Budget 2026 costings: changes to tax on savings, property and banks

Key facts

Each row is checked against the stored copy of the official document; open a row to see the exact words and where they appear.

The story

This is the Treasury's costings note for Budget 2026. It sets out the assumptions behind the estimated effect on the public finances of the tax and annually managed spending decisions it covers, where those have a fiscally significant impact. Measures the OBR certified as below a £10 million a year threshold in every forecast year are left out. The note says all of its costings were submitted to the independent Office for Budget Responsibility (OBR) for certification. This digest covers the introduction and a selection of the measures. It does not cover them all.

Several measures change taxes on savings, property and business. From 6 April 2027, Income Tax rates on property income and on savings income each rise by 2 percentage points. The Exchequer impact row for the property change prints +575m for 2028-29, and the row for the savings change prints +555m for the same year. The lifetime limit for Business Asset Disposal Relief, a lower rate of Capital Gains Tax on gains from selling a business, is cut to £500,000. Gains outside the new limit are chargeable at the headline marginal rate, which the note gives as 24% for higher rate taxpayers. The Business Asset Disposal Relief row prints +305m for 2031-32.

Banks and other businesses are also affected. The Banking Surcharge rise takes the combined rate of Corporation Tax and Banking Surcharge on affected profits from 28 per cent to 31 per cent for a 15 month period, from 1 January 2027 to 31 March 2028. The row prints +950m for 2027-28. The capital allowances measure does two things. It cuts the main rate Writing Down Allowance, which spreads tax relief on equipment over several years, from 14% to 12%. It also raises the first-year allowance, which gives relief on new equipment up front, from 40% to 50%. The +1,040m printed for 2028-29 is the figure for both changes together, not for either one alone.

Other measures point the other way. The Cash ISA limit will remain at £20,000 for all individuals, reversing a previously announced reduction to £12,000 for those under 65. VAT on domestic electricity is cut from 5% to 0% from 1 October 2026 to 1 July 2027, and its row prints -755m for 2026-27 and -305m for 2027-28. A new 10% Capital Gains Tax rate is introduced for qualifying disposals by founders or early investors in high-growth companies, subject to a £10 million lifetime limit.

The note does not say what a plus or minus sign means. Plus figures sit beside tax rises and minus figures beside tax cuts, which suggests plus is a gain for the Exchequer, but the note does not spell this out. Each note describes the measure, the tax base, the costing method and the main areas of uncertainty.

What changed

The note says the Cash ISA limit will remain at £20,000, reversing a previously announced reduction to £12,000 for individuals under 65.

What it means

Written by AI and checked by a second AI. Published under the responsibility of VERADIQ's human director. Lens: economist

In practice, the measures covered here mostly change taxes on savings, property, banks and business investment, while the Cash ISA limit and domestic electricity VAT move the other way. The capital allowances row prints figures of up to +1,120m in 2031-32 (and +1,040m in 2028-29), but that row covers a cut to one allowance and a rise in another together, so it cannot be read as the effect of the cut alone.

The property income row goes from +35m in 2027-28 to +575m in 2028-29, a difference of 540m on the printed figures (575 minus 35). The note does not say why the first year is so much smaller, so any explanation, such as the timing of when the tax is collected, would be a guess.

Worth watching are the behavioural responses the notes describe. The property note says some landlords may incorporate, though this is expected to be limited. The savings note says some individuals may shift savings into products such as ISAs. If people react more than assumed, the printed figures could be affected, but the note does not size that.

Who is affected

• Unincorporated landlords
• People with taxable savings income
• Banks
• Businesses claiming capital allowances
• Owners selling qualifying businesses
• Founders and early investors in high-growth companies
• Domestic electricity customers
• Cash ISA savers

Key dates

• 1 October 2026 to 1 July 2027 — VAT on domestic electricity is cut from 5% to 0%.

  Source: Supporting documents for Budget 2026 — Policy costings, PDF p.12 (printed p.12), section Support for Energy Bills — Open the official document at page 12 (opens in a new tab) · Our archived record

• 1 January 2027 to 31 March 2028 — The higher Banking Surcharge applies.

  Source: Supporting documents for Budget 2026 — Policy costings, PDF p.66 (printed p.66), section Bank Surcharge — Open the official document at page 66 (opens in a new tab) · Our archived record

• 6 April 2027 — The rise in Income Tax rates on property income starts.

  Source: Supporting documents for Budget 2026 — Policy costings, PDF p.74 (printed p.74), section Property Income — Open the official document at page 74 (opens in a new tab) · Our archived record

• 6 April 2027 — The rise in Income Tax rates on savings income starts.

  Source: Supporting documents for Budget 2026 — Policy costings, PDF p.75 (printed p.75), section Savings Income — Open the official document at page 75 (opens in a new tab) · Our archived record

• 6 April 2027 — The lower Business Asset Disposal Relief lifetime limit of £500,000 starts.

  Source: Supporting documents for Budget 2026 — Policy costings, PDF p.73 (printed p.73), section Business Asset Disposal Relief (BADR) — Open the official document at page 73 (opens in a new tab) · Our archived record

What the document does not say

• It does not set out a combined total for all the measures covered here.
• It does not explain why the first-year figures for some measures, such as property income, are much smaller than later years.
• It does not say what a plus or minus sign on an Exchequer impact figure means.
• It does not set out the detailed policy design for Founders' Relief; the note says the measure is subject to a technical consultation in which the design is set out in more detail.
• The areas of uncertainty sections name risks but do not put a size on them.

Plain-English glossary

Exchequer impact

The figure the note prints for a measure's effect on the public finances, in millions of pounds a year.

Office for Budget Responsibility (OBR)

The independent body that scrutinises and certifies the government's costings.

Writing down allowance

Tax relief that lets a business deduct part of the cost of equipment each year.

First-year allowance

A larger deduction for the cost of new equipment in the year it is bought.

Capital Gains Tax (CGT)

Tax on the profit when you sell certain assets, such as shares.

Business Asset Disposal Relief (BADR)

A lower rate of Capital Gains Tax on gains from selling qualifying businesses, up to a lifetime limit.

Banking Surcharge

An extra tax on the profits of banks, on top of Corporation Tax.

Percentage points

The simple difference between two rates, so 20% to 22% is 2 percentage points.

How this was checked

Status

confirmed

Checked by

claude, second family

Method

quote check, digit guard, adversarial review, independent second-family review, compliance review

Limits

The document is more than 100 pages. This digest covers the introduction and a selection of measures (pages 10, 12, 19, 29, 66, 70, 73, 74 and 75); many other measures are not covered. The note itself leaves out measures the OBR certified as below a £10 million a year threshold. Figures are as printed in the Exchequer impact tables, in £ million, 2026-27 to 2031-32. The note does not state what a plus or minus sign means.

Approved for publication

28 Oct 2026, 18:19 GMT

Not tax, legal or investment advice.

Corrections

• 28 Oct 2026, 18:29 GMT — Corrected: the analysis said the capital allowances row had the largest printed figures among the measures covered, which the note does not support; it now states only the figures printed in that row, which combine a cut to one allowance and a rise in another. In-brief 2 also wrongly ran the bank surcharge and the capital allowances change together as if the allowances change were aimed at banks; they are now separate sentences. Wording only; no figure or quote changed.