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THE MOST IMPORTANT THING:
On Wednesday, Chancellor John Healey didn't touch your income tax rates or your National Insurance. That's the good news.
The less exciting news is what stayed frozen. Your tax-free allowance and the point where you start paying 40% are locked until April 2031. Every pay rise gets taxed a little harder in real terms.
The one thing that did rise is tax on savings interest, to 24% (basic rate) and 44% (higher rate) from April 2027. The planned cut to the cash ISA limit was scrapped.
Most people won't see a number change on their payslip. What matters now is what you do with your pay.
WHAT'S CHANGED:
- Savings interest is taxed more from April 2027. Rates go from 20/40/45% to 24/44/49%. That's a further 2 points on top of the rise already planned. The Personal Savings Allowance stays at £1,000 of interest tax-free for basic-rate payers and £500 for higher-rate. Additional-rate payers get none. The Treasury says 84% of income tax payers are unaffected.
- Cash ISA U-turn. The planned cut of the cash ISA limit to £12,000 is cancelled. The ISA limit stays at £20,000 a year.
- Energy and fuel. A £100 Household Energy Payment for council tax bands A to D in England, paid from January 2027. The VAT cut on electricity now runs to 1 July 2027, which the government says takes about £50 off the price cap from April 2027. The 5p fuel duty cut and freeze also run to 1 July 2027.
- Pay floor. The National Living Wage rises 3.9% to £13.21 an hour from April 2027.
- State Pension. The full new State Pension is up 3.9% from April 2027 to £250.70 a week, according to the BBC.
- First-time buyers. The Lifetime ISA withdrawal charge drops from 25% to 20% on purchases above the £450,000 price cap, from 29 October 2026. A new First Time Buyer ISA arrives in April 2029: £4,000 a year, 25% bonus, homes up to £450,000.
- Starter ISA (not confirmed yet). The government is exploring a new "Starter ISA" to get more people investing for the first time. It's only being consulted on, so no details yet. I'm all for it. I think everyone should be an investor from birth, and the earlier you start, the more compounding does the heavy lifting.
- Side income and expenses. The Trading Allowance triples from £1,000 to £3,000 from 6 April 2027. From April 2028, the £2,500 self-assessment threshold for employment expenses goes, so more people can claim work expenses through PAYE.
WHAT HASN'T CHANGED:
- Income tax rates: 20%, 40%, 45%. Personal allowance £12,570. 40% starts at £50,270.
- Frozen thresholds: Frozen until 5 April 2031. That was set at last year’s Budget. Last November the OBR estimated that if the thresholds had moved with inflation, the allowance would be about £4,900 higher and the 40% threshold about £20,100 higher by 2030/31.
- Employee National Insurance: Still 8% on pay between £242 and £967 a week, then 2% above.
- The £100k trap: Your personal allowance shrinks by £1 for every £2 above £100,000 and is gone by £125,140. That’s an effective 60% rate on that slice.
- Salary sacrifice cap: Only the first £2,000 a year of pension salary sacrifice stays NI-free, from April 2029. That’s old news, not a new change.
- Child Benefit charge: Still starts at £60,000 and is fully repaid at £80,000.
- Scotland: Scotland sets its own income tax rates and bands, so the income tax numbers above are for England, Wales and Northern Ireland. National Insurance applies UK-wide.
YOUR CHECKLIST BEFORE APRIL:
- Check your payslip. Tax code (most people with one job are on 1257L) and whether there’s a student loan deduction. Wrong code, wrong tax.
- Check your pension. Are you getting the full employer match? If not, that’s your first move.
- Add up your savings interest. Look at what you earned outside an ISA this year, then compare it to your £1,000 or £500 allowance.
- Set up an ISA standing order. Even £100 a month. Automate it.
- Plan your next pay rise. If you’re close to £50,270 (or £60,000 and you get Child Benefit), pension contributions can keep more of it.
THE TAKEAWAY:
You can't control the Budget. You can control what you earn, what you spend and what you invest.
Your 9–5 is your foundation. Raise your income, keep spending flat and put the surplus to work in the right wrappers.
If this was useful, forward it to a colleague on a PAYE payslip.
They can join here 👉 https://thewealthwire.kit.com/thewealthwire
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