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Autumn Budget 2026: A welcome absence of tax reforms for individuals and families
For wealthy families, the 2026 Budget is notable as much for what it did not do as for what it did.
Following significant changes in the Autumn Budget 2024, the Chancellor has largely left inheritance tax (IHT), including business (BPR) and agricultural (APR) reliefs and pension rules unchanged. This, we hope, signifies a period of welcome stability for families who have spent the past two years reviewing their financial affairs.
The fundamentals remain
It had been feared in some circles that the combination of a new Prime Minister and increasing fiscal pressures at home and abroad may have presented the Chancellor with the opportunity to fundamentally reshape the UK tax landscape for wealthy individuals and families. In the end, the Chancellor took a more measured approach, preserving wealth and succession planning frameworks that had already seen significant change by his predecessor and avoiding the further widespread reforms that some anticipated. Welcome headlines included:
No wealth tax
No CGT alignment with income tax
No trust or IHT reforms
No reduction in cash ISA limits
No reduction in pension contribution relief
No changes to BPR/APR or pension succession rules
Advisers in the private wealth and family office space will hope that this Budget marks the point at which conversations can move on from reacting to previous legislative changes, and back to helping families manage their wealth and execute long-term succession plans effectively.
Succession planning: the enduring value of ISAs and pensions
The decision to retain the £20,000 cash ISA allowance will be welcomed. The government has also indicated that it will explore additional incentives for first-time stocks and shares ISA investors and will replace the lifetime ISA with a new first-time buyers' ISA from 6 April 2029. The rules around pension contribution relief were also left unchanged.
While these changes are unlikely to be transformational for many wealthy individuals, they reinforce the continued importance of ISAs and pension funds as some of the last tax-efficient shelters for income and investment growth. Pensions may not enjoy the IHT relief they once did, but they are still a protective wrapper and, along with ISAs, remain useful to families seeking to build capital for children and grandchildren as part of wider IHT and long-term succession planning strategies.
Less welcome changes
Property and savings income tax rates rise again
From April 2027, property and savings income tax rates will rise to 24% (basic rate), 44% (higher rate) and 49% (additional rate) for taxpayers in England, Wales and Northern Ireland, with any changes for Scottish taxpayers to be announced at its Budget on 3 December.
Those impacted by these changes may wish to consider the benefits of alternative structures for holding their wealth and managing future tax liabilities, such as investment bonds, family investment companies, trusts and bond wrappers.
High value council tax surcharge
It was also confirmed that the high value council tax surcharge will be introduced from April 2028, with the conclusion of the consultation published. The measure will impose an additional annual charge on owners of residential properties in England valued at £2 million or more, with charges ranging from £2,500 to £7,500 depending on the property's value. Impacted taxpayers should make plans for these previously announced changes.
Increased focus on wealthy taxpayers
Modernising the approach to the compliance of wealthy taxpayers
The government has published a new multi-year plan to modernise the approach to the compliance of wealthy taxpayers. The plan sets out how HMRC will make better use of data, technology and specialist expertise to improve its understanding of wealthy taxpayers and identify and address non-compliance earlier, targeting resources at the greatest areas of risk.
A review of company distribution legislation
The government also announced a reform of company distribution legislation. The reforms are intended to protect genuine family succession and retain access to capital treatment for genuine changes in ownership, but reduce opportunities for well-advised taxpayers to extract profits using structures that give them more favourable tax treatment that is unavailable to other taxpayers. We will have to wait and see draft legislation in 2027 for the full proposals in this regard.
Our takeaway
Ultimately, wealthy taxpayers and their advisers should welcome any investment by HMRC that helps it focus better on proportionate tax enquiries and results in faster resolution of disputes. That said, wealthy taxpayers considered higher risk, or with particularly complex affairs, may experience increased oversight and an increase in tax enquiries.
Family groups, business owners and wealthy taxpayers could therefore benefit from reviewing their tax affairs proactively to ensure structures are operating as intended, and that the rationale underpinning tax planning arrangements is clearly documented.
Key takeaways for wealthy families
Review post-2024 planning: With major reforms off the table for now, review and refine existing IHT and succession plans
Pension funds and IHT: Review pension savings arrangements ahead of the previously announced IHT changes coming in from April 2027
Savings and property income reviews: Review the impact of increased property and savings income tax rates and explore the merits of alternative wealth structures
HMRC readiness: Review tax planning, business and trust governance, records and family-office compliance
Please get in touch with your usual contact or one of the contacts listed if you would like to discuss any of the above further.
Detailed analysis
Increases to income tax rates
Income tax rates applying to savings and property income will increase from April 2027, while most income tax thresholds and national insurance limits remain frozen.
The government has confirmed that income tax rates on savings and property income will increase by four percentage points from 6 April 2027, double the increase originally announced at Budget 2025.
The measure leaves tax rates on other sources of income unchanged, while most income tax thresholds and national insurance limits will remain frozen until 2030/31, as previously announced.
Summary
The government previously announced that separate rates of income tax will apply to savings income and property income from 6 April 2027, while income from employment, self-employment and pensions would continue to be taxed at existing rates.
That measure has been amended, so that income tax rates for savings income and property income will now increase to 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers.
The new savings income tax rates will apply across the UK. The new property income tax rates will apply in England, Wales and Northern Ireland.
Other income tax rates and allowances
Income tax rates applying to employment income, pensions and trading profits (20%, 40% or 45%) and dividend income (10.75%, 35.75% or 39.35%) remain unchanged.
The existing dividend allowance and personal savings allowance will also remain in place. These currently shelter the first £500 of dividend income and up to £1,000 of savings income for basic rate taxpayers (£500 for higher rate taxpayers).
