Yesterday’s Budget had a little something for almost everyone: a tax rise for landlords, a reprieve for Cash ISA savers and a squeeze on business owners.
There were also areas that didn’t receive much or any limelight at all – most notably the lack of housing market intervention and no attempt to tackle the overwhelming problem of government over-spending. Both problems will just become more difficult with time, not less.
Here are our key takeaways:
Landlords: tax on rental income is going up
From April 2027, income tax on rental profits will rise by two percentage points in every band, to 24%, 44% and 49% respectively. This increase is in addition to the 2% increase announced in the previous Budget.
Around 65% of landlords are expected to sell at least one property in the next three years, which leaves a big question: what should you do with the sale proceeds? We covered this in a blog last year, and yesterday’s news makes it particularly timely.
Good news for Cash ISA savers
The planned cut to the Cash ISA allowance has been dropped. You can still save up to £20,000 a year tax-free in cash, so if you like the simplicity of a Cash ISA, nothing changes.
Selling a business? The relief is shrinking
From April 2027, the lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000. If you’re thinking about selling or stepping back from your business, now is a good time to talk to us about timing.
The Lifetime ISA is being replaced
From April 2029, new savers will open a First Time Buyer ISA instead. It keeps the 25% government bonus on qualifying first-home purchases. If you already have a Lifetime ISA, you carry on under the current rules. And from today, if you use your Lifetime ISA towards a first home costing more than £450,000, the withdrawal charge falls from 25% to 20%.
Separately, although capital gains tax did not increase, again, it is already at levels which are drawing more investors into the tax net. We have solutions for this, as we covered here, so do get in touch.
We are conscious that there is a lot of change looming, and so we have re-produced this timeline which will hopefully simplify it in one place.
What next?
The Budget has become a good opportunity for our clients to reflect and future proof financial plans. If you’re concerned about how any of this affects you, and would be interested in learning about how our Chartered Financial Planners can help, please contact us here and we would be happy to schedule a free consultation.
