Chancellor John Healey has delivered his much awaited first Autumn Budget, announcing changes for both savers and businesses. From a major Cash ISA U-turn to changes in tax, business rates, and investment relief, here’s what the Budget could mean for your money.
Cash ISA allowance to remain at £20,000
Last year, the government announced plans to cut the amount under-65s could pay into a Cash ISA each year from £20,000 to £12,000 from April 2027. The aim was to encourage savers to invest more of their money in stocks and shares instead. This would have reduced how much you could put into Cash ISAs each year by £8,000.
In an unexpected move, that change has now been reversed. This means you can continue to put up to £20,000 into a Cash ISA each tax year without paying Income Tax on the interest you earn.
This is a sensible move by the Treasury that will help millions of savers make better savings decisions for themselves and their families' futures. Reducing how much a saver could put into a Cash ISA was not a helpful move for savers or investors.
This becomes particularly relevant alongside another change in the Budget: tax on savings interest is going up.
Higher taxes ahead for savings interest
Last year's Budget announced that tax rates on savings income would rise by two percentage points from April 2027. The government has now announced a further increase of two percentage points from the same date.
From 06 April 2027, your savings income will be taxed at:
24% at the basic rate
44% at the higher rate
49% at the additional rate
The Personal Savings Allowance will remain in place, so you can continue to earn some interest without paying tax.
The government estimates that a basic rate taxpayer earning an average interest rate of 4% would need more than £25,000 in savings outside an ISA before paying tax on the interest they earn.
With the Cash ISA allowance staying at £20,000 while tax on savings interest increases, where savings are held will have a greater impact on how much interest you keep.
A new ISA for first-time buyers
There are also changes for people saving for their first home. From April 2029, a new First Time Buyer ISA will replace the Lifetime ISA.
You’ll be able to save up to £4,000 a year, with a 25% government bonus when the money is used towards a first home – worth up to £450,000. The maximum bonus will be £20,000 and there won't be an upper age limit.
Existing Lifetime ISA holders will still be able to pay into and use their accounts under the existing rules.
Pension Tax Allowance to be introduced
One key announcement for pensioners was the introduction of a new Pension Tax Allowance from April 2027.
The State Pension is set to rise by 3.9% to £13,036.40 a year, taking it above the £12,570 Personal Allowance for the first time. The new allowance is designed to stop pensioners on lower incomes having to pay a small amount of tax because of the increase. The allowance will be applied automatically if you’re eligible.
Pension Triple Lock set to change from 2030
The State Pension Triple Lock will stay as it is through to April 2029. This means the State Pension will rise each year by whichever is highest: 2.5%, inflation, or growth in average employee pay.
From April 2030, the government plans to adjust the Triple Lock. Under the proposals, the State Pension would still rise each year by at least 2.5% or inflation – whichever is higher. But it would no longer automatically rise in line with average earnings. Instead, the government says it would aim to make sure the State Pension doesn't fall behind wages over time.
What does the Budget mean for businesses?
Businesses also face a mix of tax changes and new support. The headline rate of Corporation Tax remains at 25%, but changes to business rates, tax relief on investment, and support for founders could affect companies from next year.
More businesses to get Small Business Rate Relief
From 01 April 2027, more retail, hospitality, and leisure businesses in England will qualify for Small Business Rate Relief:
The threshold for 100% relief will rise from a rateable value of £12,000 to £18,000
The threshold for tapered relief will rise from a rateable value of £15,000 to £21,000
Rateable value is an estimate of what a commercial property could rent for each year and is used to calculate its business rates.
The government estimates the changes will mean around 70,000 more high-street businesses pay no business rates at all.
First Year Allowance rises to 50%
Businesses investing in equipment and machinery will be able to claim more of the cost against their profits upfront.
The government has increased the First Year Allowance (FYA) from 40% to 50%. This means businesses can deduct half the cost of investments from their taxable profits in the year the investment is made.
The FYA is particularly relevant where other forms of upfront tax relief, like full expensing, aren't available.
A tax shake-up for founders and entrepreneurs
For founders and entrepreneurs, the Budget offers new tax breaks, but scales back some existing relief. From April 2027:
founders of high-growth, innovative companies will pay a reduced 10% Capital Gains Tax rate on up to £10m of lifetime gains as part of the new Capital Gains Tax Founders' Relief.
the lifetime limit for Business Asset Disposal Relief will fall from £1m to £500,000, meaning business owners could pay more tax when selling their business.
the Trading Allowance will triple from £1,000 to £3,000, giving entrepreneurs starting a small business a larger tax-free allowance on their trading income.
Inflation expected to peak at 3.8%
The conflict in the Middle East has pushed up energy prices, adding to costs for households and businesses. The Office for Budget Responsibility (OBR) expects it to peak at 3.8% in the first quarter of 2027, before returning to the Bank of England's 2% target by the third quarter of 2028.
For savers, changes in inflation can influence the Bank of England's decisions on interest rates and, in turn, the rates available on savings accounts.
For businesses, inflation and interest rates can also affect costs, borrowing, and the return earned on money held in savings accounts.
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