Autumn Budget 2026: Your questions answered

The Autumn Budget introduced changes that may affect your everyday finances, savings and investments. We’ve brought together some of the questions our clients have asked, with clear answers on what the announcements could mean for you. Some details are still subject to legislation, so consider your own circumstances before making any decisions.

Cash, savings and tax-efficient investing

Should I reconsider how much I’m holding in cash?

The Budget does not change the general role cash may play in an emergency reserve or for short-term spending. Whether your cash level is appropriate depends on your needs, time horizon and tolerance for investment risk, though as a general rule we often suggest holding between 6-12 months living expenses as a cash reserve or emergency fund. The savings tax increase starts on 6 April 2027, so it may be useful to review the tax implications as part of a wider financial plan, or consider alternative options for those who may be holding excess cash.

What are your short-term savings suggestions?

Consider when you may need the money, whether access restrictions or penalties apply, and how interest is taxed. A savings account comparison may help you understand available rates and terms, but there is no single best option for everyone.

What are the best investment destinations for switching away from cash into equities, mixed funds or similar?

There is no universally ‘best’ destination. Investments can fall in value, and the right mix depends on your goals, time horizon and capacity for loss. Switching from cash should not be based solely on the Budget or tax rules.

If my only income is £5,000, would savings interest be taxable before I reach the £12,570 personal allowance?

Usually, savings interest is considered alongside other taxable income. If your total income, including interest, is within your available personal allowance, income tax would generally not be due. The starting rate for savings and personal savings allowance may also be relevant, depending on your circumstances. The rules can be complex, so check HMRC guidance or take tax advice.

Does the £1,000 tax-free allowance on interest remain?

Yes. The personal savings allowance remains unchanged. It is generally £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and nil for additional-rate taxpayers. The separate starting rate for savings also remains unchanged.

Does the increase in tax on rental income and savings include overseas rental income and savings?

The savings income rate increases apply across the UK. The property income rates announced in the Budget apply to individuals in England, Wales and Northern Ireland, while Scotland has separate powers to set property income rates. The treatment of overseas income depends on your UK tax residence and individual circumstances. Check HMRC guidance or seek specialist tax advice.

Has the proposed tax on cash held within a stocks and shares ISA been scrapped?

The Budget confirmed that the annual cash ISA limit will remain £20,000 for everyone from April 2027. It also confirmed that the previously planned reduction and related anti-circumvention rules will not take effect. The Budget did not announce a tax on cash held within a stocks and shares ISA.

Are there alternatives to cash that can be accessed quickly and without penalty, with dividend income rather than interest?

Some investments pay dividends, but they are not cash substitutes. Their value and income can fall, and access may depend on market conditions and dealing arrangements. Dividend income has its own tax rules, such as the £500 annual dividend allowance, which differ from savings interest. Consider the risks and tax treatment before making any changes.

What alternatives might someone consider if they have high cash savings and already use their ISA and pension allowances?

Depending on their circumstances, people may consider taxable savings or investments, other tax wrappers or using capital to meet planned spending. Each has different risks, access terms and tax treatment. 

Personal tax

I’m at the beginning of my career and falling into the 62% marginal tax rate. What should I do with earnings above £100,000, and how can I reduce my tax liability?

The tapering of the personal allowance can create a high effective marginal tax rate for some people. Pension contributions are one way to reduce your adjusted net income, but there may be other considerations, such as access to funds or the potential tax payable on the way out of a pension.  Other options depend on your circumstances. You may wish to consider speaking to a tax adviser or regulated financial planner if you are unsure.

What is the exact definition of investment income? Does it include occupational pensions and SIPPs?

The Budget’s savings income rate increase applies to savings income such as interest, while the property income increase applies to property income. Occupational pension and self-invested personal pension (SIPP) income are generally taxable as pension income, not savings income. The detailed treatment depends on the type of payment.

Does tax on rental and savings income apply in Scotland?

The new savings income rates apply across the UK. The Budget says the property income rates apply in England, Wales and Northern Ireland, with Scotland able to set property income rates under its devolved powers. The Scottish position should be checked as rules are finalised.

Pensions and retirement

With higher taxes and the IHT benefits of gifts from ordinary income, should people reconsider annuities?

An annuity can provide a guaranteed income and can potentially reduce the value of your estate almost immediately depending on the terms, while other retirement options offer different levels of flexibility and investment risk. The Budget does not make an annuity automatically more suitable, but those who value income certainty may find it worthwhile to consider them. The decision depends on health, income needs, dependants, other assets and tax position, so it should be considered as part of a regulated retirement plan.

Can you explain more about pensions coming into inheritance tax (IHT) and how they may be taxed twice?

From 6 April 2027, most unused pension funds and pension death benefits are due to be included in the estate for IHT. A beneficiary may also have income tax to pay on some inherited pension benefits, depending on the deceased’s age and the type of payment. This can mean different taxes apply to the same pension value, although specific reliefs and rules may affect the outcome. It is worth noting that pensions still benefit from upfront tax relief, and broadly speaking are a beneficial component of a retirement plan.

HMRC has published a technical note on the changes.

IHT and estate planning

If both ISAs and pension funds may be liable to IHT, is it better for a beneficiary if I draw down from ISAs?

There is no general rule that ISA assets should be spent before pension assets. The tax treatment of withdrawals, future growth, estate value and beneficiaries’ circumstances are all relevant to the drawdown strategy. The 2027 pension IHT changes make this worth reviewing, but decisions should be based on a full financial and estate plan.

Can I make gifts to charity from my pension on death?

Some pension schemes allow you to nominate a charity to receive a death benefit, although what can be paid depends on your scheme’s rules and whether you have dependants. Any amount paid to a qualifying charity can count towards the charitable giving threshold. This threshold allows for an estate to reduce its IHT tax rate from 40% to 36%, if at least 10% of the net estate is left to charity. Check with your pension provider what your scheme allows and consider the effect on your wider estate plan.

Property and rental income

Does the additional 2 percentage points on property income also apply to landlords in Scotland?

The Budget’s announced property income rates apply in England, Wales and Northern Ireland. Scotland has been given the ability to set property income rates in line with its devolved powers. The final Scottish position should be checked before publication or action.

How will the Government value properties for the high value council tax surcharge?

The Valuation Office Agency will conduct a targeted valuation exercise for properties in England. The published approach refers to evidence including comparable sales around the April 2026 valuation date, property type, age, number of rooms and location. The charge is due to start in April 2028 for qualifying properties worth £2 million or more.

Will landlords pass the extra tax on rental income to tenants?

The Budget does not determine how individual landlords will respond. Rents are influenced by local demand, supply, costs and tenancy arrangements, as well as tax. It is not possible to say whether or how much rents may change.

Lifetime ISA and first-time investors

Do we know the details of the new ISA for first-time investors?

The Government has said it will explore an incentive for people investing in a stocks and shares ISA for the first time, but the detailed design is still to be developed with industry. The Budget also announced a first time buyer ISA, expected to launch in April 2029, with a 25% bonus on eligible balances up to a maximum of £20,000 towards a first home costing up to £450,000.

Lifetime ISAs are being replaced. What should I do with my existing account and monthly direct debits?

Existing Lifetime ISA holders can continue contributing to and using their accounts under the current rules. The new first time buyer ISA is intended to replace the Lifetime ISA for new savers, with legislation and launch planned before April 2029. You do not need to stop contributions solely because of the announcement, but check that the account remains suitable for your plans and the withdrawal rules.