the small profits rate. However, businesses will need to consider several other announcements:
Many of the measures will take effect from April 2027 or later, giving individuals and businesses time to understand their implications. The detail, eligibility conditions and timing will all matter.
The Budget proposals are subject to amendment before becoming law. Professional advice should be sought before taking action.
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