With a series of tax and spending measures estimated to raise an extra £26bn a year in taxes by 2029/30, what does the Budget mean for you and your finances? 

While immediate changes are limited, as Helen Miller, Director of the Institute for Fiscal Studies (IFS) said, “the Chancellor is relying heavily on tax rises towards the back end of the parliament. More borrowing for the next few years, then a sharp adjustment.” 

One of the most immediate changes takes place from April 2026. The Dividend Tax rate will increase by 2 percentage points, with the basic rate rising from 8.75% to 10.75%, and the higher rate increasing from 33.75% to 35.75%. Following repeated cuts to the tax-free annual Dividend Allowance, which now stands at just £500, people who hold investments outside of a Stocks and Shares ISA or SIPP, or who own their own business and pay themselves in dividends, are expected to pay more tax. 

Salary sacrifice schemes curtailed 

From April 2029, only the first £2,000 of salary-sacrificed pension contributions each year will not be subject to National Insurance (NI). Anything above that will attract both employer and employee NI at the usual rates. 

New ‘mansion tax’ brought in 

If you live in a home worth more than £2m, from April 2028, you’ll be expected to pay a new annual high value Council Tax surcharge. This surcharge will be £2,500 for properties valued from £2m to £2.5m, £3,500 for homes valued from £2.5m to £3.5m, £5,000 for homes valued from £3.5m to £5m, rising to £7,500 for properties valued at £5m or more. The Valuation Office will be conducting a targeted valuation exercise to identify properties above £2m. 

Changes to Cash ISAs and other investments 

In a move designed to encourage more Britons to invest in home-grown companies, from April 2027, the annual Cash Individual Savings Account (ISA) allowance will fall to £12,000 for under 65s, but the overall annual ISA allowance remains at £20,000. In other words, you can invest £12,000 in a Cash ISA each year and invest £8,000 in a Stocks and Shares ISA. The Lifetime ISA or LISA, which is designed to appeal to first-time buyers, is due to be replaced sometime in 2026 with a simpler version. The Junior ISA allowance remains at £9,000. 

VCT and EIS tax relief reduced 

For those considering higher-risk investments, Income Tax relief on Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) will be cut from 30% to 20% from April next year. Although this reduces the upfront incentive of investing in these funding mechanisms for UK early-stage higher risk companies, there are still other benefits. The government is increasing the VCT and EIS company investment limit to £10m, and £20m for Knowledge Intensive Companies (KICs) and increasing the lifetime company investment limit to £24m, and £40m for KICs. These changes will be legislated in the Finance Bill 2025/26. 

Other key tax changes include: 

We’re here to help 

It’s important to remember that most of the changes announced won’t come into effect until 2027 or later. There’s no need to make quick decisions. We’re here to help you make sense of the details and advise the best course of action for you. 

It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for guidance only. Some rules may vary in different parts of the UK.