Positioning your wealth for 2027: key measures already on the horizon

For many Coutts clients, Budget developments – both those definitely set to take effect next year and the actions to be announced in October – may provide a useful opportunity to revisit existing plans and consider whether any adjustments could help preserve flexibility, tax efficiency and long-term family objectives. Whatever your circumstances, your Private Banker is on hand to discuss your options.

Among the measures currently due to take effect are:

• The inclusion of unused pension assets within the inheritance tax regime
• Higher tax rates on savings income
• A reduction in the Cash ISA allowance
• Continued frozen income tax thresholds
• Increased taxation of property income

Any impact will depend on individual circumstances, family structures and existing arrangements. Reviewing these changes alongside your broader wealth strategy with your Private Banker can help ensure your plans remain aligned with your ambitions.

Pension wealth and inheritance tax

From April 2027, most unused defined contribution pension funds and pension death benefits are expected to form part of an individual's estate for inheritance tax purposes.

Historically, pensions have often played a dual role: providing retirement income while also serving as an efficient vehicle for passing wealth between generations. For individuals with sufficient resources outside their pension arrangements, preserving pension assets for later-life planning or legacy purposes has frequently been an attractive strategy.

The forthcoming changes may alter that equation. For some families, inheritance tax liabilities could increase materially, while others may find their estates brought within scope for the first time.

As a result, beneficiary nominations and estate planning arrangements may warrant renewed attention. In some circumstances, the way pension assets are allocated between spouses, civil partners and subsequent generations could become increasingly important.

Higher taxation of savings income

Tax rates applying to savings interest are due to increase from April 2027:

• Basic-rate taxpayers: 20% to 22%
• Higher-rate taxpayers: 40% to 42%
• Additional-rate taxpayers: 45% to 47%

At the same time, frozen income tax thresholds may result in more individuals moving into higher tax bands over time.

For affluent households holding substantial cash reserves, the cumulative impact could become increasingly relevant, particularly where cash balances have been elevated in response to recent market conditions or liquidity requirements.

This may be an appropriate time to revisit how surplus cash is held and whether existing allowances and structures are being used as effectively as possible.

Changes to Cash ISA allowances

From April 2027, the annual Cash ISA allowance for those under 65 is expected to reduce from £20,000 to £12,000, while the overall ISA allowance is anticipated to remain unchanged at £20,000.

For some investors, this may simply require a reallocation between different ISA types. For others, it may provide an opportunity to reassess the role of cash within a broader portfolio.

Where appropriate, a Stocks and Shares ISA could offer greater long-term growth potential, although investment risk and time horizon remain important considerations. Alternative options, including gilts and Premium Bonds, may also have a role within a diversified strategy, depending on liquidity needs and risk tolerance.

The right approach will depend on the wider purpose of the capital and its place within your overall financial plan.

Fiscal drag remains a consideration

Current plans indicate that personal allowances and income tax thresholds will remain frozen until April 2031.

As earnings, investment income and pension withdrawals increase over time, more people may find themselves subject to higher rates of taxation despite no change in headline tax rates.

For many high-net-worth families, the effect can be gradual rather than immediate. However, over the course of several years, fiscal drag can influence income planning, investment decisions and the timing of certain transactions.

Property income and the role of real estate within a portfolio

Tax rates on property income are due to increase by two percentage points across each marginal tax band from April 2027.

For buy-to-let investors and those with meaningful property holdings, the change may prompt a reassessment of after-tax returns and the role property plays within a wider wealth strategy.

Property continues to offer benefits that extend beyond income generation, including diversification and long-term capital appreciation potential. Nevertheless, changing tax treatment reinforces the importance of viewing real estate as one component of a broader portfolio rather than in isolation.

A timely opportunity to review your wider plans

Against a backdrop of evolving legislation and changing tax treatment, the period ahead may provide a useful opportunity to revisit key aspects of your financial affairs, including:

• Estate and succession planning
• Pension beneficiary nominations
• Retirement income and cash-flow strategies
• Inheritance tax exposure
• Savings and ISA arrangements
• Property ownership structures
• Capital gains and dividend planning
• Family gifting and intergenerational wealth transfer

For many people, the most valuable outcome will not be reacting to individual policy changes, but ensuring that their wealth continues to support the people, priorities and legacy they care about most.

To discuss how these developments may affect you, please speak with your Coutts Private Banker to find out more.

For ongoing analysis and updates ahead of the Autumn Budget, visit the Coutts Budget Hub at coutts.com/budget.