Chancellor John Healey delivered his first Budget on Wednesday 28 October. If you have savings, an ISA or a pension, you may be wondering whether the announcements affect your plans. The main change for savers is a further rise, from April 2027, in tax on taxable savings interest and rental income. The planned cut to the cash ISA allowance has been scrapped, and no new changes to pension tax relief or mainstream capital gains tax rates were announced. In our view, the Budget alone is not a reason to change a long-term investment strategy, though individual tax circumstances will matter.
What was the backdrop?
The Budget came against a difficult economic backdrop. The conflict in the Middle East has pushed up energy prices: UK inflation rose to 3.5% in September, and the Office for Budget Responsibility (OBR) now expects inflation of 3.1% this year and 3.4% in 2027. UK government borrowing costs have climbed to their highest levels in decades, while the Government’s headroom against its borrowing rules has narrowed.
What was announced?
| Measure | What was announced | Who it affects |
| Tax on savings and property income | A further 2 percentage points from April 2027, on top of the 2-point rise announced last year: rates rise to 24%, 44% and 49% for taxable income to which they apply, subject to applicable allowances | Savers and landlords |
| Cash ISA allowance | Planned cut from £20,000 to £12,000 scrapped; the announced allowance remains £20,000, subject to applicable ISA rules | Cash savers |
| New "Starter ISA" | To be developed with industry for first-time investors; eligibility and other details to follow | New investors |
| Lifetime ISA | Proposed replacement by a First Time Buyer ISA. Withdrawal treatment for savers affected by the £450,000 property cap, including the 25% bonus, requires confirmation before publication. | First-time buyers |
| Founders' Relief (new) | Proposed 10% capital gains tax rate on up to £10m of lifetime gains for founders of qualifying UK companies from 6 April 2027; subject to consultation | Business founders |
| Bank Surcharge | Up from 3% to 6% for 15 months from 1 January 2027, raising about £1.5bn | Banks; potentially bank shareholders |
| OBR forecasts | Inflation 3.1% this year and 3.4% in 2027 (March: 2.3% and 2%); growth 1.0% in 2027 (cut from 1.6%) | All investors |
| Public finances | Headroom £15bn in 2029/30 (down from £23.6bn); borrowing 4.2% of GDP this year, falling to 1.8% by 2030/31; gilt sales £250.6bn this year | Gilt investors |
The further 2-percentage-point rise announced for savings and property income would, together with the 2-point rise announced last year, leave the relevant rates 4 percentage points higher from April 2027 than today. The Treasury expects the additional 2 points announced in this Budget to raise about £1.1bn a year by 2028/29. The Budget also stated that, from April 2027, pensioners whose only income is up to the level of the new State Pension will pay no income tax; the scope and operation of this measure should be checked against the final documents.
There were no announced changes to income tax rates, dividend tax, mainstream capital gains tax rates, pension tax relief or inheritance tax thresholds.
What could it mean for your finances
ISAs and savings: The announced annual ISA allowance remains £20,000, available across cash and stocks and shares ISAs, subject to the ISA rules. From April 2027, taxable savings interest outside an ISA may be subject to 24%, 44% or 49%, depending on individual circumstances and allowances. An ISA may help shelter interest from tax, but whether it is suitable depends on your circumstances. The proposed 22% charge on interest from cash held in stocks and shares ISAs, and limits on transfers to cash ISAs, were also reported to have been dropped. These details still need confirmation. A new Starter ISA for first-time investors will be developed with industry, with details to follow.
Pensions: No new changes to pension tax relief were announced in this Budget. Previously announced changes still matter: unused pensions will count towards inheritance tax from 6 April 2027, and the minimum age for accessing a personal pension rises to 57 in April 2028. Pensions remain a tax-efficient way to save for many people, but the rules and suitability depend on individual circumstances.
Income and dividends: Income tax rates are unchanged and the thresholds remain frozen until April 2031. As wages rise, more people may find part of their income falls into a higher tax band. Dividend tax rates rose this April, so it may be worth discussing the available ISA and pension allowances with your adviser.
