Plans to slash the annual cash Individual Savings Account (ISA) were scrapped. The allowance will remain at £20,000 ($26,600) rather than falling to £12,000 as announced by the former Chancellor Rachel Reeves in the 2025 budget statement, giving wealth managers some relief. However, Healey has imposed an additional 2 per cent tax bite on income derived from savings and property rental, outside of ISAs. 

The Treasury will also work with the private sector to create a new starter ISA to reward first-time investors.

Healey said banks will be subject to higher taxes and raised the bank surcharge. It means that lenders will face a levy of 6 per cent, up from the 3 per cent amount they pay in addition to corporation tax of 25 per cent. The levy will begin in January and last for 15 months.

Since late summer following the resignation of Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves, Chancellor Healey largely avoided giving the Left of his party the kind of policies, such as wealth taxes, that they have asked for. The package has been seen as a cautious set of meaures designed to keep markets calm at a time when long-term bond yields have risen, creating worries about pressures on borrowing should economic conditions deteriorate. Gross domestic product (GDP) is expected to expand by 1.2 per cent this year and 1 per cent next year. John Stopford, head of managed income at , said gilt sales were close to forecasts of £250 billion for 2026/27. 

There was modest gilt outperformance in the market during the afternoon after Healey's speech, not much reaction from sterling, while bank shares rose on what was a lighter rise in the levy than some had expected.

On the political front, Conservative leader Kemi Badenoch welcomed the move on ISAs, but she said the Budget fell short of what needed doing to revive the economy and help the public.

Other measures
Defence spending will rise to 3 per cent of GDP by 2030 under the budget and to 3.5 per cent of GDP by 2035. Details of how this will be done were not announced and will come at the spending review next year.

A British data centre covenant has also been launched to set out conditions for building data centres.

Meanwhile, there will be no income tax rise; income tax thresholds have been frozen until April 2031 while capital gains tax (CGT) will not increase, bringing some relief to wealth managers.

In addition, the threshold at which retail, hospitality and leisure businesses pay rates, a charge on commercial properties, has been increased from £12,000 to £18,000 under the budget. As a result, half of shops, restaurants and gyms will not pay business rates, Healey said. 

The minimum wage is also set to rise by 3.9 per cent. Pensioners receiving the state pension will not have to pay income tax this quarter.

A green levy, to fund hydrogen projects, has been taken off household energy bills and moved into general taxation, meaning that bill payers may see monthly charges fall. As announced in September, the government has cut VAT on electricity bills to zero, and has extended this until July.

Tariffs have also been removed from more than a hundred imported food items, including gherkins, baked beans and chocolate; the government said this could save up to £21 a year.

Reactions
Pensions, CGT, Income tax
Jason Hollands, managing director at wealth management firm Evelyn Partners
“Feedback from our financial planners and investment managers ahead of the Budget showed that potential changes to capital gains tax had been a particular concern for clients, especially business owners. The Chancellor’s decision not to raise CGT will be a relief. Many economists and business leaders have argued that higher rates could deter investment without guaranteeing higher tax receipts. HMRC’s own modelling has previously suggested that a substantial increase in the higher CGT rate could reduce receipts over time.

“The absence of further changes to private pensions is also welcome. The pensions regime has already seen repeated changes in recent parliaments, while speculation about reducing tax-free cash has prompted some savers to make decisions they may later regret. A period of stability would help people plan with greater confidence.

“Other changes already announced will still shape the tax landscape. From April 2027, most unused pension funds and pension death benefits are due to come within the scope of inheritance tax. The High Value Council Tax Surcharge, dubbed the ‘Mansion Tax’, is due to begin in England in April 2028. And from April 2029, only the first £2,000 of employee pension contributions made through salary sacrifice will qualify for National Insurance relief.

“Income tax thresholds are also frozen until April 2031. As earnings rise in cash terms, more people will be drawn into higher tax bands. The OBR estimates that, between 2022/23 and 2030/31, 4.8 million more people will move into the higher rate and 600,000 more into the additional rate as a result of frozen thresholds.

“The message for savers is clear: the tax landscape is set to become tougher in the foreseeable future. For many households, a rising tax bill is another cost-of-living pressure. This underlines the importance of making effective use of available allowances, including ISAs and pensions, and seeking sound financial planning advice to navigate the changes ahead.”

Claire Trott, head of advice at St James’s Place
“One key detail concerns pensioners who would otherwise be pushed into paying income tax when the new State Pension rises above the personal allowance in April 2027. While initially billed as an increase in the personal allowance, the reality is slightly different. The measure introduces an automatic tax deduction for those over State Pension age whose total income, regardless of source, is below the value of the new State Pension. There is no cliff edge, with the allowance tapering for those whose incomes sit just above this threshold. For now, however, this is only a short-term fix, running until 2030 before being reviewed.

“Another small but welcome nugget is the removal of the two-year rule on pension death benefits, a hangover from the lifetime allowance regime. This means that from Budget Day 2026, income tax will no longer apply simply because benefits are paid more than two years after the member’s death. The rule originally ensured that benefits were either tested against the lifetime allowance or subject to income tax where the member died before age 75.

