Budget 2026: The announcements that matter

Key changes and what they mean for you

For individuals

Budget 2026 announced a number of key measures that will affect individuals and their families, with implications for their income, investments and wider tax position. Below, we summarise the principal announcements.

HMRC's approach to wealthy compliance: HMRC has published a more targeted, data-led approach to wealthy compliance, combining earlier support for compliant taxpayers with more intensive intervention where it identifies serious risks. The definition of “wealthy” remains taxpayers with income over £200,000 or assets over £2 million in any of the preceding three years, a population now comprising approximately 1.3 million individuals. HMRC intends to develop a fuller picture of those individuals and their connected businesses, trusts, partnerships and offshore structures, using internal records, third-party information and international data exchanges. Advanced analytics and AI will support risk identification, although compliance decisions will remain the responsibility of HMRC officers.

Income Tax on Property Income: The Chancellor announced that tax on property income for unincorporated landlords will increase by 2 percentage points across the basic rate, higher rate and additional rate. This measure will be effective from 6 April 2027.

Income Tax on Savings: The Chancellor announced that tax on savings income will be increased by 2 percentage points across the basic rate, higher rate and additional rate. This measure will be effective from 6 April 2027.

ISA Allowance: The Chancellor confirmed he will reverse his predecessor's decision to cut the tax-free allowance on cash individual savings accounts (ISAs) from £20,000 to £12,000 per year.

Founders' Relief: The Chancellor announced a brand new tax relief that will be of interest to entrepreneurs. The new "Founders' Relief" allows for a reduced 10% rate of capital gains tax to apply on lifetime gains for founders of businesses and early investors up to £10m. To qualify, the individuals must hold at least 25% of the company at the start of trading. The company must also meet minimum turnover and employment thresholds and satisfy two of three specified growth and innovation tests. This measure will be effective from 6 April 2027.

Business Asset Disposal Relief (BADR): BADR reduces the Capital Gains Tax payable when an individual sells all or part of a qualifying business, shares in a qualifying personal company, or certain business assets. The relief only applies on qualifying gains up to a lifetime limit of £1m. The Chancellor has announced that this lifetime limit will be reduced from £1m to £500,000. This measure will be effective from 6 April 2027.

New Young Entrepreneurs Allowance: The government will pilot a Young Entrepreneurs Allowance in England, providing successful applicants with support towards their living costs during the first year of their business.

Trading Allowance: The Chancellor announced that he will raise the amount people can earn from trading tax free from £1,000 to £3,000. Individuals with income at or below this allowance will not be required to report that income to HMRC through Self-Assessment. This measure will be effective from 6 April 2027.

Changes to Self-Assessment: Self-assessed income tax will be reformed from April 2029 so that taxpayers will be required to make automated payments towards their current year income tax self-assessment liabilities based on a forecast of their previous liabilities. This will only apply to taxpayers where less than 80% of their total tax liability is collected at source.

Mansion Tax: The High Value Council Tax Surcharge (commonly known as the Mansion Tax) was announced at Budget 2025 and is taking effect from April 2028. In the Autumn Budget 2026, it was confirmed that a deferral scheme will be available for those who meet certain criteria, as well as a series of discounts and exemptions.

First Timer Buyers: The Lifetime ISA will be replaced by a First Time Buyer ISA. Under the new scheme, the Government will pay a 25% bonus on savings where the funds are used to purchase a first home up to £450,000. This measure will be effective from 6 April 2029.

Pension Tax Allowance: A new 'Pension Tax Allowance' will be introduced to prevent those living on the state pension from paying income tax, as income from the state pension crosses the personal allowance threshold for the first time. This measure will be effective from 6 April 2027 until 5 April 2030.

Paternity Leave: The Chancellor has announced the introduction of a new Parental Allowance, broadly modelled on Maternity Allowance, for fathers, partners and adopters who are not eligible for Statutory Paternity Pay or Statutory Adoption Pay because they are self-employed or do not meet the current earnings or continuity-of-employment conditions. This will be effective from April 2029.

VAT on Electricity: In July 2026, Labour announced that VAT on household electricity bills would be reduced from 5% to 0% from 1 October 2026. At Budget 2026, it was announced that this cut would be extended until July 2027, to ease energy prices over winter and spring.

Gas Standing Charges: The Government is abolishing standing charges on gas bills for 23 million homes. Standing charges are currently £108 a year for a typical billpayer and they are paid by households even if they use very little gas.

Household Energy Payments: In a further attempt to ease pressures on households from energy prices, 20 million households in council tax bands A to D will receive 'Household Energy Payments' of £100 directly into bank accounts.

Tax Free Mileage: The mileage rate is the maximum amount an employer can pay an employee tax-free to reimburse them for using their own vehicle for work (not including standard commuting). The rates have been increased to 55p per mile for the first 10,000 miles of travel from 6 April 2026 with an additional increase to 35p per mile for over 10,000 miles of travel from 6 April 2027. The intention of this change is to reduce costs for employees, sole traders, and partnerships that use cars or vans for business purposes.