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Capital at risk

What does the Autumn Budget 2026 mean for your pension?

Matthew Batsman

Senior Investment Content Manager

PensionBee

29 Oct 2026

minute read

Oct 2026

All

Money Matters

John Healey presented the 2026 Autumn Budget on Wednesday 28 October, his first since being appointed Chancellor.

In it, Healey laid out the “clear direction” for the country to give “fresh hope for Britain’s future”.

Healey has faced what he described as “economic storms” since taking the position. Inflation as a result of wars in Ukraine and Iran has pushed up the cost of living for Britons.

Meanwhile, a global sell-off in government bonds reduced Healey’s Budget headroom. That’s the margin of how much the government has to spend within its own self-imposed rules.

Estimates beforehand suggested that he might have lost as much as half of his financial wiggle room. But the Chancellor said that this headroom will now be £15 billion in 2029/30.

Healey said that despite global challenges, the government was on track to eliminate the current budget deficit. According to the Chancellor, that’ll get Britain back into the black in three years, with the lowest deficit in the G7 by 2029.

Find out what Healey announced, and what it might mean for you and your money.

State Pension and the Personal Allowance

Healey confirmed the adjustments to the State Pension triple lock will come into effect from next parliament.

Until April 2029, the State Pension will increase by the greater of 2.5%, inflation, or average earnings growth. Then, from April 2030, it’ll use an ‘adjusted triple lock’, rising by the greater of 2.5%, inflation, or earnings relative to the 2029/30 level.

From 2027/28, the full new State Pension will pay just over £13,036 a year. That’s above the tax-free Personal Allowance for Income Tax (£12,570 in 2026/27).

In an expected move, Healey introduced the Pension Tax Allowance (PTA). Under this, pensioners with an income at or under the full new State Pension - regardless of source - won’t pay Income Tax between 6 April 2027 and 5 April 2030.

The allowance will be gradually tapered for those with incomes just above the value of the State Pension. For every £3 of income above £13,037, your PTA will reduce by £1.

Cash ISA changes reversed, and a new ‘starter’ ISA

The planned changes to the allowance for Cash ISAs, announced at the 2025 Budget by then-Chancellor Rachel Reeves, will no longer go ahead.

Instead, the overall annual ISA allowance will remain at £20,000 for all ISA savers.

Healey also announced plans to work with the financial industry to create a new ‘starter ISA’, with incentives for first-time investors in stocks and shares.

Income Tax on savings and property income increases

While Healey kept Labour’s promise not to increase headline Income Tax rates, the rate on savings and property income will rise by a further two percentage points from 6 April 2027. That’s on top of the originally planned two-point increase announced in 2025.

That’ll see them increase to:

24% for basic rate taxpayers;
44% for higher rate taxpayers; and
49% for additional rate taxpayers.

Increase to the minimum wage

The National Minimum Wage will rise by 3.9%, from £10.85 an hour to £11.27 for 18 to 20-year olds. The National Living Wage will rise by the same percentage, from £12.71 to £13.21 an hour. Both are from 1 April 2027.

For those who are eligible, that’ll also increase how much workers and their employers contribute to pensions.

Under Auto-Enrolment, eligible workers see 8% of their earnings between £6,240 and £50,270 paid into their pension, with employers paying in at least 3% of this.

So, that rise in earnings will bump up the amount workers and employers pay into workplace pensions.

The Carer’s Allowance cliff-edge is removed

The cliff-edge withdrawal of Carer’s Allowance at the Weekly Earnings Limit will be replaced by a taper from the 2030/31 tax year.

Currently, carers who exceed the threshold by even a penny lose their entire benefit.

Instead, the taper will reduce the benefit payment gradually as earnings increase.

Cost of living measures

Healey announced a range of measures to tackle the cost of living, including:

removing import tariffs on around 100 items including garlic, gherkins, and jams;
making permanent a 55p per mile tax-free mileage rate for those driving up to 10,000 miles for work, with the rate rising from 25p per mile to 35p above that;
giving two weeks of parental pay to self-employed fathers, partners, and adopters from April 2029;
extending the Fuel Duty freeze to July 2027; and
support with energy bills, with households in Council Tax bands A-D receiving a £100 Energy Household Payment, an extension to the VAT cut on electricity bills, and the removal of the standing charge on household gas bills from 2027 “or as soon as possible after” with a similar reform to electricity bills to follow.