“The other pensions announcement is the confirmation of the adjustment to the triple lock from 2030. Rather than applying the highest of CPI inflation, 2.5 per cent or Average Weekly Earnings each year, the government will review increases over time to ensure the State Pension keeps pace overall. This should smooth increases and potentially deliver significant savings for the Treasury. It also addresses the cumulative ‘ratchet effect’ seen during Covid, when a year of sharp earnings growth compounded with increases in subsequent years.

“Overall, it was a relatively quiet Budget for pensions, and that should be welcomed as it gives savers greater certainty as they plan and invest for their retirements. However, with other changes including higher tax rates on property and savings income, it remains as important as ever to consider all assets when planning for retirement and avoid putting all your eggs in one tax basket. For those who are able, speaking to a financial advioer can help them understand how these changes affect their wider financial circumstances and plan for retirement with confidence.”

Cash ISAs
Daniel Hough, director, wealth manager at RBC Brewin Dolphin
“Keeping the Cash ISA allowance at £20,000 reduces complexity and avoids the risk of confusion amongst savers, allowing them to tailor the balance between cash and investments within the tax-efficient ISA wrapper. There have been more than 130 changes to personal finance rules announced in Budgets over the last 10 years and our recent research found that less than a quarter of people were both aware of, and able to correctly identify, the proposed April 2027 ISA changes.

“It is worth considering your individual savings goals when deciding how to use your ISA wrapper. Building up an emergency cash fund or holding cash for shorter term goals is an important part of the savings mix. However, there is a risk that too much can sit in cash for the long term, potentially eroding real value against inflation over time. The Chancellor also announced plans to develop a “Starter ISA” to help encourage a new generation of investors. A regular investment into a Stocks and Shares ISA is a great financial habit to consider, even starting small can help grow your investment pots over the long term.”

Isabella Galliers-Pratt, senior investment director at Rathbones
“This U-turn on ISAs is a victory for common sense. You don’t create investors by penalising savers. Cutting the cash ISA allowance risked leaving people with an uncomfortable choice: take more investment risk than they are comfortable with, or keep their savings outside an ISA and potentially pay more tax.

“Our research shows why changing the ISA rules was never going to be a silver bullet. More than a quarter (27 per cent) of people think stocks and shares are too risky, while 28 per cent say they lack the know-how to manage investments themselves. At the same time, almost a third are willing to take a high level of risk in pursuit of stronger returns. There is an appetite to invest, but confidence and understanding remain real barriers for many.

“Cash and investments also do different jobs. Cash can provide an emergency buffer or somewhere to keep money needed in the short term, while investing is generally about building wealth over the longer term. It shouldn’t be a case of cash versus investing. Both can have an important place in a well-rounded financial plan. The ambition to get more people investing is absolutely right, but education and confidence-building are better tools than restriction. Helping people understand investment risk, diversification and the impact inflation can have on cash savings is more likely to encourage sustainable, long-term investing than trying to push them towards it through changes to the tax rules.”

Claire Exley, head of financial advice and guidance at JP Morgan Personal Investing
“Overturning the upcoming Cash ISA allowance cut was on few people’s radar for the Budget but marks a clear change in policy for long-term saving and investing in the UK. Many believed the aim of the Cash ISA cut to get more people investing was a positive step, but the way the policy was designed carried some risk of confusion. The exemption for over 65s and introduction of a new allowance fuelled worries that the UK ISA regime was becoming too hard to understand for the average consumer.

“Keeping parity between the Cash ISA and Stocks and Shares ISA allowances should maintain the simplicity of the regime for savers to understand the rules and shift between cash and investments as their time horizon changes. Efforts from the investment industry to build awareness of the benefits of investing alongside new initiatives like Targeted Support and Simplified Advice should also empower more savers to take the next step to invest.

“For savers worried about paying tax on their savings interest, this news will come as a relief as they will keep their full £20,000 allowance next tax year when allowances reset. However, with UK inflation running high, savers shouldn’t overlook the impact of rising prices on the purchasing power of their savings. If your financial goal is more than three years away, investing carries more risk but it also offers the potential for growth over the long term that keeps up with or exceeds inflation.”

Steve Owen, head of proposition (EMEA) at Morningstar Wealth
“Stepping back from the proposed changes to the Cash ISA is a big win for savers and investors. The ambition to encourage more people to invest was right but restricting how people use their ISA was not the best way to achieve it. We need to make investing simpler and more accessible, while maintaining confidence in the ISA. Adding complexity and friction risks doing the opposite. Keeping the ISA simple and flexible, and giving people the confidence to move from saving to investing when it’s right for them, is a much better direction.”

Founders relief, EMI reforms
Sean Bannister, head of tax at Edwin Coe
“This could be the Budget that gives entrepreneurs something to be genuinely positive about. We've had a lot of discussion about wealthy individuals and business owners leaving the UK, and tax has certainly been part of that conversation. So it's encouraging to see the Chancellor recognising that we need to reward people for taking risks, building businesses and creating wealth.

