Budget 2026: Key takeaways for private clients

• 28 October 2026
• News
• Forsters news
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• Private wealth
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• Tax

The Budget delivered a message of stability following a couple of turbulent fiscal years, and largely reaffirmed the policy commitments of the new Labour government – including in respect of entrepreneurship, defence and AI. 

A noticeable absence from the Chancellor’s speech was any focus on inheritance tax (IHT) and rural affairs, but perhaps this was unsurprising given the considerable attention given to these areas in the previous two Budgets.  

The supplementary documents published following the Chancellor’s speech did, however, include further detail on the new rules bringing most unused pension funds and pension death benefits within the scope of IHT from April 2027, as well as some small but technical changes to the IHT regime applying to certain trusts. We continue to encourage clients to take appropriate advice on how the new pension rules may affect their estate planning, including the interaction with charitable giving. 

Another noticeable absence was a capital gains tax (CGT) exit charge for individuals, in the wake of fears the new Chancellor might introduce what his predecessor didn’t. In fact, some announcements (such as a proposal for a new “Founders’ Relief”) suggest the Government might be using more of a carrot than a stick when it comes to CGT. 

There will be other points of interest to private clients which you can read in our other briefings.

Income tax: rates on savings and property income to rise further  

The Government announced the rates of income tax on savings and property income will rise by a further 2% (in addition to the 2% rise announced in the 2025 Budget). From 6 April 2027, therefore, the rates of income tax on non-employment income will be as follows:

This increase comes following the hike to the rate applicable to dividend income, which increased by 2% on 6 April 2026.  

The types of income above are treated as the top slice of income, meaning any employment, trading or pension income benefit from the personal allowance in priority. The change will not affect specific structural allowances such as the dividend, personal savings, and property allowances. 

The cash ISA limit at £20,000 will also remain in place from 6 April 2027. The Government is also aiming to create a new Starter ISA for first-time investors, with further details to follow. 

CGT: exemption from trust exit charges for temporary migration to the UK 

The Government announced they will introduce an exemption to the CGT “exit charge” on trusts that migrate temporarily to the UK.  

Under the trust emigration rules, if a trust ceases UK residence its trustees are deemed to dispose of and reacquire all the trust’s assets immediately before the trust ceased UK residence – such that a CGT arises on the latent gain in the trust’s assets. Currently, there are limited exemptions to this exit charge, such as where the trust becomes non-UK resident by virtue of the death of a trustee, provided that appropriate steps are taken to make the trust UK resident again.  

The Government will legislate to introduce an additional exemption, such that an exit charge will also not apply when a trust becomes UK resident because one of its trustees moved to the UK and it ceases to be UK resident later that year or the following year. It is not immediately clear why the Government will do this, but it is a welcome change to deal with a pitfall that is easy for trustees to miss (i.e. of an exit charge arising inadvertently because one or more trustee became UK resident – a particularly common mistake where the trustees include individuals rather than professional non-UK trust companies).  

For more information or advice, please get in touch with one of our team.