28 October 2026
Budget Day always produces plenty of headlines, but not every announcement requires an immediate response.
For most people, the more useful question is not simply “what changed?”, but “does this change anything about my financial plans?”
Here are some of the announcements that caught our attention from a personal financial planning perspective.
Cash ISA allowance remains at £20,000
One of the more notable announcements concerned ISAs.
The Government has decided not to proceed with the proposed reduction in the amount that could be placed into a Cash ISA. The annual ISA allowance will therefore remain at £20,000, including for cash savings. The Government had previously announced that they were reducing the Cash ISA limit to £12,000 for under 65s, in an attempt to incentivise more investment in the equity markets. However, this policy proposal had been met with some criticism.
This amendment provides some welcome clarity for savers. ISAs remain a valuable part of financial planning, allowing savings and investments to grow free from UK Income Tax and Capital Gains Tax.
The wider question, however, remains whether holding money in cash or investing it is appropriate for you. Cash can be important for emergency funds and shorter-term expenditure, while investments may be more appropriate where money can be committed for the longer term.
A new ISA for first-time buyers
There was also more news for younger savers and those hoping to get onto the property ladder.
A new First Time Buyer ISA is planned from April 2029, replacing the Lifetime ISA for new accounts from that point. Existing Lifetime ISAs opened before then will be able to continue under their existing terms.
Under the proposed design, savers will be able to contribute up to £4,000 each tax year, with a 25% Government bonus available when the proceeds are used towards an eligible first-home purchase. The total Government bonus will be capped at £20,000, and the property purchase price limit will be £450,000.
The ISA will be available from age 18 with no upper age limit, and both cash and stocks and shares versions are planned.
For existing Lifetime ISA holders, there was another potentially useful change. From 29 October 2026, where a Lifetime ISA is used to buy a qualifying first home costing more than the £450,000 property cap, the withdrawal charge will reduce to 20%. The Government says this is intended to recover the Government bonus without taking part of the saver’s own contributions.
More help onto the housing ladder
The Budget also introduced Your First Home, a new scheme intended to help eligible first-time buyers purchase new-build properties in England.
Under the announced structure, buyers would provide a deposit of at least 2.5%, obtain a repayment mortgage from a participating lender, and receive a Government equity loan of 20% of the purchase price, which would be interest-free for the first five years.
For example, on a £300,000 property this could mean:
- £7,500 buyer’s deposit
- £60,000 Government equity loan
- £232,500 repayment mortgage
An important point is that the equity loan is linked to the value of the property. If the Government initially provides 20% of the purchase price, the amount eventually repayable will normally represent 20% of the property’s value at that time. This means the amount repayable could rise or fall with the property’s value.
The scheme is expected to open for applications in February 2027, with detailed eligibility rules still to follow.
A new Pension Tax Allowance
There was also an interesting announcement for people at or approaching State Pension age.
From April 2027, the Government plans to introduce a Pension Tax Allowance. This addresses an unusual consequence of the State Pension increasing while the standard Personal Allowance remains at £12,570.
For 2027/28, the full annual value of the new State Pension will rise to £13,036.40, taking it above the Personal Allowance.
Under the new arrangement, someone over State Pension age whose total income is no more than the full annual new State Pension could receive a tax reduction sufficient to prevent this, by itself, resulting in a small Income Tax bill.
Those with income slightly above this level may still receive some benefit, with the allowance gradually withdrawn. Based on the announced figures, no Pension Tax Allowance will be available once total income reaches £13,319 in 2027/28.
Importantly, this does not make the State Pension tax-free, nor does it increase the normal Personal Allowance. It is a separate tax reduction targeted at people with relatively modest incomes.
So, should you do anything?
Probably the most important message from any Budget is not to make significant financial decisions based purely on the headlines.
Changes to ISAs, pensions and support for first-time buyers can create opportunities, but their relevance will depend on your own circumstances.
For example, retaining £20,000 in a Cash ISA may be perfectly appropriate for someone who needs access to their money in the short term. Someone investing for the medium to longer term may have very different considerations. Equally, the new first-time buyer measures will need to be weighed against factors such as mortgage affordability, property values and longer-term objectives.
Good financial planning should start with what you are trying to achieve, rather than with changes to tax rules and allowances.
