As expected, this year’s Autumn Budget offered few feel-good surprises for those on middle or high incomes. However, most of the changes announced by Chancellor Rachel Reeves will take some time to come into effect, giving you time to seek financial advice and explore your options. Here’s a quick look at what the Budget will mean for savings, investments, taxes and pensions.
Saving
There was little good news for savers. Ms Reeves announced that from April 2027, the annual Cash ISA allowance will fall to £12,000 for investors under the age of 65. The overall £20,000 ISA limit stays the same, however, which means the balance shifts towards Stocks and Shares ISAs. This change may encourage more people to invest rather than hold large sums in cash.
The Chancellor also confirmed a review of the Lifetime ISA (LISA) next year. The current LISA is expected to be replaced with a simpler product aimed solely at first-time buyers. If you already use a LISA, it will be worth waiting to see how the replacement works before making decisions.
Investing
The Budget signalled a shift towards higher tax for investments outside of ISAs, alongside less generous tax incentives for higher-risk investments.
From 2026, dividend tax will rise by 2 percentage points, and from 2027, tax on savings income and property income will rise by the same amount. These increases apply only to assets held outside tax-free wrappers. If you hold a General Investment Account (GIA), rental property or meaningful cash savings outside of an ISA, your future tax bill is likely to increase.
From April next year, income tax relief on Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) will fall from 30% to 20%. These schemes will continue to support early-stage UK companies, but the reduced relief means the financial incentive will be smaller. If you use VCTs or the EIS as part of your overall investment and tax planning strategy, will be sensible to review whether these investments will still suit your circumstances. In the meantime, the full 30% income tax relief is still available until April next year.
These changes make it more important to ensure your investments are structured tax-efficiently and aligned with your long-term goals.
Taxes
Much of the Budget focused on raising revenue without increasing headline tax rates. The extension of the income tax threshold freeze to 2031 will likely bring millions more people into higher tax brackets as wages rise over time. This “fiscal drag” could raise around £8 billion a year and will be felt widely.
A new annual council tax surcharge will apply from April 2028 to homes worth more than £2 million. The charge starts at £2,500 and rises to £7,500 for homes valued above £5 million.
Pensions
The most significant pension change relates to salary sacrifice, which has long helped people boost retirement savings while reducing National Insurance (NI). From April 2029, only the first £2,000 of salary-sacrificed contributions each year will be free of NI. Above that level, the usual employer and employee NI rates will apply.
This shift will matter for higher earners who use salary sacrifice to keep income below key thresholds, such as the £100,000 point at which the personal allowance tapers away. It will also affect parents who rely on salary sacrifice to retain access to childcare benefits. The good news is that the change is still several years away, giving people time to adjust.
For many higher earners, understanding how pension adjustments interact with income thresholds is essential.
A final word
Most of the measures announced only take effect from 2027 onwards, so there is no need to act in haste. Your financial adviser can guide you through the details and help you make well-timed, well-informed decisions over the months ahead.
If you would like personalised guidance on how these Budget changes could affect your savings, investments, or retirement planning, we can help. Get in touch via email at hello@s4financial.co.uk, phone 01276 34932, or via our website: Contact us – S4 Financial