Help for first-time homebuyers

The government confirmed it will go ahead with a new First-Time Buyer ISA from April 2029, replacing the Lifetime ISA (LISA).

It’ll work similarly, allowing you to save up to £4,000 a year, providing a 25% government bonus up to a maximum of £20,000 over the life of the product. That bonus will be paid on withdrawal towards the purchase of a first home worth up to £450,000. There’s no age cap on when you need to have opened your First-Time Buyer ISA.

Meanwhile, for LISA holders, the government’s reducing the 25% LISA charge if you withdraw to buy a first home above the £450,000 property price cap. From 29 October 2026, it’ll be 20%, only removing any government bonus you had been given.

The Budget documents also confirmed further details of the Your First Home scheme. These are that:

first-time buyers in England will be able to purchase new-build homes with a minimum deposit of 2.5%, and maximum of 15%;
the government will loan 20% of the property’s value;
buyers will be subject to a combined income cap of £110,000 outside London, and £140,000 in London; and
property price caps will be set based on local authority median prices. Inner and outer London caps will be £650,000 and £500,000 respectively.

Business rates relief extended for small businesses

The Small Business Rate Relief threshold will rise from £12,000 to £18,000. That’ll see 70,000 retail, hospitality, and leisure businesses pay no business rates from April 2027.

Certain industries will be carved out of this tax break, including adult gaming centres and vape shops.

For all other retail, hospitality, and leisure properties, rates will be frozen for two years.

Small Producer Relief in the Alcohol Duty system will also become more generous. That’ll give £10 million of support a year to more than 2,000 small brewers.

Mixed support for entrepreneurs and businesses

The government plans to support founders and entrepreneurs with various measures, including:

tripling the Trading Allowance from £1,000 to £3,000 from 6 April 2027;
the Young Entrepreneurs Allowance, providing support with living costs for the first year while founders start businesses;
creating a new Founders’ Relief, offering a reduced 10% Capital Gains Tax (CGT) rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies from 6 April 2027; and
increasing the Company Share Option Plan (CSOP) individual option limit from £60,000 to £120,000.

It’s not all good news as Healey also announced:

a cut in the Business Asset Disposal Relief (BADR) lifetime limit from £1 million to £500,000 from April 2027, reducing business assets that can be disposed of with a lower CGT rate;
rule changes from April 2028 for distributions from companies to individual shareholders to make them taxed consistently with other taxpayers - there’ll be rules to protect genuine changes of ownership, such as family succession;
expectations for online marketplaces, like Amazon or eBay, to collect VAT from traders on their platforms; and
an increase in the Bank Corporation Tax Surcharge, a tax specifically on bank profits, from 3% to 6%, starting in January 2027 and lasting for 15 months.

Summary

The details of many of these changes are yet to be ironed out. So we’ll have to wait and see exactly how they’ll work over the coming weeks and months.

Private pensions have come out unscathed this year, meaning they remain a tax-efficient way for you to save for the future.

You can still get the same tax relief on your contributions, and any growth is free from Income Tax, CGT, and Dividend Tax.

So, your pension remains an effective route for putting money aside for later.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Read the full Budget summary for more details of changes announced.

Period	Market Event	FTSE World TR GBP (%)	4Plus Plan (%)
4Plus Plan’s inception – 6 Sept 2013	QE Tapering, China Interbank Crisis and its aftermath	-5.44	-2.41
3 Oct 2014 – 15 May 2015	Oil price drop, Eurozone deflation fears & Greek election outcome	-5.87	-1.77
7 Jan 2016 – 14 Mar 2016	China’s currency policy turmoil, collapse in oil prices and weak US activity	-7.26	-1.54
15 June 2016 – 30 June 2016	BREXIT referendum	-2.05	-1.07

Period	Market Event	FTSE World TR GBP (%)	4Plus Plan (%)
4Plus Plan’s inception – 6 Sept 2013	QE Tapering, China Interbank Crisis and its aftermath	-5.44	-2.41
3 Oct 2014 – 15 May 2015	Oil price drop, Eurozone deflation fears & Greek election outcome	-5.87	-1.77
7 Jan 2016 – 14 Mar 2016	China’s currency policy turmoil, collapse in oil prices and weak US activity	-7.26	-1.54
15 June 2016 – 30 June 2016	BREXIT referendum	-2.05	-1.07