Remember that moment when you finally felt you were getting ahead? The pension contributions were ticking up nicely, the cash ISA was doing its quiet little job, and the house you’d worked decades for felt like proper security. Then the Chancellor stands up with her red box and, in one afternoon, the goalposts move – again.
I’ve covered more Budgets than I care to count, but this one felt different. Messy leaks, frantic briefings, and a palpable sense that someone, somewhere, was going to pay a heavy price for years of fiscal drift. And pay we will.
The Big Picture: £40 Billion Had to Come From Somewhere
Let’s not pretend this was a giveaway. The Office for Budget Responsibility had already warned the Treasury cupboard was bare. Rachel Reeves needed roughly £40 billion a year extra and, unlike some of her predecessors, she wasn’t prepared to borrow it all or magic it out of thin air. So the money is coming from us – just not evenly.
In my view, the Chancellor has tried – not always successfully – to protect the most vulnerable while asking more from those with broader shoulders. Whether those shoulders can actually bear the weight is another question entirely.
The Clear Winners (Yes, There Are Some)
First, the good news – because it does exist, even if it’s quieter than the bad.
- Rail fares frozen for the first time in three decades – a genuine cost-of-living win for commuters.
- Prescription charges in England held at £9.90 rather than rising with inflation.
- The two-child benefit cap finally scrapped, lifting an estimated 250,000 children out of poverty risk.
- Minimum wage jumping to £12.21 (age 21+) – the biggest cash increase ever.
- Carer’s allowance earnings threshold up significantly – more help for the “sandwich generation”.
If you’re on lower or middle income and don’t own assets, this Budget actually leaves you slightly better off in day-to-day terms. That matters.
The Undoubted Losers – And There Are Plenty
Now the bit most of us came for. The measures that made jaws drop and calculators come out.
1. Cash ISA Savers – The £12,000 Shock Coming in 2027/28
Perhaps the most eye-catching personal finance change: the annual cash ISA allowance will fall from £20,000 to £12,000 starting tax year 2027/28, with the stocks & shares ISA limit staying at £20,000.
Yes, you read that right. The government is effectively nudging – some would say shoving – savers toward the stock market.
“The average cash ISA balance is around £7,000. This won’t touch most people.”
– Treasury spokesperson
Fair point on paper, but it ignores the thousands of people who deliberately max their cash ISA every year because they’re risk-averse or simply don’t trust markets after 2008, Covid crashes, and everything in between.
In practice, from April 2027 you’ll face a choice: put the extra £8,000 into stocks & shares (scary for many), leave it in a taxable account, or spend it. Hardly the spirit of tax-free saving we were sold.
2. Salary Sacrifice Pension Contributors – The £2,000 Cap From 2029
Another quietly devastating move for higher earners who’ve been clever with their money.
Right now, salary sacrifice lets you avoid both employee and employer National Insurance on pension contributions – often saving 8-15% combined. From April 2029, only the first £2,000 per year of sacrificed salary will enjoy that NI relief.
The Treasury claims 74% of basic-rate taxpayers won’t be affected. Translation: higher and additional-rate taxpayers doing proper retirement planning just lost a major perk.
For someone earning £100k sacrificing £20k into their pension, that’s potentially thousands of pounds a year extra in NI. And employers may think twice about generous matching if their own 13.8% saving disappears.
3. Owners of High-Value Homes and Farms – Inheritance Tax Raid
The headlines screamed “mansion tax”, but it’s more nuanced – and still painful.
From April 2027, the nil-rate band for inheritance tax stays frozen at £325,000 (plus £175,000 residence nil-rate band where applicable), but pension pots and certain AIM shares will be dragged into the IHT net for the first time.
More dramatically, agricultural property relief and business property relief will be capped at £1 million each from 2026, with 20% IHT (half-rate) above that. Family farms suddenly face multi-million-pound tax bills on land that generates modest income.
4. Electric Vehicle Drivers – Bye-Bye Free Ride
From April 2025, electric cars lose their Vehicle Excise Duty exemption and from 2027 they’ll pay the expensive car supplement (£410/year) if valued over £40,000. A Tesla Model Y buyer just saw their running costs jump.
The Middle Ground – Where Most of Us Live
Not everything was brutal. Some measures landed in that grey area of “annoying but survivable”.
- Capital gains tax rates aligned closer to income tax (basic rate up to 18%, higher rate to 24%) – stings investors but not catastrophically.
- Non-dom regime finally scrapped and replaced with a 4-year foreign income exemption – long overdue in many eyes.
- Employer NI up 1.2 percentage points to 15% – likely passed on via slower wage growth or perk cuts.
- Furnished holiday let tax advantages gone – Airbnb landlords hit hard.
What Should You Actually Do Before the Rules Change?
Time is your friend here – for now.
Until April 2027 you can still:
- Max your cash ISA at £20,000 each year (consider joint accounts with a partner for £40,000 total tax-free cash).
- Use salary sacrifice aggressively for pension contributions while the full NI saving exists.
- Review trusts and gifting strategies if inheritance tax is likely to bite.
- Consider VCTs or EIS if you want IHT-exempt investments (but understand the risk).
After those dates, the landscape looks very different.
The Bigger Question: Is This Fair?
That depends on your definition.
Freezing thresholds while inflation rages is a stealth tax pure and simple. Asking farmers to pay inheritance tax on assets that can’t easily be sold feels particularly harsh. Penalising prudent savers while simultaneously begging people to invest in “British assets” sends mixed messages at best.
Yet the counter-argument is equally valid: public services are creaking, debt interest is the second-biggest budget item after pensions, and someone has to pay. The Chancellor chose wealth over income, assets over wages. History will judge whether that was brave or brutal.
In my experience, the people who come out of Budgets like this best are rarely the ones complaining loudest on day one. They’re the ones quietly adjusting their plans, using the grace periods wisely, and remembering that tax rules are never set in stone.
Because if there’s one certainty in British fiscal life, it’s that another Chancellor with another red box will be along soon enough to move the goalposts again.
For now, though? Check your ISA balance, run the numbers on salary sacrifice, and maybe have that conversation about the family farm sooner rather than later.
Your wallet will thank you.
