The Budget preserves the £20,000 annual cash ISA allowance and proposes a 24% rate on savings and rental income for basic-rate taxpayers from April 2027.
UK Chancellor John Healey’s 28 October 2026 Budget preserves the annual cash individual savings account (ISA) allowance while announcing higher taxes on savings and rental income for basic-rate taxpayers. It also proposes wider business-rates relief for high-street shops in England.
BBC News said Healey’s predecessor, Rachel Reeves, had announced the cash ISA allowance cut in 2025. Cancelling it preserves savers’ capacity to contribute £20,000 a year rather than reducing that limit to £12,000.
| Measure | Earlier plan or threshold | Budget announcement |
|---|---|---|
| Tax on savings and rental income for basic-rate taxpayers | 22% scheduled from April 2027 | 24% from April 2027 |
| Threshold at which high-street shops in England start paying business rates | £12,000 | £18,000, with vape shops and adult gaming centres excluded from the expanded relief |
The Office for Budget Responsibility (OBR), the UK’s fiscal watchdog, forecasts inflation peaking at 3.8% in 2027 as higher energy costs pass through supply chains to consumer prices. It warns of significant uncertainty because of the changing situation in the Middle East.
The OBR projects that British households will be little better off than before the Covid-19 pandemic even a decade after it began.
The government plans a 26 November start for suspensions covering 101 food and agricultural products, including garlic, gherkins and plant-based milk.
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The Budget proposes a First Time Buyer ISA to help savers build a home deposit. The government would add a 25% bonus to contributions of up to £4,000 each year, while retaining the Lifetime ISA’s £450,000 home-price cap.
Some critics have described Lifetime ISA withdrawal penalties as harsh for people buying homes above that cap. Under the proposed replacement, withdrawal penalties would not cause savers to lose their own contributions. The Budget also announces lower withdrawal penalties for existing Lifetime ISA accounts.
The deposit-saving account differs from Your First Home, the previously announced government scheme for first-time buyers of new-build homes in England. That scheme would provide a purchase loan worth 20% of a property’s value and allow buyers to put down a 2.5% deposit.
The proposed First Time Buyer ISA is planned for introduction in 2029, replacing the Lifetime ISA.
Under the announced Your First Home terms, eligible first-time buyers purchasing qualifying new-build homes in England can seek a 20% equity loan with a deposit from 2.5%. Applications are scheduled to open in February 2027.
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The five-percentage-point increase is below a think-tank’s proposed doubling. British racing’s governing body warns of a possible £57 million annual loss and plans urgent engagement with the government to reduce the impact.
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