By Samuel Mather-Holgate

What today’s announcements mean for your taxes, pensions, savings, and household finances.

After months of noisy rumours, political kite-flying and leaks that sent markets on edge, Rachel Reeves has delivered her second Budget — and in many ways, it was underwhelming.
But that’s precisely what the country needed today.

With inflation proving sticky, unemployment rising, and households already squeezed by high borrowing costs, the last thing the UK economy needed was a shock. And for once, the Chancellor resisted the temptation to spring surprises.

But make no mistake:
This wasn’t a quiet Budget — it was a stealth tax Budget, and millions of people will feel the impact.

Below, we break down the key changes and, crucially, what they mean for you.

⭐ 1. Tax Thresholds Frozen Until 2031 — The Biggest Stealth Tax of the Decade

The Chancellor chose not to raise income tax or National Insurance rates.
Instead, she extended the freeze on tax thresholds until 2030–31.

This single measure is expected to raise £26 billion, quietly dragging millions into higher tax bands simply because wages eventually rise.

This is the definition of “fiscal drag” — and it will affect almost every working household.

⭐ 2. Salary Sacrifice Hit With a New Restriction (From 2029)

A major change that caught many by surprise.

From April 2029, any pension contributions made via salary sacrifice above £2,000 per year will no longer be exempt from National Insurance.

This affects:

• Employees (who will pay 8% NI below £50,270, or 2% above)

• Employers (who will pay 15% NI on sacrifice above £2,000)

This means:

• Lower take-home pay for many

• Smaller pension contributions from employers

• A reduction in the overall value of salary sacrifice arrangements

For many employees earning over £40,000, this will genuinely change how pension funding is planned.

This is one area where professional financial advice is now essential.

⭐ 3. Pensions: Triple Lock Retained, Tax-Free Cash Untouched

In perhaps the biggest sigh of relief for clients:

• 25% pension tax-free cash remains untouched.

• Tax relief on pension contributions stays as is.

• Triple lock remains in place for the rest of the Parliament.

This means:

• State pension rises 4.8% in April 2026.

• Full New State Pension → £241.30/week

• Full Basic State Pension → £184.90/week (single)

With frozen personal allowances, many pensioners could soon exceed the tax threshold — a problem the government says it will “explore”.

Translation:
Many pensioners will pay tax for the first time unless reforms follow.

⭐ 4. ISA Shake-Up: Under-65s Forced Into Investment Risk

From April 2027:

• ISA limit stays £20,000

• But only over-65s can put the full £20,000 into Cash ISAs

• Under-65s will be limited to £12,000 in cash

• The remaining £8,000 must be invested

This is a bold policy shift.
For some, it nudges them into long-term investing — a positive.
For others, especially risk-averse savers, it feels like forced exposure to markets.

A consultation is also coming to replace the Lifetime ISA with a new first-time buyer product.

Advice here will be crucial, especially for younger clients and those saving for property.

⭐ 5. New ‘Mansion Tax’ (Council Tax Surcharge from 2028)

A major new measure, despite avoiding the phrase “wealth tax”:

Properties worth £2 million+ will pay a new annual surcharge:

• £2m–£2.5m → £2,500

• £2.5m–£5m → £3,500

• £5m+ → £7,500

This will disproportionately affect homeowners in London and the South East, as well as high-value rural properties.

Trusts and complex ownership structures will have separate rules.

⭐ 6. Dividend, Savings & Rental Income Tax Rise

A significant revenue-raiser:

✔ Dividends

From 2026:

• Basic rate → 10.75% (up from 8.75%)

• Higher rate → 35.75% (up from 33.75%)

✔ Savings Income

From 2027: all savings tax bands rise 2 percentage points.

✔ Property / Rental Income

From 2027:

• 22% / 42% / 47% depending on income band

• Finance cost relief fixed at 22%

This will particularly hit:

• Landlords

• Investors with taxable income outside ISAs

• Savers relying on fixed-term bonds

• Company directors extracting dividends

ISAs and pensions now matter more than ever for tax efficiency.

⭐ 7. High-Sugar Drinks Levy, Tourist Tax, Gaming Tax & EV Road Pricing

The Chancellor added a collection of smaller-but-meaningful measures:

• Soft drinks levy expanded to high-sugar milk-based drinks

• New tourist tax on overnight stays

• 3p per mile road tax for EV drivers from 2028 (1.5p hybrid)

• Remote gambling tax rising

• Bingo duty abolished

These won’t fund the country — but they will be felt by consumers.

⭐ 8. Business & Investment Changes

Key points:

• VCT relief drops from 30% to 20% (from 2026)

• Writing-down allowances trimmed

• Employee Ownership Trust CGT relief reduced

• EMI scheme expanded

• Voluntary Class 2 NIC for overseas individuals abolished

• Transfer pricing exemption retained for SMEs

Businesses will feel a tightening environment, with incentives shifting toward investment, productivity and compliance.

⭐ 9. Welfare & Cost-of-Living Measures

• Two-child benefit cap scrapped from April 2026

• £150 average cut in energy bills from 2026

• National Living Wage rising to £12.71

• Rail fares frozen

• Significant OBR-forecast rise in welfare spending

• Crackdown on fraud

These support measures will help some households but contribute to the broader fiscal tightening elsewhere.

⭐ 10. What This Budget Means for You 

Homeowners & Mortgage Holders

• No direct mortgage support, but broader freezes will tighten budgets

• Interest rates remain high, making remortgage advice critical

• Landlords face meaningful tax rises

• ISAs and pensions matter more for future planning

‍‍ Families

• Two-child cap removal is a big gain for affected households

• Higher living wage helps but may feed through to prices

• ISA changes affect younger savers

Employees

• Salary sacrifice NI limit means less efficient pension saving

• Threshold freeze means more tax over time

Savers & Investors

• Dividends, savings and rental income tax rises put enormous value on planning

• Using ISAs and pensions strategically will save thousands

• Bond investors should review tax planning options

Pensioners

• Triple lock protects income

• But frozen allowances mean tax may apply earlier than expected

⭐ 11. Why This Underwhelming Budget Was Exactly What the UK Needed

Markets were braced for:

• Income tax rises

• Pension tax-free cash reform

• Big changes to inheritance tax

None happened.

That’s a victory for stability.

Yet the Chancellor still raised £26 billion — mainly through stealth, freezes and structural tweaks.

This Budget won’t transform the UK economy.
But it avoids doing more damage, and in the current climate, that counts as a win.

⭐ 12. What Should You Do Now? 

• Review pension contributions ahead of the 2029 salary sacrifice change

• Use full ISA allowances (especially before the under-65 cap hits)

• Review buy-to-let and property tax planning

• Consider moving dividend income into tax-efficient wrappers

• Revisit estate planning, especially with new property taxes

• Review cashflow planning given frozen thresholds

This Budget creates a huge opportunity for planning — and that’s where good advice pays for itself.

⭐ 13. Need Independent Financial Advice?

We are based in Cricklade, perfectly positioned between Swindon, Cirencester and Bristol, and we offer:

• Face-to-face meetings

• Zoom consultations nationwide

• Full independent financial and mortgage advice

If you want clarity on how this Budget affects you, we’re here to help.

BOOK A CALL BACK or CONTACT US HERE