In one of the most eagerly awaited budgets for many years, the Chancellor finally announced her latest raft of financial and tax measures for 2026 onwards. Below is a summary of some of the main points of interest, but the full statement can be found here.
Personal taxation
The current personal tax and national insurance thresholds will be frozen for a further 3 years from 2028 to 2031.
From April 2026, the ordinary and upper rates of tax on dividend income will increase by 2%, with no change to the dividend additional rate. The basic rate will be 10.75% and the higher rate will be 35.75%.
Then from April 2027, there will be a 2% increase on income tax for savings income and property income. The basic rate will be 22%, the higher rate will be 42%, and the additional rate will be 47%.
From April 2027 the annual ISA cash limit will be reduced to £12,000 for under 65’s, within the overall annual ISA limit of £20,000. Stocks and shares ISA’s are therefore unaffected.
Businesses
The amount people can sacrifice from their salary to avoid paying Employee and Employer NI on pension contributions will be capped at £2,000 a year from 2029.
The minimum wage for over-21s will rise 4.1% in April, from £12.21 to £12.71 per hour, and the wage for 18 to 20-year-olds will rise by 8.5%, from £10 to £10.85 per hour.
Welfare and other announcements
The 2-child benefit cap will be lifted from April 2026.
The triple lock for state pensions will remain in place ensuring an above inflation increase again next year.
There will be a new annual High Value Council Tax Surcharge of between £2,500 to £7,500 on properties in England worth more than £2m.
From 2028, a new tax will be introduced on electric vehicles and plug-in hybrid cars based on annual mileage; 3p/mile for EV’s and 1.5p/mile for hybrids.
