Chancellor John Healey’s first Budget: Wealth planning implications 

Greater complexity was the central wealth planning theme of John Healey’s Budget: more distinctions between income sources, entrepreneurs and savings accounts, with important details outstanding. Short-term support for household and business costs sat alongside higher taxes on savings and property income, a tighter Business Asset Disposal Relief limit, and new incentives for selected founders and first-time investors. 

The wider Budget in brief 

The Chancellor presented the package as providing “breathing space” while maintaining fiscal discipline. Household measures included extending the electricity VAT cut and fuel-duty reductions to July, a £100 winter energy payment for households in council-tax bands A–D in England, and removing household gas standing charges from next year. Business support included expanded small-business rates relief for retail, hospitality and leisure, alongside investment in infrastructure, defence, housing and innovative businesses. Funding measures included a temporary additional bank surcharge, higher gambling taxes and stronger tax-compliance activity. 

For individuals, however, the most consequential announcements concerned retirement income, savings taxation, business disposals and first-home savings.

Here are the nine key takeaways for savers and investors.

1. Cash ISA: £20,000 retained for all ages 

The cash ISA limit was retained at £20,000 a year for all ages. The Chancellor abandoned the proposed reduction; this retained the existing limit rather than adding an allowance. 

This is welcome certainty for cash-based planning, particularly alongside higher savings-income tax. It supports the use of tax-free cash reserves for near-term expenditure and retirement withdrawals, although the choice between cash and investments should still follow the client’s time horizon and risk capacity.

2. New incentive for first-time ISA investors: design to be developed 

The Budget announces an initiative to “explore a new ISA incentive” for first-time stocks-and-shares ISA investors. It does not establish a separately named Starter ISA product. 

The unanswered questions include whether it sits within existing ISA limits, how a first-time investor is defined, and whether the incentive is a government payment, tax benefit or something else. Until these are answered, there is insufficient information to recommend delaying otherwise suitable saving or investing to qualify. 

3. Pension Tax Allowance: protection confirmed, but taper detail outstanding 

The Chancellor announced a new Pension Tax Allowance to ensure that pensioners over State Pension age whose total income does not exceed the value of the full new State Pension are not brought into paying income tax because of State Pension uprating during this Parliament. 

The new allowance will operate as an automatic tax deduction from April 2027 to April 2030. Income from all sources counts. Protection will taper away above that threshold, although the taper rate and withdrawal range still require clarification. 

4. BADR: the qualifying gains limit halved 

The Budget reduces the lifetime limit on qualifying gains eligible for Business Asset Disposal Relief limit from £1 million to £500,000, for disposals made from 6 April 2027. The Chancellor said three-quarters of claimants would see no change, implying that the impact is concentrated on larger qualifying disposals.  

The practical issue is the interaction between this relief and the new Founders’ Relief. Before revising an owner-manager’s exit plan, advisers will need the detailed eligibility conditions, treatment of previous claims and interaction between the two regimes. 

5. Founders’ Relief: 10% CGT on up to £10 million 

Founders’ Relief will provide a 10% capital gains tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies, from 6 April 2027. A technical consultation on the detailed design has been launched, so the precise eligibility criteria remain to be confirmed. 

A comparison with the former Entrepreneurs’ Relief is useful, but this is not a straightforward restoration. The reference to qualifying founders of high-growth, innovative companies may indicate a narrower qualifying population than the headline rate and £10 million limit suggest. 

For business owners, eligibility could become central to exit planning: the standard BADR regime became less generous, while a potentially much more valuable relief was introduced for a selected group. Ownership history, founder status, holding periods, business eligibility and interaction with previous relief claims all need clarification. 

6. State Pension triple lock: change confirmed from 2030 

The Chancellor confirmed that the triple lock will be adjusted from April 2030. From then, the State Pension will rise each year by the highest of 2.5%, inflation, or the amount required to maintain its value relative to earnings at the level reached in April 2029. 

This retains annual and inflation protection but changes the earnings link and removes the ‘ratchet’ effect. Retirement projections should not assume the current triple-lock arrangement continues beyond April 2029; the adjusted formula should be incorporated into long-term cash-flow models, particularly for clients heavily dependent on State Pension income. 

The Budget also linked the new settlement to a National Care Service. That is potentially relevant to later-life planning, but the speech did not provide enough information about eligibility, benefits or individual contributions to reduce clients’ assumed care-funding needs. 

7. Property and savings income: a further two-percentage-point rise 

The announced increase covered savings income as well as property income. The speech announced a further two-percentage-point rise from April 2027, while leaving employment and dividend income tax rates unchanged. 

From 6 April 2027, savings and property income tax rates will rise by a further two percentage points, to 24%, 44% and 49% at the basic, higher and additional rates respectively. Employment and dividend income tax rates are unchanged. 

For buy-to-let owners, this is another reduction in after-tax income. As a simple illustration, an additional two percentage points applied to £20,000 of affected taxable income would mean £400 more tax annually, before allowing for any other interactions. 

Our planning assessment is that landlords should revisit net yields, debt costs and the role of property in retirement funding. The announcement alone was not a reason to incorporate or sell: the wider costs and consequences still need to be modelled. 

For savers, the combination of higher tax on interest and the retained £20,000 cash ISA limit strengthens the case for reviewing where cash is held, rather than looking only at headline deposit rates. 

8. Share options: greater generosity and flexibility 

 The Chancellor announced that the Company Share Option Plan will be renamed EMI2 and made more generous from 6 April 2027. The individual option limit will double from £60,000 to £120,000, the interaction with the EMI option limit will be removed, and the exercise period will extend from 10 to 15 years. 

Participating employees and growing businesses should weigh any additional benefit against exercise funding, eventual sale arrangements and the risk of concentrating employment income and personal wealth in the same company. The planning opportunity is potentially significant. 

9. Lifetime ISA: replacement announced, but penalty reform appears targeted 

The Budget announced that a First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029. Existing Lifetime ISA holders will be able to continue contributing to and using their accounts under the current rules. 

The new product will retain a £4,000 annual contribution limit and a 25% government bonus, paid on withdrawal for a qualifying first-home purchase. The property-price cap will remain £450,000, the maximum bonus will be £20,000, and the product will have no upper age restriction. 

Separately, from 29 October 2026, the withdrawal charge for otherwise qualifying first-home purchases above the £450,000 cap will be reduced from 25% to 20%. Other unauthorised withdrawals will continue to attract a 25% charge. 

Withdrawals may be relevant to people whose intended property purchase exceeds the cap. The announced protection could make withdrawal materially less costly for that group. 

Affected holders should reassess their purpose and alternatives once the transitional rules are clear, rather than exit automatically. 

The Chancellor also announced a £4.7 billion government-backed first-time-buyer equity-loan scheme from next spring. Its eligibility criteria and financing terms will matter when comparing family assistance with government-supported borrowing. 

The views in this article are the opinion of Isio and do not constitute advice. This article does not constitute a financial promotion and is a general update on markets for informational purposes only. ​