Educational, not advice. This article sets out what the UK Budget of 28 October 2026 changes for savers, investors and pensioners, as stated in the Budget documents published that afternoon. It is general information, not personal financial advice. Savvy Investor Guide is not authorised or regulated by the Financial Conduct Authority. Nothing here tells you what to do with your savings, investments or pension.
What this article covers: the Budget measures that touch ISAs, tax on savings, dividends and gains, income tax thresholds, the State Pension, private pensions, first-time buyers and household energy bills, plus the official forecasts behind them. Every figure comes from the Treasury’s Budget documents or the Office for Budget Responsibility’s forecast, both published on 28 October 2026.
What it does not cover: business taxes in detail, or what any individual should do. Several measures still need legislation, so details can change before they take effect.
In short
- The £12,000 cash ISA cap is scrapped. The cash ISA limit stays at £20,000 for everyone from April 2027, instead of falling to £12,000 for under-65s.
- Tax on savings interest rises again. From 6 April 2027 the savings rates will be 24%, 44% and 49%, two points above the rates already legislated and four points above today’s.
- Dividend tax, capital gains tax and the ISA allowance are unchanged for 2027-28. Income tax thresholds stay frozen until April 2031.
- A new Pension Tax Allowance means pensioners whose income is no more than the full new State Pension, £13,036.40 a year from April 2027, will not pay income tax on it.
- The triple lock changes from April 2030. The State Pension will rise by the highest of 2.5%, inflation, or the amount needed to keep its value relative to earnings as reached in April 2029.
- A First Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029, and the Lifetime ISA withdrawal charge for homes above £450,000 falls to 20% from 29 October 2026.
- Households in council tax bands A to D in England get a £100 energy payment from January 2027, and the government has asked Ofgem to abolish gas standing charges.
What the UK Budget 2026 means for savers and investors
The UK Budget is the government’s main annual statement on tax and spending. The Chancellor of the Exchequer, now John Healey, announces it in the House of Commons, and the Treasury publishes the detail as the speech ends, alongside an independent forecast from the Office for Budget Responsibility (OBR). This one, on Wednesday 28 October 2026, was Healey’s first. For US readers, it does roughly the job of the President’s budget and a tax bill combined. Its tax changes are then put into law through a Finance Bill, which Parliament debates over the following months.
For savers, the UK Budget 2026 headlines are a reversal and a rise. The government has dropped the cut to the cash ISA limit, even though it was already written into regulations. Tax on savings interest outside ISAs and pensions, already due to rise in April 2027, will rise further. Most other personal tax rates stay where they were.
ISAs: the cash ISA cap is scrapped
From 6 April 2027 the cash ISA limit was due to fall to £12,000 a year for anyone aged 64 or under, within the overall £20,000 ISA allowance. That rule had been made in regulations in September. The Budget drops it: “the government has decided not to reduce the cash ISA limit, so that it remains at £20,000.” The Treasury says the change will be made by secondary legislation laid before Parliament in November 2026.
The overall ISA allowance stays at £20,000, and the Treasury’s costings assume it stays there up to and including 2030-31. The Junior ISA limit stays at £9,000. Our earlier guide to the £12,000 cash ISA cap describes a rule that is now not due to take effect.
Two rules announced alongside the cap are not mentioned in the Budget documents: the 22% charge on interest earned on cash held inside a stocks and shares ISA, and the ban on transfers from stocks and shares ISAs into cash ISAs. The documents neither confirm nor withdraw them. Our piece on the 22% ISA cash charge will be updated when HMRC says what happens to them.
The Budget makes three other ISA changes:
- A First Time Buyer ISA from April 2029. It replaces the Lifetime ISA for new savers. It keeps the £4,000 a year limit and the 25% government bonus, but the bonus is paid on the account balance when the money is withdrawn for a first home costing up to £450,000, up to a maximum bonus of £20,000. There is no upper age limit. Existing Lifetime ISA holders can keep paying in under the current rules. Our guide to the First Time Buyer ISA covers how it differs from the Lifetime ISA.
- A lower Lifetime ISA charge for dearer homes. From midnight on 29 October 2026, the withdrawal charge for buying a home above the £450,000 price cap falls from 25% to 20%. The charge on other unauthorised withdrawals stays at 25%. Our Lifetime ISA guide explains the bonus and the charge in full.
- A possible incentive for first-time investors. The government “will work with industry to explore a new ISA incentive for people investing in a stocks and shares ISA for the first time.” No design, amount or date has been set.
