The Chancellor’s latest Budget brings a range of changes that will impact wages, taxes, and long-term financial planning. At SBP, we have reviewed the announcements and highlighted the key points that are likely to affect individuals and businesses.
Minimum Wage
From April 2026 the National Minimum Wage and National Living Wage will increase across all age groups. The living wage will rise to £12.71 per hour, 18- to 20-year-olds will see their rate increase to £10.85, and the 16-17 and apprentice rate will move up to £8. These changes will have implications for payroll budgets and employers should begin planning accordingly.
Income tax
Income tax changes will also affect investors and savers. Dividend tax rates will increase by two percent from April 2026, while savings income including bank interest and rental income will be taxed two percent higher from April 2027. The Cash ISA allowance will be capped at £12,000 per year for under-65s from April 2027, and other ISA limits along with personal tax bands will remain frozen until 2031. These measures may prompt a review of tax-efficient planning strategies for dividends, savings, and investments.
National Insurance
There are also changes to National Insurance, with pension salary sacrifice contributions above £2,000 per year becoming subject to NI from April 2029.
Capital Gains Tax
Capital gains tax relief for Employee Ownership Trusts has been reduced from 100 per cent to 50 per cent with immediate effect, which will affect the tax planning benefits of transferring a business into an EOT.
Business Tax
Businesses will see adjustments to capital allowances. The main rate writing-down allowance will fall from 18 percent to 14 percent from April 2026, while a new 40 percent First Year Allowance for main-rate assets will be introduced from January 2026. These changes may influence investment decisions and underline the importance of careful planning.
Inheritance Tax
Inheritance tax changes offer additional flexibility with APR and BPR reliefs now transferable between spouses and civil partners, although the £1 million threshold will remain frozen until 2031.
Other Highlights
Other measures include a mileage-based charge for electric vehicles from 2028, a council tax surcharge for high-value properties in England, the expansion of the sugar levy to milk-based drinks, the introduction of tourism taxes in England, and a short-term freeze on fuel duty.
The Scottish Budget will be announced on 13 January 2026 and will provide further clarity for devolved taxes. SBP will continue to monitor developments and share guidance to help clients understand the implications for their personal and business planning.
Our team is ready to support you with advice on how to prepare for these changes, get in touch today with any questions or concerns.