National insurance contributions
Most national insurance contributions limits, thresholds and rates have been frozen, except for the Class 1 lower earnings limit (increased to £6,916) and Class 2 small profits threshold (increased to £7,355). There is also an increase to the weekly rates of Class 2 (£3.80) and Class 3 (£19.05) national insurance contributions.
Our comment
The increase to the tax rate on savings and property income was first announced at the 2025 Autumn Budget. The Chancellor has now opted for a larger increase, doubling the previously proposed rise from 2% to 4%.
These measures seek to increase tax revenues while maintaining the government’s commitment not to increase the headline income tax rates for “working people”. Instead, the measures fall on savers and landlords.
We assume the changes will see the deduction available to landlords of residential properties increase from 20% to 24%, and that trustees will also be subject to the increased rates on their savings or property income. We expect to see an accompanying change to the allocation of allowances and reliefs such that these deductions must first be taken against income subject to 20%, 40% and 45% tax rates before property or savings income.
Savers should ensure they are taking full advantage of available tax-advantaged investments, particularly ISAs, within which interest and dividend returns are not subject to tax.
ISA reform
A reformed help to save scheme will launch in spring 2028, allowing savings accounts to be offered by a wider range of providers.
From April 2029, a new first time buyer ISA will replace the lifetime ISA for new savers, offering a 25% government bonus on qualifying withdrawals for a first home worth up to £450,000, capped at £20,000. Existing lifetime ISA holders will retain their current arrangements, although the withdrawal charge for first-home purchases above the £450,000 cap will fall from 25% to 20% from 29 October 2026.
The cash ISA limit will remain at £20,000 per annum for all savers over 18 years old from April 2027.
Summary
The Help to Save scheme will be reformed and reintroduced in spring 2028 using a multi-provider delivery model. Rather than being available through a more limited provider structure, accounts will be offered by providers including banks, building societies and credit unions. The reform is intended to broaden consumer access and choice, while preserving Help to Save as a targeted savings product for eligible customers.
The new first-time buyer ISA will be introduced from April 2029 and will replace the lifetime ISA for new savers. It will allow contributions of up to £4,000 a year and provide a 25% government bonus based on the account balance when funds are withdrawn for a qualifying first-home purchase, subject to a maximum bonus of £20,000 and a £450,000 property price cap. The product will have no upper age restriction, and the bonus will be paid on withdrawal, avoiding the need for a withdrawal charge where the purchase satisfies the qualifying conditions.
Existing lifetime ISA holders will be able to continue contributing to and using their accounts under the current rules. From 29 October 2026, however, the withdrawal charge for an existing lifetime ISA holder purchasing a qualifying first home above the £450,000 property cap will be reduced from 25% to 20%. The 25% charge for other unauthorised withdrawals will remain unchanged.
The government will also retain the annual cash ISA subscription limit at £20,000 for savers aged 18 or over from April 2027. This is intended to maintain substantial tax-advantaged savings support while the government works with the investment industry to encourage wider participation in investment products.
Our comment
The changes announced by the Chancellor are intended to encourage individuals to save for their future and towards their first home.
Following the reduction to the cash ISA limit announced in the 2025 Budget, it is welcome news that this has been abandoned and the full allowance reinstated. This will likely remain popular for more risk-averse savers.
Reform to lifetime ISAs was expected, but an increase in the property price cap would have likely been more welcome than a reduction in the penalty. The introduction of a new first-time buyer ISA closely mirrors the lifetime ISA, with restrictions still in place on purchasing properties.
Modernising wealthy taxpayer compliance
HMRC has published a multi-year strategy setting out how it intends to modernise its approach to wealthy taxpayer compliance. The plan aims to reduce the wealthy tax gap, estimated at £3.6 billion, by bringing together information from across HMRC systems and third-party sources using advanced analytics and AI to identify risks earlier and deploying specialist resources towards higher-risk taxpayers.
Summary
HMRC has published a programme setting out how it intends to administer tax affairs for wealthy individuals over the coming years. This focuses on making greater use of data, alongside investment in technology and digital services to allow it to utilise the knowledge of newly recruited specialist expertise.
HMRC currently defines a wealthy taxpayer as an individual with either income exceeding £200,000 or assets exceeding £2 million in any of the previous three years. The wealthy population has increased significantly in recent years, growing from around 700,000 individuals in 2021/22 to approximately 1.3 million in 2025/26. HMRC estimates that this population contributed around £160billion of tax receipts during 2025/26.
The core theme running throughout the 26-page document is the creation of a more connected view of taxpayers' affairs by combining information obtained from companies, trusts, partnerships, overseas entities, financial institutions and international data exchange arrangements such as the Common Reporting Standard.
HMRC also intends to deploy advanced analytics, automated risk triggers and AI to identify potential compliance risks at an earlier stage. These tools will support the use of targeted prompts and more focused compliance interventions based on the perceived risk profile of the taxpayer.
Lower risk taxpayers may receive greater automated support and reduced intervention, while those considered higher risk may get increased oversight. HMRC also intends to continue expanding the use of customer compliance managers (CCMs) for taxpayers with particularly complex affairs.
Our comment
HMRC estimates that the wealthy tax gap of £3.6billion represents just under 6% of the total UK tax gap. This group of taxpayers are, on HMRC’s analysis, among the most tax compliant.
By comparison, the tax gap attributed to small business has trebled to £36.7bn or 62% of the total tax gap in a decade.
The most significant aspect of this announcement is HMRC's stated intention to build a more complete picture of wealthy taxpayers and their connected interests. This has been an HMRC aim for several years, with prior initiatives including the introduction of CCMs.
Tax enquiries and disputes involving wealthy taxpayers often take many years to resolve. Wealthy taxpayers and their advisers will therefore welcome any investment by HMRC that helps it to better focus on proportionate tax enquiries and results in faster resolution of disputes.