SUMMARY OF MAIN BUDGET CHANGES FOR PRIVATE CLIENTS

Rachel Reeves’ much anticipated second Budget took place recently and it contained changes for some private clients, which are briefly summarized below:

Council Tax

From April 2028, owners (as opposed to occupiers) of residential properties in England valued at over £2 million will be liable for a £2,500 extra recurring annual charge, additional to existing council tax liability. This will increase to £3,500 for properties worth over £2.5 million, £5,000 for properties over ££3.5 million and £7,500 for properties above £5 million.

The Valuation Office will undertake the valuations next year and there will be revaluations every five years.

The tax, although collected by local councils, will be passed on to central government.

Income Tax

The freeze on personal tax rates and allowances has been extended for a further three years to April 2031.

NICs employer threshold and upper earnings limit has also been frozen until April 2031.

Income Tax rates will increase by 2% on income from dividends basic and higher rates only) from 6 April 2026 and from savings income and rental income from 6 April 2027.

Savings

From 6 April 2027, £8,000 of the £20,000 annual ISA allowance must be invested in investment assets unless you are over 65.

There are no changes to pension scheme reliefs, but National Insurance will be applied to salary sacrifices of more than £2,000 from April 2029.

The Income Tax relief available for individuals investing in Venture Capital Trusts will drop from 30% to 20% from 6 April 2026, but the lifetime investment limits available for Enterprise Investment Scheme companies or Venture Capital Trusts are doubling with the aim of providing more support for early-stage companies and those wanting to scale up.

CGT

The CGT annual exemption has been frozen at £3,000 (£1,500 for trusts).

Inheritance Tax

The much publicised restrictions on 100% agricultural and business reliefs, as announced last year, will take effect from 6 April 2026, although the £1 million 100% allowance will be transferable between spouses on death.

Whilst there were no other the nasty surprises on the Inheritance Tax (IHT) front in the Budget this time, the nil rate band, the value above which tax starts to kick in, has been frozen at £325,000 until 5 April 2031, as well as the residential nil rate band at £175,000.

This means that more estates are paying IHT and those that are paying are paying more.

Here are a few ideas to help you start considering mitigating the burden on your family. “Simple ways to save Inheritance Tax“

Please contact us  if you would like to discuss how any of these changes impact on your family and what you can do to alleviate them.