Capital gains and inheritance tax: Mainstream capital gains tax rates and the £3,000 annual tax-free allowance are unchanged. The proposed Founders’ Relief would apply a 10% capital gains tax rate to up to £10m of lifetime gains for founders of qualifying UK growth companies from 6 April 2027, subject to consultation. The announcement specifies at least five years’ share ownership and five years’ UK residence; the Government is consulting on the details until 30 November. Inheritance tax thresholds remain frozen at £325,000, plus £175,000 where a main home is passed to children or grandchildren, subject to the relevant conditions.
How did markets react?
Initial market moves on 28 October 2026 were relatively modest, based on mid-afternoon data. The 10-year gilt yield, a measure of UK government borrowing costs, edged down to around 5.32%, about 0.2 percentage points below this month’s peak, the highest since 2007. Longer-dated gilts strengthened after the Debt Management Office said it would sell fewer long-dated bonds, with the 30-year yield falling to just below 5.7%. The FTSE 100 rose 0.3%; Lloyds gained 4.2%, Barclays 3.7% and NatWest 2.4%. Sterling was little changed at around $1.33. These are initial observations rather than evidence of a lasting market response.
What does this mean for your portfolio?
Our portfolios spread investments across regions, sectors, types of assets and fund managers. This can reduce the effect of any single event, including a UK Budget, but cannot remove the risk of loss. We are not changing portfolios solely because of the Budget, but will continue to assess developments within each portfolio mandate. We will watch the Bank of England’s next interest rate decision on 5 November, energy prices and gilt markets. Higher gilt yields can mean more starting income from newly bought bonds, although bond prices may remain volatile while inflation is high. We will assess the long-term outlook rather than react to every headline.
What this means for long-term investors
The Budget does not change our view that long-term goals matter more than short-term headlines. Energy prices, inflation and the path of interest rates remain important for investors. You may wish to discuss your ISA and pension allowances, how inflation affects cash you do not need in the short term, and any estate plans affected by the April 2027 pension changes. What is appropriate will depend on your circumstances and the final detail of the measures. If you would like to discuss the Budget, please speak to your adviser.
Important Information
This document is for information purposes only and does not constitute personal financial advice. If you are unsure about whether a particular course of action is suitable for you, we recommend that you seek independent financial advice.
The value of investments and the income from them can fall as well as rise, and you may get back less than you originally invested. Past performance is not a reliable indicator of future performance. Tax treatment depends on individual circumstances and may be subject to change in the future. Tax and estate planning outcomes are not guaranteed.
The information in this document has been supplied by Titan Investment Solutions Ltd (“TISL”) which is authorised and regulated by the Financial Conduct Authority. The company is registered in England and Wales with Company Number 10636265. The independent research is provided by Square Mile Investment Consulting and Research Limited ("SMICR") which is not authorised or regulated by the Financial Conduct Authority and does not undertake regulated activities. TISL and SMICR are wholly owned subsidiaries of Titan Wealth Holdings Limited.
Titan Wealth Planning Ltd is authorised and regulated by the Financial Conduct Authority (FCA reference number: 574458). Registered address: 101 Wigmore Street, London, W1U 1QU, United Kingdom.
Source of data: HM Treasury, “Budget 2026: Breathing space for today, hope for the future” (28 October 2026); Evening Standard, “Budget 2026: Key points announced by Chancellor John Healey” (28 October 2026); City AM, “Budget 2026: Healey reverses Reeves’ cash Isa cut” (28 October 2026); Financial Times, “UK Budget 2026 live” (28 October 2026); Office for Budget Responsibility, Economic and fiscal outlook (October 2026); Investment Week; Portfolio Adviser; Reuters; market data as at mid-afternoon, 28 October 2026; views and opinions are Titan Square Mile’s own unless otherwise stated.
Date of data: 28 October 2026 unless otherwise stated.
