Autumn Budget 2026: What it means for you

Chancellor John Healey delivered the Budget on Wednesday, setting out the government's latest tax and spending plans and providing an updated view of the UK's economic outlook.

One of the key announcements for savers and investors was the decision to scrap the planned cut to the cash ISA allowance. The limit had been due to fall from £20,000 to £12,000 a year for under-65s, but it will now remain at £20,000.

The chancellor also announced plans for a new “starter ISA” aimed at first-time investors and confirmed plans for a new ISA for first-time buyers.

Here's what investors need to know.

The outlook for the UK economy

As part of the Budget, the chancellor gave an updated picture of the UK economy, sharing new growth forecasts from the Office for Budget Responsibility (OBR)¹.

The OBR now expects the UK economy to grow by 1.2% in 2026, slightly higher than the 1.1% it forecast in March. But it has lowered its forecast for 2027 more significantly, from 1.6% to 1.0%. Its forecast for 2028 remains unchanged at 1.6%, while it now expects growth of 1.8% in 2029 and 1.7% in 2030, up from 1.5% for both years. For 2031, it expects growth of 1.6%.

Inflation² is expected to stay higher for longer than previously thought, partly because of higher energy prices. The OBR expects inflation to average 3.4% in 2027, compared with the 2% it forecast in March, before falling back to levels close to the Bank of England's 2% target in 2028 as energy prices ease.

The jobs market is expected to remain weak too. The OBR expects unemployment to rise slightly, reaching just over 5% in the second quarter of 2027, before gradually falling to around 4.1% over the longer term.

Key announcements from the Autumn Budget 2026

Cash ISA allowance to remain at £20,000

The chancellor announced that plans to reduce the cash ISA allowance from £20,000 to £12,000 for under-65s from April 2027 have been scrapped.

This means savers will continue to be able to put up to £20,000 a year into a cash ISA, although it’s important to remember that the £20,000 ISA allowance applies across all the ISAs to which you contribute in a tax year.

The reversal gives savers more flexibility over how they use their ISA allowance. Whatever mix of cash and investments you choose, it’s worth considering what you need your money for. Cash can be useful for emergencies and shorter-term spending, but holding too much could make it harder to reach your longer-term goals. Investing, meanwhile, offers greater potential for growth over the long term.

Other planned ISA changes have also been scrapped, including the proposed charge on interest earned on cash held within a stocks and shares ISA and restrictions on transfers between stocks and shares ISAs and cash ISAs.

Plans for a new “starter ISA”

Alongside the decision on the cash ISA allowance, the chancellor announced plans to work with the investment industry on a new “starter ISA”, designed to make investing more accessible for first-time investors.

Further details about the account and how it would work have yet to be confirmed.

New ISA for first-time buyers

The chancellor also confirmed a new “First-Time Buyer ISA” to help people save for their first home. This account will be available from April 2029 and will replace the Lifetime ISA for savers.

Savers will be able to put in up to £4,000 a year and receive a government bonus of 25%, up to an overall maximum bonus of £20,000. Unlike the Lifetime ISA, where the government bonus is added after each contribution, the bonus will be calculated on the account's final balance and paid when the money is withdrawn for a qualifying first home purchase worth up to £450,000.

The government also announced a change for existing Lifetime ISA holders who want to buy a home costing more than the current £450,000 property price cap. From 29 October 2026, they will be able to withdraw their Lifetime ISA savings for an otherwise qualifying home purchase above the cap and pay a reduced withdrawal charge of 20%.

Income tax changes for some pensioners

From 6 April 2027, the State Pension is expected to rise to just over £13,000 a year, taking it above the standard personal allowance of £12,570 – the amount most people can earn before paying income tax.

To prevent some pensioners facing an income tax bill as a result, the chancellor announced a new “pension tax allowance”. He said pensioners with income up to the value of the State Pension will not pay income tax during this Parliament, although details of how the new allowance will work have yet to be confirmed.

Retirees with income from sources other than the State Pension may still need to pay income tax.

Tax on savings interest to rise further

Savers will face a further increase in the tax they pay on interest above their personal savings allowance from 6 April 2027. Last year’s Budget had already announced that rates would rise by two percentage points, but the chancellor has now increased them by a further two percentage points.

This means savings interest above your personal savings allowance will be taxed at 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers from April 2027. Tax rates on property income will also rise by the same amount from that date.

Your personal savings allowance remains £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and £0 for additional-rate taxpayers.

Changes to pensions and inheritance tax

One previously announced change that is still due to take effect from 6 April 2027 affects how pension savings are treated for inheritance tax (IHT).

From that date, most unused pension savings will be brought into your estate for IHT purposes. This means that if you still have money left in your pension pots when you die, it might be subject to 40% tax. 

The changes could affect some families' estate planning arrangements, but for most people pensions will remain one of the most tax-efficient ways to save for retirement. Tax relief on personal pension contributions and tax-efficient investment growth continue to make pensions an important part of long-term financial planning.

Learn more about what the changes to pensions and IHT could mean for you.

Making the most of your allowances

Many of the most valuable tax-efficient savings opportunities remain in place.

Investors can still:

• invest up to £20,000 a year across their ISAs
• contribute up to £60,000 a year into pensions (subject to earnings and personal circumstances³)
• benefit from tax relief on personal pension contributions
• grow investments within ISAs and pensions without paying tax on income or capital gains

If you're able to, regularly contributing to an ISA and/or pension can help you build wealth in a tax-efficient way.

What should investors do now?

Budget days can often generate headlines and uncertainty. While it's important to stay informed, long-term investors are usually best served by focusing on factors they can control:

• have clear goals
• invest in a balanced portfolio with the right mix of shares and bonds⁴ for you
• keep costs low, so you keep more of your returns
• be disciplined – stick to your long-term plan and don’t let headlines, market movements or policy changes knock you off course

Changes to tax rules and allowances can be important, but successful investing is often less about reacting to individual announcements and more about maintaining a clear plan, staying invested and making the most of the opportunities available to you.

Notes: All data in this article are sourced from Budget 2026, HM Treasury, October 2026 and reflect information available at the time of publication.

¹ Office for Budget Responsibility, October 2026 Economic and fiscal outlook, published 28 October 2026.

² Inflation is the rise in prices for goods and services over time, meaning your money buys less than it used to. 

³ Your pension annual allowance might be lower than £60,000 if you have a high income or you’ve already flexibly accessed your pension pot. To work out if you have a reduced (tapered) annual allowance, see HMRC’s website.

⁴ Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.