The Budget explained
What does the latest Budget mean for your money? We unpack the key announcements and consider how they could affect your financial plans.
The Chancellor, John Healey, has delivered this year's Budget, setting out the government's latest plans for taxation, spending and the wider economy. As expected, today's announcements include a number of measures that could affect personal finances, investment decisions and long-term financial planning.
When a Budget is announced, it's often the big headlines that attract the most attention. But beyond the immediate reaction, some of the changes can have longer-term implications for how we save, invest, plan for retirement and pass on wealth to future generations.
Taking the time to understand what has changed, and what it could mean for your own circumstances, can help you make more informed financial decisions.
We've summarised the key announcements from the Budget and explained what they could mean for investors, savers, retirees and those planning ahead.
What's changed?
Cash ISA allowance to remain the same
What is it?
The Chancellor announced that the annual Cash ISA contribution limit for people under 65 will remain at £20,000 instead of reducing it to £12,000 in April 2027.
What does it mean?
The overall £20,000 annual ISA allowance will remain unchanged, meaning savers can continue to allocate their full allowance to cash savings, investments or a combination of both, subject to the relevant ISA rules.
Who is most likely to be impacted?
People under 65 who make substantial contributions to Cash ISAs, particularly those planning to save more than £12,000 in the 2027–2028 tax year.
Things to consider
Review how your savings are structured to ensure they remain aligned with your goals. Cash ISAs can be useful for short-term savings, while investing may offer greater long-term growth potential, although this involves taking investment risk.
Additional increases in tax on savings and property income
What is it?
The Chancellor has announced further increases to income tax rates on savings and property income. These were already due to rise by two percentage points from April 2027, but will now increase by a further two percentage points.
From 6 April 2027, the basic, higher and additional rates will be 24%, 44% and 49% respectively. Savings rates will apply UK-wide, while the announced property rates will apply in England, Wales and Northern Ireland.
What does it mean?
People receiving taxable interest on savings or income from rental properties could face higher tax bills, potentially reducing the income they retain.
Who is most likely to be impacted?
People with substantial cash savings outside tax-efficient accounts, particularly those exceeding their available tax-free allowances, and landlords receiving rental income.
Things to consider
Review how and where your savings and investments are held to ensure you are making appropriate use of available tax-efficient allowances. Property owners may also wish to assess the implications for their overall tax position.
New tax allowance for people relying on the State Pension
What is it?
The Chancellor has confirmed details of a Pension Tax Allowance, first announced in 2025, designed to protect pensioners on lower incomes from paying income tax on the State Pension.
What does it mean?
From April 2027, pensioners whose total income does not exceed the value of the full new State Pension will not face an income tax liability arising from State Pension increases above the standard Personal Allowance.
The allowance will apply until April 2030 and gradually reduce for those with income above this threshold.
Who is most likely to be impacted?
Pensioners whose total income is at or below the full new State Pension amount, particularly those who depend on it as their main source of retirement income.
Things to consider
Review your retirement income sources and how they are taxed. Understanding how the State Pension, private pensions and other savings work together can help you plan a sustainable and tax-efficient retirement income.
Plans to replace the Lifetime ISA
What is it?
The government has confirmed plans to replace the Lifetime ISA (LISA) with a new First Time Buyer ISA from April 2029.
What does it mean?
The replacement will allow annual contributions of up to £4,000, with a 25% government bonus paid towards a qualifying first home purchase. Existing Lifetime ISA holders will be able to continue using their accounts.
From 29 October 2026, the withdrawal charge for Lifetime ISA holders purchasing a qualifying first home above the £450,000 property price cap will also fall from 25% to 20%, protecting their original contributions from the additional penalty.
Who is most likely to be impacted?
First-time buyers using Lifetime ISAs, as well as families supporting younger relatives with home purchases.
Things to consider
Review how existing savings arrangements fit into your longer-term goals, particularly if you are planning to help children or grandchildren purchase their first home.
New ISA incentive proposed for first-time investors
What is it?
The Chancellor has announced plans to work with the investment industry on a new incentive for people investing in a Stocks and Shares ISA for the first time.
What does it mean?
The initiative could encourage more people to invest, although its features and implementation timetable have not yet been confirmed.
Who is most likely to be impacted?
People considering investing for the first time, particularly those who currently rely mainly on cash savings.
Things to consider
Consider how cash savings and investments fit into your longer-term financial plans, taking account of your investment timeframe, financial circumstances and attitude to risk.
Energy bill support for households
What is it?
The Chancellor has announced a £100 payment for up to 20 million households in council tax bands A to D in England from January 2027, with funding also provided to devolved governments.
The government will also extend the temporary 0% VAT rate on domestic electricity until July 2027 and has asked Ofgem to remove standing charges from household gas bills by the end of 2027, or as soon as possible afterwards.
What does it mean?
The measures are intended to help households manage rising energy costs. Removing gas standing charges will shift more costs into the price of gas consumed, potentially benefiting lower-usage households while increasing costs for some higher-usage households.
Who is most likely to be impacted?
Households eligible for direct support and those whose energy bills could change under the new charging arrangements.
Things to consider
Review your household expenditure and consider how energy costs and inflation could affect your longer-term financial plans, particularly in retirement.
Understanding your next steps
Every Budget creates opportunities and challenges, but the impact will be different for everyone. What matters most is understanding how any changes relate to your own goals, circumstances and long-term plans.
If today's announcements have raised questions about your finances, retirement plans, investments or estate planning, we're here to help. Arrange a call with one of our financial advisers to discuss what the changes could mean for you and whether any action may be worth considering.
We can begin with a free, no obligation conversation to understand if our service is right for you. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.
Want to hear more about the Chancellor’s announcements?
Watch our webinar to hear more about the Budget announcements and what they could mean for you.
For full detail of the announcements, you can view the Budget report here.
Important information
This article is for information purposes only. It is not intended as investment advice.
Fees, charges and eligibility criteria apply.
Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Also, in this article we refer to the tax rate and thresholds set for England and Northern Ireland, these may differ for the devolved nations of Scotland and Wales.
The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which isn’t guaranteed and can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.
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