UK Tax Rises Explained: 7 Changes Before Budget 2026
The Budget lands next week and we can probably expect more change. Rather than read more speculation about what might happen on the day, it's worth taking stock of what's already happened. Because it's a lot.
If you've been earning well and building savings and investments over recent years, you've already been through the wringer.
Inspired by a recent viewing of Se7en, here are all the changes that have happened outlined as the seven sins.
| 1. Greed: Capital Gains Tax Rates, Nearly Doubled
The basic and higher rates of CGT went from 10% and 20% to 18% and 24%. Not a tweak. A steep tax rise on the reward for taking investment risk in the first place.
| 2. Envy: Your Tax-Free Gains Allowance, Smashed
The annual capital gains exemption has fallen from £12,300 to £3,000.
Keeping more than a few thousand pounds of your own gains tax-free was apparently too much to watch.
| 3. Gluttony: Savings and Dividend Tax, More Please
Tax on savings interest, rental income and dividend income is rising by 2%.
Dividend tax increases affect basic rate and higher rate taxpayers; these have already increased from April 2026.
Income tax on rental income and savings interest will increase by 2% for all taxpayers from April 2027. Using your ISA allowances and managing investment and business income efficiently has never been more important.
| 4. Sloth: Income Tax Thresholds Frozen, For Longer
Tax thresholds were due to stay frozen until April 2028. Now it's 2031. The laziest tax rise there is, do nothing, let earnings inflation drag more people into higher bands every single year. Sneaky from HMRC.
| 5. Wrath: Pensions, Taxed on the Death Too
From April 2027, unused pensions form part of your estate for inheritance tax. Save responsibly your whole working life, and HMRC gets another bite at it when you're gone.
Furthermore, die after age 75 and your beneficiaries pay income tax too.
| 6. Pride: Employer National Insurance, Up 1.2%
Claimed as a tax on business, not workers. Funnily enough, pay rises haven’t been quite so high since employers picked up an extra 1.2% on every payroll. See below:
| 7. Lust: Even Your ISA Wasn't Safe
From April 2027, the cash ISA allowance for under-65s is set to be cut to £12,000, and interest earned on uninvested cash sitting inside a stocks and shares ISA to be taxed at 22% - I wrote on this back in June here.
Rumour this could be reversed, but we’ll wait and see!
| The Real Cost: Motivation has Reduced
More people are saying they'd rather live for today than bother saving and investing for tomorrow. I believe it's years of incentives being stripped away and tinkering, one Budget at a time.
I get it. It's hard to get excited about a long-term financial plan at the best of times, let alone when the rules keep changing underneath it.
In my view, only those with a huge commitment to keep on top of things, or those with professional advice on the journey will avoid expensive mistakes and build enough to support a decent standard of living in retirement.
What more could possibly be thrown at hard-working, diligent savers?
We’ll find out next week.
Risk warnings
None of the information in this communication should be seen as a recommendation and you should seek independent financial advice. Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount invested. Tax treatment depends on individual circumstances and may be subject to change in the future.
Written on 20th October 2026