Tax on savings interest rises to 24%, 44% and 49%
Interest on savings held outside an ISA or pension has its own tax rates. The 2025 Budget had already legislated a two-point rise from April 2027. This Budget adds another two points from the same date, across the whole UK: “The savings basic rate will be 24%, the savings higher rate will be 44%, and the savings additional rate will be 49%.” Rates of tax on property income in England, Wales and Northern Ireland rise in the same way.
| Savings income tax band | 2026-27 (now) | 2027-28 before this Budget | 2027-28 after this Budget |
|---|---|---|---|
| Basic rate | 20% | 22% | 24% |
| Higher rate | 40% | 42% | 44% |
| Additional rate | 45% | 47% | 49% |
The tax-free amounts do not change. The Personal Savings Allowance stays at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, and the starting rate for savings stays at 0% on up to £5,000 of interest for people with low other income. The Treasury says “84% of income tax payers will be unaffected by these changes”, and that a basic-rate taxpayer could hold more than £25,000 in savings, on top of ISAs, before paying any tax. That figure assumes an average interest rate of 4%. At a higher rate, a smaller balance uses up the allowance.
Dividends, capital gains and shares
The rates of tax on dividends stay at 10.75%, 35.75% and 39.35% for 2027-28, with the £500 dividend allowance unchanged; our dividend tax explainer shows how those rates apply. Capital gains tax stays at 18% and 24%, with the £3,000 annual exempt amount unchanged.
Two changes affect people selling a business from 6 April 2027. A new Founders’ Relief charges 10% capital gains tax on up to £10 million of lifetime gains for qualifying founders of “high-growth, innovative companies”. The lifetime limit for Business Asset Disposal Relief, which charges 18%, falls from £1 million to £500,000. Separately, a new Securities Transfer Tax will replace stamp duty on share purchases “from late 2027”; its rate is not set out in the documents we read.
Income tax thresholds stay frozen to April 2031
There is no change to the headline rates of income tax, National Insurance or VAT. The personal allowance stays at £12,570, the higher-rate threshold at £50,270 and the additional-rate threshold at £125,140. The Treasury’s costings show all three held “up to and including 2030-31”, as the 2025 Budget set out; the OBR assumes they rise with inflation again from April 2031. When thresholds are frozen while wages and pensions rise, more income falls into tax each year.
The State Pension, the triple lock and a new Pension Tax Allowance
The State Pension keeps rising under the current triple lock, by the highest of earnings growth, inflation or 2.5%, up to and including April 2029. HM Treasury’s explainer gives the full annual value of the new State Pension from 6 April 2027 as £13,036.40, which works out at about £250.70 a week, up from £241.30.
That is above the £12,570 personal allowance. Without a change, someone living only on the full new State Pension would have started paying income tax. We covered that problem in September. The Budget answers it with a Pension Tax Allowance, which applies automatically from April 2027 to people over State Pension age:
- Total income up to £13,037: no income tax. The allowance is worth up to £94 a year.
- Total income between £13,037 and £13,319: a reduced allowance, so less tax than otherwise.
- Total income of £13,319 or more: no Pension Tax Allowance.
Total income includes occupational and private pensions as well as the State Pension. The Treasury expects around 290,000 pensioners to pay no tax because of it in 2027-28, with around 500,000 paying less. It is set for three tax years, to April 2030, and the government “will consider any arrangements beyond April 2030”. The personal allowance itself does not change.
From April 2030 the triple lock is adjusted. The State Pension will rise “by the highest of 2.5%, inflation, or the amount required to maintain its value relative to earnings as reached in April 2029.” Put simply, the earnings link stops pushing the pension up faster than wages. It only stops it falling behind them. The Treasury puts the saving at £15 billion a year by the end of the 2030s, to help fund a National Care Service in England. Our explainer on the triple lock from 2030 sets out what this means for future increases.
Private pensions: what changes and what does not
Pension tax-free cash is untouched. The lump sum allowance stays at £268,275, the annual allowance at £60,000 and the money purchase annual allowance at £10,000 for 2027-28.
- Inheritance tax on unused pensions still starts on 6 April 2027. The Budget makes a technical change to how the tax is paid, not to the rule itself. Our guide to pensions and inheritance tax from 2027 still applies.
- The “two-year rule” on death benefits goes. Beneficiaries will no longer pay tax on pension and lump sum death benefits just because they were paid more than two years after the member’s death. This applies to payments made on or after 28 October 2026.
- The salary sacrifice cap is unchanged. From 6 April 2029, only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance, as announced at the 2025 Budget.
