After weeks of speculation, the Autumn Budget finally landed.
There were no dramatic changes to pension tax relief or income tax rates, but there were plenty of “quiet” changes that will increase the tax take over time. The broad theme is raising more money by freezing thresholds and increasing tax on savings, investments and property income.
Here is what changed and why having a plan (and good advice) now matters more than ever.
More people will be dragged into higher tax bands
The personal allowance and the higher-rate and additional-rate income tax thresholds are now frozen until April 2031. In practice, that means:
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As your pay or pension goes up with inflation, more of it will be taxed at 20%, 40% or 45%.
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Over the rest of the decade, more people will become taxpayers for the first time, and many will be pushed into higher bands.
This is “fiscal drag”, nothing obvious changes on your payslip, but the taxman takes more each year.
How can advice help
A financial planner can look at ways to manage your “taxable income”, for example, using pension contributions, ISAs and charitable giving, so more of your money stays with you and less disappears in stealth taxes.
Higher taxes on dividends, savings interest and rental income
Over the next few years, the tax on income from investments and property will rise:
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Dividends: the tax rate on dividends will increase for basic-rate and higher-rate taxpayers.
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Savings interest: tax on savings income (including gains on some investment bonds) will also rise.
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Rental income: property income will have its own tax bands, with higher rates than today.
Put simply, it becomes more expensive to hold large share portfolios, cash and rental property outside tax-efficient wrappers.
How can advice help
Good planning can:
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Prioritise using ISA and pension allowances to shelter investments from dividend and savings tax.
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Consider whether different “wrappers” or structures are suitable for your situation.
ISAs: gentle push away from cash
The overall ISA allowance stays at £20,000 a year. However, for anyone 65 or under, from April 2027:
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You can only put £12,000 a year into Cash ISAs.
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The remaining £8,000 must go into a Stocks & Shares ISA if you want to use your full allowance.
Those aged 65 or over can still put the full £20,000 into cash if they wish.
The government’s message is clear: over the long term, it would prefer people to invest rather than keep everything in cash.
How can advice help
A planner can:
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Help you work out how much you really need in cash for emergencies and short-term spending.
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Decide how much can sensibly be invested for growth, based on your timeframes and your comfort with risk.
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Build an ISA strategy that doesn’t just “tick the allowance box” but actually supports your long-term goals.
4. Pensions: no “raid”, but some crucial tweaks
The headlines many people worried about, cuts to pension tax relief or the 25% tax-free lump sum, did not happen.
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Pension tax relief remains in place.
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The State Pension triple lock continues, so it is expected to keep rising each year.
However, two big changes are on the way:
a) Salary sacrifice cap
From April 2029, the National Insurance saving on salary-sacrifice pension contributions will be capped at £2,000 a year. Above that level, normal National Insurance will apply again. This is particularly relevant for people on higher incomes who currently sacrifice a large portion of their salary into their pension. It could mean:
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Lower take-home pay, if you keep contributions the same.
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Or smaller pension contributions, if the overall cost needs to be kept in check.
b) Pensions and inheritance
From 2027, when someone dies with money in their pension, the people dealing with their estate will be able to ask pension schemes to hold back part of the pension death benefits for a period to ensure there is enough to cover any potential Inheritance Tax.
This is another reminder that pensions, death benefits, and Inheritance Tax planning all interact, and the rules are getting more involved.
How can advice help
A financial planner can:
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Review your workplace pension and salary-sacrifice arrangements well before 2029 to avoid any surprises.
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Check that your retirement plan still works under the new rules.
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Make sure your pension death-benefit nominations and your wider inheritance plan are joined up.
Property and the new “mansion tax”
If you own rental property, remember that rental income will be taxed under the new, higher property-income rates from 2027.
If you own a very high-value home a new “High Value Council Tax Surcharge” (often called a “mansion tax”) will apply from 2028 on properties worth £2 million or more, with flat annual charges depending on the value band.
How can advice help
Property can still be part of a sensible long-term plan, but it is no longer the straightforward tax winner it once was. Advice can help you:
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Compare property against pensions and ISAs on a fair, after-tax basis.
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Decide whether to keep, reduce or diversify away from property as part of your overall strategy.
So what should you actually do?
For most people, the sensible next steps are:
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Ignore the noise, focus on the signal: Despite the changes, pensions and ISAs remain extremely attractive. Used properly, they still offer powerful tax advantages and long-term growth potential.
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Expect more tax “drift”: With thresholds frozen and taxes on savings, dividends and property income rising, it is wise to assume the tax system will quietly take more over time, unless you actively plan around it.
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Control what you can control:
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How much you save and invest.
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Which tax wrappers you use (pensions, ISAs, etc.).
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How your investments balance growth and income.
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How you and your partner share income and assets.
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Why good financial advice matters more than ever
Rules now change regularly. Ideas are floated, dropped, and sometimes reintroduced. It is difficult for most people to track what genuinely matters and what is just political noise.
On top of that:
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The impact of a Budget change is personal; the same rule can help one person and hurt another.
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A series of small decisions (or non-decisions) can compound into a big difference in your eventual retirement income and family wealth.
A good financial planner’s role is to sit between you and the constant rule changes:
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Turning complex Budget announcements into simple, practical steps.
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Helping you use pensions, ISAs and other allowances in a joined-up way.
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Giving you the confidence to stick to a long-term plan, even as the tax and pension landscape shifts.
Our job is to turn tax changes into clear, calm advice for our clients. If you need advice, we’re here to help. Schedule a free, no-obligation chat here. A guide on selecting a financial advisor is also available here.
This article is for general information only and is not personal advice. Tax and pension rules can change, and their impact depends on your individual circumstances. If you are unsure how any of these changes affect you, please seek regulated financial advice.
