Budget 2026: what it actually means for your money

The Budget is done. There’s no rise in the headline rates of income tax, National Insurance or VAT. The changes that affect you are in the detail of the Budget 2026 document, and most of them don’t start until April 2027 or later. That gives you time to plan.

Here’s what changes, who it hits, and what to do about it.

Savers: cash ISA limit stays at £20,000, but tax on interest goes up

The cash ISA limit stays at £20,000. Last year’s Budget planned to cut it to £12,000 for under-65s from April 2027. That cut is now scrapped. You can keep putting up to £20,000 a year into cash ISAs.

Tax on savings interest outside an ISA goes up again. Last year’s Budget had already added 2 percentage points from April 2027. This Budget adds another 2 on top. From 6 April 2027, interest above your Personal Savings Allowance will be taxed at:

• 24% for basic-rate taxpayers (20% today, £1,000 savings allowance)
• 44% for higher-rate taxpayers (40% today, £500 savings allowance)
• 49% for additional-rate taxpayers (45% today, £0 savings allowance)

Take £30,000 earning 5%. That’s £1,500 of interest. A higher-rate taxpayer pays tax on £1,000 of it, which is £400 today and £440 from April 2027. It’s not a huge jump, but it’s money you don’t need to pay. Interest inside an ISA stays tax-free. If you’re deciding whether to lock money away, my article on fixed-rate savings goes through when it’s worth it.

What to do: use your ISA allowance, before saving in taxable accounts.

If you’re holding more cash, check it’s protected too. Some banks share one banking licence, and with it one £120,000 compensation limit. My free guide shows which ones: peterkomolafe.com/fscs.

Landlords: rental income costs more

The same 4 percentage points apply to tax on rental profits from 6 April 2027, in England, Wales and Northern Ireland. The rates become 24%, 44% and 49%.

On £10,000 of rental profit, a basic-rate taxpayer pays £2,000 today and £2,400 from April 2027. Check your figures before next April, so the bigger bill doesn’t arrive as a surprise.

Your bills: some help, mostly from 2027

• A £100 energy payment. From January 2027, households in England in council tax bands A to D get £100 paid into their bank account, through the council tax system. Your council pays it. How it reaches people who don’t pay council tax by direct debit hasn’t been set out yet. Wales, Scotland and Northern Ireland get funding so they can offer something similar.
• The VAT cut on electricity is extended to July 2027. The government expects that to take around £50 off the annual price cap in April 2027.
• Gas standing charges are set to go. They average about £108 a year. Ofgem has been asked to remove them, aiming for the end of 2027 or as soon as possible after. The cost moves into the price per unit instead, so people who use little gas should gain, and heavy users may pay more.
• The 5p fuel duty cut stays until 1 July 2027.

Pensions: big changes, mostly for younger people

If you’re retired or close to it, not much changes yet. The triple lock continues until April 2029, so the State Pension keeps rising by inflation, earnings growth or 2.5%, whichever is highest. From April 2027, a new Pension Tax Allowance means pensioners whose income is no more than the full new State Pension won’t be pulled into paying income tax by State Pension rises in this Parliament.

If you’re in your 40s or younger, this one matters. From the next Parliament, the triple lock will be adjusted so the State Pension tracks earnings. The Treasury expects that to cut State Pension spending by £15 billion a year by the late 2030s. In plain English, your State Pension is likely to grow more slowly than it would have done.

So is this good or bad for you?

• Bad for your retirement income. The triple lock pushed the State Pension up faster than wages over time. Without it, you’ll likely get less from the State Pension than you would have done, so your workplace pension and savings need to do more of the work.
• Good for your pay now. Today’s workers pay for today’s pensioners through National Insurance. Slowing that cost takes pressure off the taxes you pay while you’re working.
• Good for later life. The savings help fund free personal care in England, which protects your savings and your home if you need care later on.

It doesn’t start until the next Parliament and the full details aren’t out yet, so it could still change.

What to do: check your State Pension forecast at gov.uk/check-state-pension. It takes five minutes, and it tells you what you’re on track for and whether you have gaps in your National Insurance record.

First-time buyers: new help, and a Lifetime ISA fix

The Lifetime ISA penalty is cut, from 29 October 2026. If you use a Lifetime ISA to buy a first home over the £450,000 price cap, the withdrawal charge drops from 25% to 20%. That matters more than it sounds. Put in £10,000, get a £2,500 bonus, and you have £12,500. A 25% charge took £3,125, leaving you £9,375, less than you paid in. A 20% charge takes £2,500, so you get back your £10,000.

Your First Home opens in April 2027. It’s a new equity loan scheme in England for around 70,000 first-time buyers. The government lends 20% of the price, the minimum deposit is 2.5%, and the loan is interest-free for five years. Household income caps are £110,000 outside London and £140,000 in London, and there are price caps too.

A First Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029. It keeps the £4,000 a year limit and the 25% bonus, for homes up to £450,000, with the bonus capped at £20,000. There’s no upper age limit. If you already have a Lifetime ISA, you can keep using it under the current rules.

Workers and graduates

• The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027. That’s around £910 a year more for someone working full time.
• Interest on Plan 2 and Plan 3 student loans is capped at 6% from 1 September 2026 to 31 August 2027.
• The £100,000 tax trap is still there. The Budget didn’t change it. If you earn between £100,000 and £125,140, you lose your tax-free Personal Allowance, which works out at an effective 60% tax rate on that slice. Here’s how the 60% tax trap works.

Homeowners: nothing for your mortgage

There was nothing in the Budget for mortgage holders. The Bank of England makes its next interest rate decision this Thursday, 5 November. Bank Rate is 3.75%, and at the last meeting three of the nine members voted for a rise.

If your fixed deal ends in the next six months, that is still likely to be the biggest change to your bills, far bigger than anything in the Budget. Work out what your new payment could be now, while you still have time to plan for it.

Correct as of 30 October 2026, based on the Budget 2026 document published by HM Treasury on 28 October 2026. Some measures still need to be passed into law and details may change.