The Chancellor of the Exchequer last week delivered a Budget aimed at boosting growth and easing the ongoing cost of living crisis. But rather than unveiling sweeping reform, she opted for what many observers have described as a largely political package. Tax expert Dan Neidle summed it up sharply, calling it “less an elegant smorgasbord, more a selection of random changes more akin to a Las Vegas buffet.”
So, what meaningful changes did this year’s Budget deliver? In truth, very few.
Many of the measures that will significantly shape the tax landscape for private clients were actually announced last year—most notably the limits on Business Relief (BR) and Agricultural Property Relief (APR). The upcoming inclusion of personal pensions in the IHT regime, expected in 2027, further adds to the long-term tax burden for wealthier individuals.
What stayed the same?
Despite rumours and speculation, several key areas remain untouched:
- The tax-free lump sum on retirement stays in place: individuals can still withdraw 25% of their pension tax-free, up to £268,275, unless they hold LTA protection.
- No changes were introduced for partners’ National Insurance, including those in LLPs.
- The inheritance tax system remains unchanged, with no cap on lifetime gifts and the seven-year rule still central.
- The ISA allowance remains frozen at £20,000.
- Income tax rates, the additional dividend rate and Capital Gains Tax all remain untouched.
- The much-mentioned exit tax was also not tabled.
So what has changed?
Income Tax
Thresholds for income tax and national insurance will be frozen until April 2031. From April 2026, dividend tax rates will rise by two percentage points, taking them to 10.75% for basic-rate taxpayers and 35.75% for higher-rate taxpayers. A year later, in April 2027, a similar two-point rise will apply to tax on savings and property income.
Pensions
A significant change arrives in April 2029: a new £2,000 cap on salary sacrifice pension contributions. Anything above this threshold will be subject to both employee and employer national insurance. Standard employer contributions, however, remain unaffected.
Property Taxes
From April 2028, high-value homeowners will see a new annual council tax surcharge on properties worth over £2 million. The surcharge—between £2,500 and £7,500—will rise annually in line with CPI. This measure will not apply in Scotland.
Inheritance Tax
The nil-rate band (£325,000) and residence nil-rate band (£175,000) continue their long freeze, now set to last until April 2031. From 2026, unused portions of the £1 million business and agricultural property relief allowance will be transferable to a spouse or civil partner.
Employee Ownership Trusts
Effective immediately, the CGT relief for sales to Employee Ownership Trusts has been cut from 100% to 50%.
EIS and VCT
The government plans to widen the remit of both the Enterprise Investment Scheme and Venture Capital Trusts, enabling them to support companies beyond the early-stage growth phase.
ISAs
The £20,000 annual ISA limit remains unchanged, but from April 2027, savers under 65 must invest at least £8,000 into a stocks and shares ISA.
Every Budget offers a moment for individuals and advisers to reassess their financial strategies. Even in a year light on headline-grabbing reforms, ensuring long-term plans remain aligned and tax-efficient is more important than ever.
