Budget 2026: Foreword
Apparently, we can all breathe easier now. The 9th incumbent of Number 11 in 11 years – two more than the number of prime ministers over the same period (numbers which tell their own story!) – has delivered a budget to give us “breathing room”. Quite what he means by that is unclear though.
Savers will be taxed even harder than they are now with rates ranging between 24% and 49%, depending on other income. And the Banks will pay an extra 3% on top of the additional 3% they already pay.
And it’s worse for landlords. They too have been hit with the same tax rates as savers, but as higher rate taxpayers also suffer a restriction on the interest they can claim as a deduction, the effective tax rate (cash actually paid) can be much, much higher.
All of which adds to the continued pain that everyone who works feels, as the income tax thresholds remain frozen. This is reported to drag yet another 500,000 people into higher tax bands generating a further £45 billion in tax!
There are other nasties too. Business Asset Disposal Relief (BADR, formally known as ER) has been halved so that only the first £500,000 attracts the lower tax rate of 18%. And those of us that pay tax by self-assessment will have to pay it earlier and more regularly.
Those involved in restructuring their businesses, perhaps part of a succession plan – which is exactly what the government wants you to do – hence the changes to business property relief, will have their options limited by the removal of existing, sensible, reliefs.
It won’t go unnoticed that the Chancellor announced that a percentage of general taxation will be diverted to local mayors – the detail of which we eagerly await.
And … let’s not forget the changes that are already coming. Pensions will attract IHT from April 2027. Sometimes you have to be reminded that the previous Budget was not just a bad dream!
The Chancellor announced that he would scrap the planned changes to ISAs and allow us to save up to £20,000 in cash a year into them. As the proposed changes were both complicated and silly, this is good news.
Was there anything helpful?
He also announced a new relief, Founders Relief, which would allow a Founder of a business to pay tax at 10% on the first £10 million of gain when they sell. This actually sounded like a good thing until you read the proposals in detail. They caused a fair amount of amusement in the office where we all tried desperately hard to think of any business that we had collectively worked on for the last several decades that would have qualified. We thought of none! Even the Government admit that this will likely cost as little as £260 million a year – a phrase they use to tell us what benefit it will give. Working this out, they expect only a few hundred people to benefit. We suspect it will be far fewer, for reasons you will find in our full review of the Budget.
There was no plan on welfare, just a line that this will be looked at next year, nothing on departmental spending (bar a few meaningless giveaways and new departments being set up) and nothing on government pensions, which cost the taxpayer an increasingly hideous amount each year. And nothing for students, drowning in ever increasing and unaffordable debt.
There were some minor announcements on cost of living. Your gas bill will go down by a few quid a month, as the standing charge is removed and 100 goods you buy at the supermarket will also become marginally cheaper as tariffs are adjusted. If you live in a band A to D house, you will get £100 this Christmas. Don’t know which band your home is in? Me neither. We all reached for our phones to check to quickly discover that the government website had crashed.
They will also make it easier to build datacentres, and maybe even power them too, and small businesses will get a bit of help with business rates…but not if you are a vape shop. And if you are looking to buy a house, there is some help on the way in the Spring which sounds very much like ‘help to buy’.
There is of course a lot more in the Budget than is announced and that is all covered in our Budget review.
We have also already begun coming up with strategies to help families and businesses plan to tackle some of these changes and we look forward to speaking with you soon about them.
But for now, all there is left to ask … Breathing any easier?
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