First-time buyers and household bills
The Budget sets out the details of Your First Home, the new-build scheme for first-time buyers in England, backed by £4.7 billion. Buyers need a deposit of at least 2.5% and a repayment mortgage, and the government lends 20% of the price as an equity loan, interest free for five years. Household income must be £110,000 or less outside London, or £140,000 or less in London. Price caps are set locally; in London they are £650,000 in inner boroughs and £500,000 in outer ones. Pre-registration opens by the end of December 2026, applications in February 2027, and the first sales are due in April 2027. Our October look at UK house prices sets the market background.
On energy, households in council tax bands A to D in England will get a £100 Household Energy Payment, delivered by local authorities from January 2027. The devolved governments in Scotland, Wales and Northern Ireland receive a share of the funding. The cut in VAT on domestic electricity is extended to July 2027. The government has also asked Ofgem, the energy regulator, to abolish gas standing charges in Great Britain, “aiming for delivery by the end of 2027 or as soon as possible after then”, with the costs moving onto the price per unit of gas. To help pay for this, the surcharge on bank profits doubles from 3% to 6% for 15 months, from 1 January 2027 to 31 March 2028.
The high value council tax surcharge on homes in England worth £2 million or more goes ahead from April 2028, with the threshold unchanged.
The forecasts behind the Budget
The OBR expects the economy to grow by 1.2% in 2026 and 1.0% in 2027. It sees inflation, measured by the Consumer Prices Index, averaging 3.4% in 2027 and peaking at 3.8% early that year, before returning to the 2% target in 2028. Borrowing is forecast at £133 billion this year, falling to about £67 billion by 2030-31.
The government’s main fiscal rule, that day-to-day spending is covered by tax revenue by 2029-30, is met with £15 billion to spare. The OBR says that margin is £7 billion lower than at the 2025 Budget, and puts the chance of meeting the rule at 56%. The Treasury says higher debt interest more than accounts for the squeeze, and that the OBR forecasts an average of £14 billion a year more in debt interest than in March. Our piece on fiscal headroom and gilt yields explains why that margin matters to bond markets.
What happens next
- 29 October 2026: the lower Lifetime ISA charge for homes above £450,000 takes effect, and the Budget debate continues in the Commons.
- November 2026: regulations to keep the cash ISA limit at £20,000 are due to be laid before Parliament.
- December 2026: pre-registration for Your First Home opens.
- January 2027: the £100 Household Energy Payment begins, and the bank surcharge rises to 6%.
- 6 April 2027: the new savings tax rates, the Pension Tax Allowance and inheritance tax on unused pensions take effect, subject to the Finance Bill.
- April 2029: the First Time Buyer ISA launches and the salary sacrifice cap begins.
- April 2030: the adjusted triple lock applies for the first time.
Frequently asked questions
Can I still put £20,000 into a cash ISA from April 2027?
That is the government’s stated intention. The Budget keeps the cash ISA limit at £20,000 for all savers aged 18 and over, but the regulations that would have cut it are already made, so they need to be reversed by new regulations, which the Treasury says will be laid in November 2026. The overall £20,000 ISA allowance is the same whichever type of ISA you use.
Do I need to claim the Pension Tax Allowance?
No. The Treasury’s explainer says it is applied automatically when HMRC calculates your income tax. It applies to people at or over State Pension age, or reaching it during the tax year, and it depends on your total income, not just your State Pension.
Does the savings tax rise affect money in an ISA or a pension?
No. Interest earned inside an ISA or a pension is not subject to income tax, so the new rates apply only to interest on savings held outside them, above the Personal Savings Allowance and any starting-rate band.
I live in the United States. Does the UK Budget affect me?
Only if you pay UK tax, for example on a UK pension, UK rental income or interest from UK accounts. Whether UK or US tax applies to a particular income, and how any double taxation is relieved, depends on the UK-US tax treaty and your own position. A cross-border tax adviser can check that.
Sources
- HM Treasury, “Budget 2026”, 28 October 2026
- HM Treasury and HMRC, “Budget 2026: Overview of tax legislation and rates (OOTLAR)”, 28 October 2026
- HM Treasury, “Supporting documents for Budget 2026” (policy costings)
- HM Treasury, “Pension Tax Allowance Explainer”, 28 October 2026
- Office for Budget Responsibility, “October 2026 Economic and fiscal outlook” (as laid before Parliament)
- HM Treasury, “First Time Buyer ISA consultation: government response”
- GOV.UK, “Your First Home”
- GOV.UK, “Chancellor abolishes standing charges on gas bills to make payments fairer”, 28 October 2026
- HM Treasury, “Budget 2026: Breathing space for today, hope for the future”, 28 October 2026
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