Autumn Budget 2026 – A clear view on the announcement and its implications

While the press will likely describe this as a ‘steady as she goes budget’ looking to support smaller businesses, entrepreneurs, and defence, there are a number of key changes from the Chancellor’s Budget and previous legislation that could affect wealthy individuals in multiple ways, especially savers and business founders.

As a Coutts client, if you have any questions on the details below or want to reassess your wealth plan following the announcement, please speak to your Private Banker.

Additionally, listen to our experts’ Budget insights at our Webinar on Thursday October 29 at 10am. 

Generational wealth planning

Inheritance tax (IHT) – This remains unchanged. The £325,000 tax-free allowance is frozen until April 2031. Amounts above the £325,000 threshold are taxable at 40%.

Family property – This remains unchanged. There is an additional £175,000 tax-free allowance when passing down a primary residence to the next generation – known as the Residence Nil-Rate Band. This sits outside of and in addition to the £325,000 IHT allowance. If the net value of an estate is higher than £2m, the Residence Nil-Rate Band reduces by £1 for every £2 above that threshold. Therefore, above an estate value of £2.35m the Residence Nil-Rate Band doesn’t apply.

It’s important to note though, that unused thresholds can be transferred with the estate to a spouse or civil partner, allowing them to potentially pass on up to £1m tax free (2x £325k + 2x £175k).

Gifting rule – This remains unchanged. Currently, gifts to family and friends made seven years before the giver dies are exempt from IHT. Gifts to trusts during someone’s lifetime may incur inheritance tax.

Pensions

The state pension will rise 3.9% with average wages.

There is a change here for pensioners whose income is solely made up of the state pension –  they will not pay income tax during this parliament. Pensioners with additional income on top of the state pension may still be liable for income tax.

As a reminder of previously announced changes, many pensions will be part of your taxable estate for IHT from 6 April 27.

From 6 April 2028, the age you can withdraw money from a workplace or personal pension is changing from age 55 to 57.

From 6 April 2029, a £2,000 annual cap will be introduced on salary-sacrificed pension contributions. Therefore, any contributions in excess of £2,000 will be subject to both employer and employee national insurance contribution (NIC). 

Pension withdrawals remain as taxable income. However, there were no changes to the tax-free pension lump sum and you may continue to make a tax-free lump sum withdrawal of up to 25% of the pension value up to £268,275.

Income tax thresholds

Income tax thresholds currently remain frozen until the 2030/2031 tax year.

There have been some significant changes here.

Business Asset Disposal Relief

This ‘entrepreneurs’ relief’ has changed. The lower 18% paid tax on business assets sold will now only apply up to a value of £500,000 throughout your lifetime – falling from a threshold of £1m. Above this normal CGT rates apply.

Founder relief

The government announced a new relief in CGT for founders, equating to a lower 10% tax on gains made across a lifetime up to £10m. This relief will be subject to a consultation.

Given these change we recommend any founders seeking a business exit take the time to seek professional advice and assess their options.

The national living wage

The minimum wage for those aged 21 or over will rise 3.9% to around £13.20.

Business rates

These are set to be devolved to local authorities by the end of the decade.

Inheritance Tax Business Relief

This remains unchanged. When it comes to commercial assets such as family businesses, Business Relief allowance removes 100% of IHT on assets worth up to £2.5m. Above this, a relief of 50% applies – an applicable rate of 20% IHT.

However, spousal transfer exemption applies so, in total, over £5m could be passed over between a couple.

Gifting qualifying business assets that are above the Business Relief allowance may be exempt from IHT but gifts must be made 7 years before death. 

Unearned income tax rise of 4% due

Tax on income from outside of a typical salary or pension – referred to as ‘unearned income’ – will rise. From 6 April 2027, income from savings accounts outside of tax-free ISAs, will be subject to the usual income tax rate plus 4%.

So, on savings and property income

• Basic rate: rises from 20% to 24%
• Higher rate: rises from 40% to 44%
• Additional rate: rises from 45% to 49%

Given this change, it may be worth considering other ways to save or invest such as via a tax-free ISA or through a pension.

Capital Gains Tax

This remains unchanged. CGT, typically payable when you sell an asset for profit, remains at 24%.

Cash ISA allowance to remain at £20,000

Last year’s Budget planned to reduce the annual amount under 65s could put into a Cash ISA to £12,000 in 2027. This has now been scrapped. Individuals can still put £20,000 tax-free into ISAs (including Cash and Stocks & Shares ISAs) every tax year.

There are plans for a new Starter ISA for first time investors.

Tax on dividend income

This remains unchanged. The ordinary rate is 10.75%. The upper rate is 35.75%. The additional rate is 39.35%.

A rise above income tax on rental income

As with savings, income tax on income from rental properties will rise from April 27 by 4% above the standard rates – to 24% for basic income tax payers, 44% for higher income tax payers and 49% for additional rate payers.

Stamp duty

This remains unchanged. Stamp duty in England has not changed and remains at –

• Up to £125,000: 0%
• £125,001 to £250,000: 2%
• £250,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Over £1.5 million: 12%

Additional Properties

This remains unchanged. If you are purchasing additional properties such as a buy-to-let or a second home, then a 5% surcharge applies on the stamp duty.

Non-UK residents must pay an additional 2% in England or Northern Ireland if they are present in the UK for less than 183 days in the 12 months prior to purchase.

When it comes to council tax on second homes, many local authorities are already applying a double rate for homes not rented out.

Property and Capital Gains Tax (CGT)

This remains unchanged. CGT on a property sale must be paid within 60 days of completion and this also applies for property sold overseas. However, CGT does not apply to inherited properties as a property is inherited at the current market value.

A ‘mansion tax’ on high value properties

The ‘mansion tax’ or High Value Council Tax Surcharge (HVCTS) is due to come into effect from April 2028. Currently, residential properties in England worth £2 million or more, as valued from 2026, will be liable to a recurring annual charge in addition to council tax.

• £2m – £2.5m: £2,500 per year
• £2.5m – £3.5m: £3,500 per year
• £3.5m – £5m: £5,000 per year
• £5m and above: £7,500 per year

Despite a weaker fiscal and inflation outlook, the initial market reaction to the Budget was relatively contained, suggesting much of the uncertainty surrounding it had already been priced in.

Gilts soon stabilised after some initial weakness, despite the Office for Budget Responsibility (OBR) revising its forecast for government borrowing higher to £133.2 billion in 2026/27 – from £115.5 billion previously.

The inflation outlook also changed, with the OBR predicting that the consumer prices index will average 3.4% in 2027, compared with the 2% previously forecast. However, the Budget is unlikely to materially alter the near-term path for UK monetary policy.

UK equities responded positively, albeit modestly. The more domestically exposed FTSE 250 rose by around 0.4% following the speech, while the FTSE 100 was up by around 0.1%. In addition, sterling was little changed against the US dollar.

Overall, the relatively subdued reaction suggests the Budget did not materially unsettle UK financial markets.

More broadly, global markets remain focused on the outlook for growth and corporate earnings, alongside continued investment in artificial intelligence. As long as global economic growth remains supportive and translates into company earnings, we continue to see a constructive overall backdrop for equities – a view that the Budget has not materially changed.

As a reminder, if you are an existing Coutts client, please speak to your Private Banker if you have any questions regarding the Budget or how we could help you plan and manage your wealth.

We're here to help, but please be aware that we cannot offer any tax advice. We recommend you contact an independent tax advisor to discuss your personal tax situation. The availability and value of any tax reliefs will depend on your individual circumstances.