The Chancellor John Healey presented his first, and the Labour Government’s third Budget on 28 October 2026. These were mostly modest changes, but lots of them! In many ways it was a Budget where there was much ado about nothing. Lots of changes were announced but most of them were relatively modest. There were, however, numerous tax changes announced and the below is just some of the headlines:
As expected, there were no changes in the headline rates of income tax, although tax rates on interest and property income were increased by a further 2% to 24% in the basic rate band, 44% in the higher rate band and 49% in the additional rate band (against headline rates of 20%, 40% and 45%).
There was a reversal of the previously announced intention to reduce the cash ISA limit from £20,000 to £12,000 per annum for under 65s.
There was no change to the personal allowance, but the heavily trailed Pension Tax Allowance was announced to ensure that the State Pension is not taxed on low-income pensioners. This new allowance will be abated for pensioners with income more than the full State Pension at the rate of £1 for every £3 of income above this level.
There was also no change to the headline rates of Capital Gains Tax.
However, the Chancellor announced a reduction in the lifetime allowance for Business Asset Disposal Relief (BADR - formerly known as Entrepreneurs’ Relief) from £1 million to £500,000. However, in almost the next breath he announced the introduction of Founder’s Relief, with a £10 million lifetime allowance and a 10% rate of CGT. This sounds a lot like an older version of Entrepreneurs’ Relief which will be consulted on ahead of a launch on 6 April 2027. The relief is targeted at founders and early investors who create and develop high growth and innovative companies and will apply to sales of qualifying shares and securities. It is likely to have significantly narrower scope than BADR and formerly Entrepreneurs’ Relief did.
Looking internationally, a helpful relief for trusts who are temporarily migrated to the because of the inwards migration of a trustee will be available provided that the trust ceases to be resident later in the same year or the following year.