Chancellor John Healey promised us a boring budget. On that, he delivered, with markets seemingly stable in the aftermath. However, it was a more nuanced and complex picture beneath the surface.
The Chancellor chose clear targets and beneficiaries.
It was not, as feared, a budget that targeted wealth, either its creation or accumulation. There was no rise in Capital Gains Tax (CGT), despite the ongoing fear of CGT equalisation with income tax. He introduced a new Founders’ Relief, plus a range of other measures to encourage entrepreneurship. Pensions were largely left alone.
The Chancellor also attempted some long-overdue redistribution towards younger generations, with the Young Entrepreneurs Allowance. First time buyers were also in his sights, with a new ISA and a change in the Lifetime ISA rules. It was a tougher picture for landlords and cash savers, who could now lose almost half of their profits in tax.
Entrepreneurs
The Chancellor’s measures for entrepreneurs showed some ambiguity.
The headline grabbing measure was a new CGT Founders’ Relief, introduced from 6 April 2027. This brought in a reduced 10% CGT rate on up to £10 million of lifetime gains. For some entrepreneurs, it brings back a similar level of relief to the ‘Business Asset Disposal Relief’, which has been gradually whittled away in recent years.
However, the definition of ‘founder’ isn’t entirely clear. The Chancellor identified “qualifying founders of high-growth, innovative companies”. The small print, when it arrives, will be important. The Government’s consultation on the new rules closes on 30 November 2026.
There were welcome moves to support entrepreneurs taking their first steps, with a tripling of the Trading Allowance from £1,000 to £3,000 from 6 April 2027. The Budget also brought in the Young Entrepreneurs Allowance, which offers allowances for entrepreneurs starting out, plus a support package for women-led scale-ups.
This goes some way to soften the blow of further cuts to Business Asset Disposal Relief. The maximum gains eligible drops from £1 million to £500,000, at a reduced rate of 18%. There were measures to support the high street, with rate cuts for small businesses and for the retail, hospitality and leisure sectors.
This budget should be beneficial for some founders but has less so for other investors.
Families and the globally mobile
For family wealth, there were no major new changes to inheritance tax (IHT). However, neither did the Chancellor reverse the changes to inheritance tax on pensions announced in the previous budget. That means those who die with some or part of their pension pot still intact could face an IHT charge of up 40% when it is passed on.
It argues for strategic gifting, using the annual £3,000 allowance, regular gifts out of income and potentially exempt transfers. These exemptions all remain intact. With no help announced on student loans, helping pay for a child’s education or to start a business will be increasingly valuable.
The government has also expanded the various visa schemes designed to attract global talent to the UK. The Chancellor will expand the Global Talent visa established in 2025. The pathway has been extended, giving more than 100 Research & Development (R&D) intensive businesses the ability to support world-leading scientists and engineers to come to work in UK industry. The High Potential Individual visa will now support applicants with eligible qualifications from the top 150 of the world’s best institutions and extend the Graduate visa to two years.
Savers
It was a similarly ambiguous situation for savers as for entrepreneurs. On the one hand, the government abandoned plans to cut the cash ISA limit to £12,000 for under-65s. That means cash savers don’t now have to look for low risk alternatives for the remaining £8,000.
However, he put another 2% of tax on interest earned on savings accounts. The highest rate taxpayers now pay an extraordinary 49% tax on any cash savings held outside an ISA. Increasingly, this makes the UK an outlier: the equivalent rates are 30% in France and in the US[1]. In countries such as Luxembourg, savings income is charged at an individual’s personal tax rate. By halving the effective rate of interest on a saver’s capital, it will bring the return below the current level of inflation for many. That means savers are losing money in real terms.
Property owners
The Chancellor also picked a side on property ownership. For first time buyers, there was more to like in this budget. The First Time Buyer ISA, for example, offers a useful and targeted way for young people to save for their first home. While the Chancellor says this was for those who ‘lacked the bank of Mum and Dad’, there appeared to be no specific restrictions on parental contributions. The removal of some of the penalties on Lifetime ISAs was also welcome. Some of the historical clawbacks around Lifetime ISAs had always looked unnecessarily stringent.
However, there was more bad news for landlords. Successive governments have targeted private landlords. Specific allowances, such as mortgage interest, have been eroded. Stamp duty has been raised. Rental income now attracts a 4% surcharge and landlords paying the highest tax rates are now subject to 49% taxation on their rental income. Alongside a stagnant property market, buy to let has become a far less obvious investment option than just a few years ago. Landlords need to do the maths carefully.
Pensioners
Under the government's Triple Lock, the state pension is set to rise by £9.40 a week to around £250.70 from next April under the triple lock guarantee. State pensioners whose total income is up to the value of the full new State Pension will benefit from a new Pension Tax Allowance, meaning they will not pay small amounts of tax if their income consists of State Pension only.
It is more complex picture for other pensioners. The triple lock is on its last legs, and due to be phased out by 2030. The government has said the savings will fund a national care service. For many retirees that have worried over how to fund later life care, this could be game-changing, but details are scant. In the meantime, state pension payments will rise in line with the highest rate of inflation or 2.5%, rather than growing faster than wages.
There were no changes to the pension tax free allowance, as had been feared, nor any changes to tax relief on pension contributions. The Chancellor also left dividend taxation alone and rates remain below those for income tax.
The Chancellor had his sights set on landlords and savers for this budget, whilst seeming to provide a lifeline for founders of UK high growth enterprises. Though it was not the attack on wealth that many had feared with inheritance tax and CGT broadly unchanged, the finer details of this budget remain to be seen.
[1] https://www.ey.com/content/dam/ey-unified-site/ey-com/en-gl/technical/tax-guides/documents/ey-gl-worldwide-personal-immigration-tax-guide-03-2026.pdf
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