The Chancellor delivered his first Budget on Wednesday 28 October. Most of the changes that had been talked about did not happen. Here is what did change, and what it means for your family, your business and your property.
Three weeks ago we wrote about what John Healey's first Budget might hold. He has now delivered it, and the short version is that very little of the speculation came to pass. Capital gains tax rates stay at 18% and 24%, and the uplift that wipes out gains on death was left alone. The seven-year rule for gifts is intact, with no cap on lifetime giving. The tax-free pension lump sum stays at £268,275. Stamp duty was not touched, the council tax surcharge on high value homes still starts at £2 million rather than £1.5 million, and the idea of a wealth tax has gone quiet again. The headline rates of income tax, National Insurance and VAT are unchanged, as are dividend rates.
That does not mean there is nothing to report though. A handful of measures will matter depending on whether you are planning your estate, running a business or hold property, and two changes already in the pipeline have been adjusted.
We take each in turn below, from the legal side of the picture. The tax figures themselves are a conversation to have with your accountant or financial adviser, and we work alongside them. Most of what was announced still has to pass through Parliament in the Finance Bill, so some of the detail may shift before it becomes law.
Your family and your estate
For most families, this Budget changes very little, and nobody needs to revisit their will or their planning because of it alone. The pressures we wrote about in October are still there, though, because they come from decisions already made. Pensions join the inheritance tax net in April 2027. The nil-rate band stays at £325,000 until 2031, and business relief remains capped at £2.5 million per person. More estates will pay inheritance tax over the next few years whatever this Budget said.
The changes worth knowing about:
- Two helpful tweaks to pensions on death. From 28 October, a tax-free death benefit no longer becomes taxable simply because it is paid more than two years after the scheme learned of the death. From April 2027, when pensions come into inheritance tax, your executors will be able to direct the pension scheme to pay the tax due rather than finding it from the rest of the estate. Our guide to pensions and inheritance tax has more information.
- Savings income will be taxed more heavily than planned. The two-point rise already due in April 2027 becomes a four-point rise, taking the rates on savings interest to 24%, 44% and 49%.
- The cash ISA cut has been dropped. The plan to limit under-65s to £12,000 a year in a cash ISA will not go ahead, and the full £20,000 can still go into cash.
- Debts secured on trust property. For deaths on or after 28 October 2026, new rules limit when a debt linked to trust property can reduce its value for inheritance tax. Anyone with a trust that has borrowed against its assets should have the arrangement looked at.
Your business
This is where the Budget lands hardest for the clients we act for, and the headline is a cut to the relief most owners rely on when they sell.
- Business Asset Disposal Relief is halved. From 6 April 2027 the lifetime limit on gains that qualify for the reduced 18% rate falls from £1 million to £500,000. For an owner selling with a £1 million gain, that is roughly £30,000 more tax. The date that matters is usually the date contracts are exchanged, so a sale loosely pencilled in for 2027 or 2028 may deserve a closer look now.
- A new Founders' Relief. Also from April 2027, founders of qualifying high-growth companies will pay 10% on up to £10 million of lifetime gains. The conditions are still to be published, and it looks aimed at scale-ups rather than established family businesses.
- Succession is unchanged. Business relief for inheritance tax keeps its £2.5 million cap, the capital gains uplift on death stays, and the pre-Budget talk of taxing a company handed down to the next generation as income did not appear.
- Transactions and structures. A new securities transfer tax will replace stamp duty on shares from late 2027. Where property moves between group companies, winding up the seller company no longer prevents stamp duty land tax relief being clawed back if the buyer leaves the group within three years, with effect from 29 October 2026. The first-year capital allowance rises to 50% for spending from January 2027.
- Day to day. The National Living Wage rises by 3.9% to £13.21 an hour from April 2027, the tax-free trading allowance triples to £3,000, and the government has said it will reform non-compete clauses, with the detail to follow.
Your property
Stamp duty land tax rates and bands are unchanged, and there was no wholesale reform of property taxation. The changes are more specific, and they depend on where you sit in the market.
- Rental income will be taxed at 24%, 44% and 49% from 6 April 2027, two points higher than was already planned. Companies are not affected, which reopens the question of holding a portfolio through a company. Moving existing property into one has its own stamp duty and capital gains costs, so it is a calculation to run properly rather than a reflex.
- Homes worth £2 million or more. The council tax surcharge starts in April 2028 at £2,500 a year, rising to £7,500 for homes over £5 million. The legal owner pays, which matters where a home is held in trust. A deferral scheme has been confirmed for households with income of £35,000 or less or savings of £16,000 or less, and for those who meet the disability criteria. Homes left empty for 12 months or more will attract a 100% premium.
- First-time buyers. A new Your First Home equity loan scheme starts in April 2027, offering a government loan of up to 20% of the price with a deposit from 2.5%, interest-free for the first five years. A First Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029. If you are a parent helping with a deposit, none of this changes the rules on gifts.
- Business premises. From April 2027 the threshold for 100% small business rate relief on retail, hospitality and leisure premises in England rises from £12,000 to £18,000 of rateable value, bills are frozen in real terms for two years, and pubs and live music venues get an extra 20% relief. Vape shops and adult gaming centres lose their reliefs. Valuation Tribunal appeal fees are abolished.
- Land and development. From 1 April 2027, land sold to registered social housing providers becomes zero-rated for VAT at any stage of development. This removes a long-standing hurdle for landowners selling to housing associations, but it may also mean a buyer with a deal in hand before April 2027 wants to wait, so anyone part-way through such a sale should talk to us about the timetable. Small residential brownfield sites of up to 1.5 hectares are exempt from biodiversity net gain.
What is worth doing now
None of this calls for a rushed decision. These are the conversations we would suggest having over the next few months rather than the next few days.
- Read your will and check your pension nomination. If your will was written before April 2026, it predates the business relief changes and the pensions change. From April 2027 the will and the nomination need to work together, and the new ability for executors to have the scheme pay the tax is only useful if the paperwork is in order.
- If you own a business, look at the exit timetable and the succession documents. The halving of Business Asset Disposal Relief makes the timing of any sale a live question, and your will, your shareholders' agreement and your company's articles should say the same thing about what happens to your shares. Our article on whether your will actually covers your company sets out the gaps we most often see.
- If you are a landlord, run the numbers on structure before deciding anything. The new rates make a company look more attractive on paper, and the cost of getting there is where the answer usually lies.
- If your home is worth £2 million or more, check who the legal owner is. That is who pays the surcharge from 2028, and if income is modest it is worth seeing whether the deferral scheme applies.
- If you are selling land to a housing association, raise the VAT change with us early rather than discovering it at exchange.
- Put lasting powers of attorney in place. This Budget, like every Budget, said nothing about them, and they remain the documents most often missing when a family needs them. Our guide to lasting powers of attorney explains why they matter.
Speak to us
Our wills and trusts, corporate and commercial, residential property and commercial property teams in Didsbury advise individuals, families and businesses across Manchester and the North West, and we work alongside your accountant or financial adviser so the legal and tax pictures fit together. If you would like to talk through what this Budget means for you, or simply want a second look at planning that was last reviewed a few years ago, please get in touch and we will be happy to help.
If you are an existing client and one of the changes above affects planning we have done together, we will be in touch.