“The new Founders' Relief offering a 10 per cent capital gains tax rate on lifetime gains of up to £10 million could be particularly significant. We've seen how changes to capital gains tax can influence decisions about when to sell a business, whether to reinvest and, increasingly, where founders choose to live and there’s been no shortage of clients coming to us in, to put it clearly, a panic. This gives successful entrepreneurs a financial reason to stay in the UK and, hopefully, to put some of the proceeds from one successful business into the next, building growth

“The EMI reforms are welcome as well. The UK already has some excellent incentives for growing businesses, and EMI has been one of its real strengths over recent years. Expanding the scheme should help more companies attract and retain talented people, particularly in the early stages when cash is tight and they are competing with much bigger employers.

“Tax incentives are only part of the picture. One of the biggest frustrations for entrepreneurs has been the constant speculation about what might change next. People making decisions about building, selling or investing in a business need to be able to plan several years ahead. The detail of these reforms will be important, but so will the government's willingness to leave them alone long enough to make a difference.

“Britain has the talent, investment community and infrastructure to be a fantastic place to start and grow a business. We need to stop giving entrepreneurs reasons to question whether they should be doing it somewhere else and I do think this Budget is a welcome step in that direction.”

Gilts
Bryn Jones, head of fixed income, Rathbones Asset Management
“The gilt remit represents a meaningful shift in issuance away from the long end. Sales of short conventional gilts will increase by £2.7 billion and medium conventional gilts by £7.5 billion, while the unallocated portion rises by £2.7 billion. This is partly offset by a sizeable £7.7 billion reduction in long conventional gilt sales. Long conventional gilts will now account for just 6.2 per cent of total issuance, down from 9.1 per cent, and dramatically below the 20 per cent plus share seen at times over the past two decades.

“That matters for the shape of the gilt curve. The market is being asked to materially absorb less duration, with additional issuance concentrated at the short and medium parts of the curve. All else equal, that should be supportive for longer-dated gilts and create a strong technical argument for long-end outperformance and curve flattening after a reduction of QT at the long end too. The reduction to just 6.2 per cent also underlines how far the UK's funding mix has shifted away from long-duration issuance compared with its historical norms.”

Matthew Amis, investment director, at Aberdeen
“The gilt market wanted dull and they got exactly that. With oil and gas prices this high and with one eye on France, a dull budget is what was needed. All of the major obstacles presented to Chancellor Healey were avoided, as such gilts yields are slightly out-performing. Is this a gilt positive budget? Not particularly, but in the context of this year that is good enough. 2027 is going to present another fiscal challenge for Chancellor Healey, but today’s budget should provide enough to reassure gilt investors going into the final months of 2026.”

Businesses
Managing director of business finance specialists Aurora Capital George Holmes
“The announcement that the small business rates relief threshold for retail, hospitality and leisure businesses will rise from £12,000 to £18,000 is genuinely welcome news for small businesses, particularly independent shops, cafés, restaurants and gyms that have been struggling with rising costs. Taking another 70,000 businesses out of paying business rates altogether could make a real difference. Unlike some forms of support, this is a saving business owners should be able to see directly in their budgets, freeing up money for stock, wages or improvements to their premises.

“It's also encouraging to see some certainty for businesses that will still be paying rates. Freezing increases in real terms for the next two years gives owners a clearer idea of what to expect, which is particularly valuable when they're trying to plan staffing and investment.

“But business rates are only one part of the picture. Many independent retailers and hospitality businesses are still dealing with higher wage bills, energy costs and customers who are being more careful with their spending.

“For businesses that qualify, the relief could be the difference between putting investment off for another year and finally being able to move forward with their plans.

“The important thing now is making sure the changes are straightforward to access and that eligible businesses understand exactly what they'll save. Small business owners shouldn't need an accountant to work out whether they're better off.”

Chris Black, director, wealth manager at RBC Brewin Dolphin
“The Budget included a number of measures to support first-time entrepreneurs. The Young Entrepreneurs Allowance, which helps cover living costs in the crucial first year of trading, will help to address a barrier for people who might otherwise never take the leap to starting a business. The doubling of British Business Bank commitments to women-led businesses to £200 million, alongside a new scale-up programme for female founders, will help provide access to growth capital which is one of the biggest blocks holding back talented founders. Taken together these measures could support more people to start and grow businesses.”

Damian Bloom, partner and head of UK Private Client at Winston Graham
“From the perspective of internationally mobile wealthy individuals, families and entrepreneurs, my overriding reaction to this Budget is not alarm, but disappointment at an opportunity missed,” Bloom said.

“The new Founders’ Relief, offering a 10 per cent capital gains tax rate on qualifying lifetime gains of up to £10 million, is welcome, although its eligibility conditions will limit its uptake compared to the wound-down Business Asset Disposal Relief (now £500,000). The decision not to increase the main capital gains tax rates is also welcome. But avoiding a further deterioration in competitiveness is not the same as making the UK more competitive on the unstable global stage."