Reflecting on the latest budget. What does it mean for individuals.

Budget 2026: Some Breathing Space Today, But Planning Remains Essential

The Chancellor’s Budget on 28 October 2026 was hailed as providing some much-needed “breathing space” for households and businesses. But while there were a handful of new announcements, for many individuals and families the most significant tax and succession planning challenges from the 2024 budget remain firmly in place.

Some new measures

Among the measures announced were a £100 energy bill payment for households in council tax bands A to D, confirmation that plans to reduce the annual Cash ISA allowance to £12,000 have been abandoned so it will remain at £20,000, and the introduction of a new Capital Gains Tax relief for business founders, known as Founders’ Relief. Although the conditions attached to Founders’ Relief are onerous, so this relief is likely to have little application.

The additional tax on savings and rental income will increase to 4% from 6 April 2027. That means rates of 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers on savings and rental income. This is not likely to be welcomed by savers or landlords.

The bigger picture remains unchanged

Despite these announcements, there are significant measures which remain unchanged and some of these will continue to increase tax exposure through what many regard as “stealth taxation”.

The inheritance tax nil-rate band remains frozen at £325,000, where it has sat since 2009. During that period, property values have risen significantly, bringing more estates into the inheritance tax net. Income tax thresholds also remain frozen until April 2031, which results in more tax on personal earnings.

The proposed Mansion Tax is still due to be introduced in April 2028, but one positive point is that there has been no change to the capital gains tax uplift on death, which will be welcomed by many families and advisers.

The lasting impact of the 2024 Budget

For many landowners, business owners and farming families, the most significant changes affecting succession planning are still those announced in the October 2024 Budget.

Since April 2026, assets which qualify for Agricultural Property Relief or Business Property Relief have been subject to a combined £2.5 million cap for 100% relief. Assets above that cap receive relief at only 50%. While this cap is more generous than the £1m originally announced and any unused cap amount can now be transferred between spouses and civil partners, careful planning remains vital.

As a result, existing Wills and succession planning arrangements should be reviewed to ensure they still achieve their intended purpose. Older Will provisions, particularly those involving agricultural or business trust clauses, may no longer operate as intended where qualifying assets exceed the new 100% relief cap.

Pensions and inheritance tax: the next major change

Attention is also turning to the planned inclusion of pension assets within the inheritance tax regime from 6 April 2027. This change is likely to significantly increase inheritance tax liabilities for many estates and create unexpected consequences for charitable gifting provisions within Wills.

Current guidance states that pension assets will be included when assessing whether the 10% charitable gifting threshold has been met in order to qualify for the reduced 36% inheritance tax rate. Depending on how a Will has been drafted, this could either increase the amount passing to charity or affect the availability of the reduced inheritance tax rate.

The Government has indicated it intends to address some of these unintended consequences following representations from professional bodies, but exactly how remains unclear.

A timely reminder

While the Budget 2026 may not have delivered the headline-grabbing reforms seen in recent years, it serves as an important reminder that estate planning should never stand still. Changes to inheritance tax reliefs and the taxation of pensions mean that arrangements which worked perfectly a few years ago may no longer deliver the outcomes intended.

Regular reviews of Wills, trusts and succession plans can help ensure that assets pass to the right people in the most tax-efficient way and that long-term family and business objectives remain protected.