Past Autumn Budget changes worth thinking about now

Several tax changes announced in recent Budgets are due to take effect from April 2027, and they could affect pensions, savings, investments, property income and estate planning.

With attention turning towards the 2026 Autumn Budget, you may be tempted to focus on what might be announced. However, reviewing the changes already scheduled could be a more useful starting point.

It is natural that the upcoming Budget attracts attention. But until we know what is in the Autumn Budget, we encourage clients to focus on what is already in play, what is confirmed and what can be planned for rather than speculating on potential changes.

Some of the previously announced changes may have gone under the radar, even among financially astute households.

This article is based on current legislation and announced policy at the time of writing. Tax treatment depends on individual circumstances and may change. It is not personal financial advice or a recommendation to take any particular action.

From April 2027, most unused defined contribution pension funds and pension death benefits are due to be included in your estate for inheritance tax purposes.

Currently, unused defined contribution pension funds can generally be passed to beneficiaries outside the inheritance tax regime. This has led some people with other assets available to fund retirement being able to leave their pension untouched and instead use it in later-life or as legacy asset.

That approach may need to be reconsidered, as including pension wealth in an estate could increase your inheritance tax liability or bring your estate into the tax regime for the first time. It may also mean that your planned legacies are impacted, meaning your beneficiaries don’t benefit as you planned.

Income tax may also apply. Where someone dies aged 75 or over, beneficiaries may pay income tax at their marginal rate when withdrawing funds from the pension. In some cases, this could result in both inheritance tax and income tax being payable on inherited pension assets. Income tax can also apply if someone dies before 75, if the if pensions are paid as a lump sum and in excess of allowances.

The change may alter how some people view the role of their pension within their wider retirement and estate plan. However, it should not be assumed that drawing pension benefits earlier, taking tax-free cash or making gifts will lead to a beneficial outcome. Such decisions can have significant and potentially irreversible tax and retirement-income consequences.

Any review should take account of lifetime income requirements, longevity, possible care costs, other available assets and the risk of exhausting retirement savings. Cashflow modelling may help identify different options, but it does not remove the need for individual advice.

Pension beneficiary nominations will also become increasingly important. For some married couples, leaving pension assets to a surviving spouse may provide greater inheritance tax protection than naming children directly, and marginal tax rates of all beneficiaries should also be taken into consideration.

Whole-of-life insurance written into trust may also be considered to help meet a potential inheritance tax liability. This is a complex area and requires careful advice.

From 6 April 2027, tax rates on savings interest are due to increase by two percentage points:

• 20% to 22% for basic-rate taxpayers

• 40% to 42% for higher-rate taxpayers

• 45% to 47% for additional-rate taxpayers

Personal savings allowances have remained unchanged since they were introduced, and frozen income tax thresholds may also push more people into higher tax bands, reducing their personal savings allowance.

As a result, more people may move into higher tax bands as wages and other income rises. This process, known as fiscal drag, can increase the overall tax burden without headline tax rates changing.

The number of higher-rate taxpayers is estimated to rise from 5.1 million in 2022/23 to 7.7 million in 2026/27. The number paying additional-rate tax is estimated to increase from 570,000 to 1.29 million over the same period.1

Pension contributions remain one possible way for eligible taxpayers to reduce taxable income while saving for retirement. Salary sacrifice may also reduce income tax and National Insurance (though this is expected to change from 2029) where it is available and suitable.

This may be particularly relevant for people with income over £100,000, where the gradual withdrawal of the personal allowance can result in a high effective marginal tax rate.

Tax on property income is due to rise

From April 2027, tax rates on property income are due to increase by two percentage points at each marginal rate.

This will affect many buy-to-let investors and casual landlords, adding to the wider tax and regulatory pressures involved in property ownership.

For some investors, the changes may prompt a broader review of whether property remains the right long-term investment for them.

These changes should not be considered in isolation. Pensions, savings, investments, property and estate planning all form part of a wider financial plan.

The Autumn Budget will bring further announcements, but in the meantime, understanding the changes already scheduled can help you prepare and avoid making decisions based solely on speculation.

To discuss how the confirmed changes could impact your financial plan, speak to your usual Evelyn Partners contact or book an appointment.

¹ GOV.UK Income Tax liabilities statistics: tax year 2023 to 2024 to tax year 2026 to 2027, 15 July 2026