Bonus episode: What does the Autumn Budget 2026 mean for your finances?

The following is a transcript of a bonus podcast episode of The Pension Confident Podcast. Listen to the episode or scroll on to read the conversation.

PHILIPPA: Hello. In today’s bonus episode, we dig into the details of Chancellor John Healey’s first Budget. We’ll lift the lid on the headlines and look at what’s happening to your take-home pay, your pension, and your savings. Here to help us weigh up the Chancellor’s choices is Maike Currie, VP Personal Finance at PensionBee. Hi, Maike.

MAIKE: Hi, Philippa.

The big picture

PHILIPPA: So, the official title of this Budget, Maike, was “Breathing space for today, [fresh] hope for the future”. The Institute for Fiscal Studies (IFS), they called it a raft of “fiddly measures”. What did you think?

MAIKE: Well, it was quite a fiddly Budget. I think what we do need to remember is the backdrop against which the Chancellor was delivering this budget. It’s an extremely challenging backdrop. We know that the UK’s borrowing costs are very high. We’re spending billions just paying off the debt on our borrowing. We know that energy prices are extremely high because of the war in Iran, which has pushed up the oil price, since February [2026] it’s up 60%.

So, there are lots of challenges. And I think if we’re talking about breathing space, the positioning was that this was a Budget that would give households in the UK breathing space. In all honesty, it was really about the government giving itself some breathing space. And there were no real game changers. And we did hear the leader of the opposition [Kemi Badenoch] come out and say, “Is that it?” -

PHILIPPA: yes -

MAIKE: and that seems to be the resounding response, saying, “Chancellor, could we have done more?”

PHILIPPA: So, should we take a look at winners and losers? -

MAIKE: yes -

PHILIPPA: I know you’re gonna have a list in your head. Let’s go with winners first.

MAIKE: Yes, so [the] first winner: Cash ISA savers. First-time buyers [are] definitely winners. Those with side hustles. The lowest paid. Most households in England living in a [property] in Council Tax Bands A to D - 

PHILIPPA: of course -

MAIKE: and pensioners getting by just on the State Pension. So those are our winners. Our losers, on the other hand, are savers. Those who’ve been prudent with their money and hold big cash savings outside an ISA. Landlords, small landlords. Young workers. And of course banks and gambling firms.

PHILIPPA: OK.

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Household costs

PHILIPPA: Should we get into the details? Should we start with household costs? Because as we all know, energy costs, energy bills have been a huge worry this year. It’s not [likely] going to get any better next year. What did the Chancellor do there?

MAIKE: So, the first thing that the Chancellor looked at, everyone will agree that our energy costs have just gone through the roof. It started with Russia’s war in Ukraine, and it’s got worse with the war in Iran. He’s extended the measure he put in place, just as Andy Burnham came into power, which is no VAT on electricity bills [from 1 October 2026]. That has been extended to [1] July [2027].

And then of course the big headline grabber was that [one-off] £100 that you could get if you live in a home that’s Council Tax between Band A and D [in England]. Now if we break that down: £100, divide that by 12 months, it’s £8.33 a month. It’s hardly [even] a drop in the ocean when we think average energy bills are far over £1,000 a year.

What this really does, it subsidises our energy bills. It’s a temporary measure and what we need, long-term, is for energy costs to come down. Now, Chancellor Healey did speak about a lot of measures about moving towards net zero, green energy, but that’s going to take years. And at the moment, as we’ve heard time and again, what households need is breathing space.

PHILIPPA: Yeah, this is a ‘now problem’ on the energy bills -

MAIKE: oh, totally.

PHILIPPA: You could call it a drop in the ocean. Having said that, it was so popular, this payout [announcement], it crashed the Council Tax band checker website.

MAIKE: I know, that’s unbelievable. So, while the Chancellor was delivering the Budget speech, many of us were going off to the Council Tax band checker website, looking, checking what Council Tax band is my home in. And so much so, that the website completely crashed. So, it just shows you the state of the nation and how much households really do need breathing space.

PHILIPPA: You were born to retire. The question is whether you’ll be ready when it happens. Subscribe to The Pension Confident Podcast and let’s make sure you are.

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Savings and investing

PHILIPPA: OK, let’s move on to savings and investing. Big news on the personal finance front seemed to me to be ISAs, right?

MAIKE: Yes, so Budget Day started really early because this was a breaking news report that the Chancellor was going to make a much-needed U-turn on Cash ISAs. So, you’ll remember in a previous Budget, the decision was made to reduce the Cash ISA allowance for anyone under the age of 65 from £20,000 a year to £12,000 a year.

PHILIPPA: Now the plan there was to try and make us invest our money -

MAIKE: yes -

PHILIPPA: in a more risky environment [than cash, like] stocks and shares -

MAIKE: exactly. And the point that I was making, and PensionBee was making, we spoke about this at length, was that you don’t make people eat more meat by rationing their vegetables, right?

PHILIPPA: I love that phrase!

MAIKE: Cash ISAs have an important role to play. And crucially, they have a very important role to play for retirees. Retirees are often told that they need to keep some money in cash for when the stock market dips -

PHILIPPA: yes -

MAIKE: and they’re drawing money from their pension. And they actually need that [cash buffer] to fill the gap. So, cash has a really important role to play. As we can see from Cash ISA subscriptions, over-65s hold quite extensive amounts in Cash ISAs. So, I think it’s really welcome that John Healey -

PHILIPPA: yeah -

MAIKE: made that U-turn. Of course, there’s a lot of grumbles out there about the cost that a lot of Cash ISA providers and platforms have spent thinking that this change is going to come in April 2027 -

PHILIPPA: of course -

MAIKE: but I still think it’s better to have the humility, and say, “Well, we made a mistake. Maybe this measure doesn’t make a lot of sense. We’re overcomplicating the ISA. Let’s keep it simple, because that’s the beauty of ISAs”.

PHILIPPA: He obviously loves ISAs because there’s a new one.

MAIKE: Oh, yes, he does love ISAs. And I do think we’re adding to what I call [the] ‘alphabet soup of ISAs’. Now, we know we’ve got the Stocks and Shares ISA, we’ve got Innovative Finance ISAs, we’ve got Junior ISAs, we have the Lifetime ISA, which is now being phased out, we have the Cash ISA. So, if that’s not enough to get your head around -

PHILIPPA: and now -

MAIKE: and now we have what’s [being] called the Starter ISA, or New Incentive ISA. Not quite as catchily named. But the idea behind this ISA is that it’d be available to people who [have] just come to the world of investing. Now, there are no more details available. The Chancellor said he’ll consult and we’ll see what transpires there -

PHILIPPA: but this is stocks and shares, right? -

MAIKE: this is stocks and shares -

PHILIPPA: not cash -

MAIKE: this is stocks and shares. We have no more details than that. I’d add to the ISA alphabet soup, there’s now going to be a First-Time Buyer ISA. And this is the [upcoming] replacement for the Lifetime ISA (LISA). So, if you’ve been using a Lifetime ISA like I have, I got into the Lifetime ISA just before I turned 40 [years old], and I [plan to] use it as a supplement to my retirement savings -

PHILIPPA: yeah -

MAIKE: that carries on. However, if you’ve been using the Lifetime ISA because you’ve got your eye on buying that first property, you’ll probably be looking at the First-Time Buyer ISA [in the future].

One good piece of news on Lifetime ISAs is the penalty. So, you put money into the LISA, right? You can put in up to £4,000 a year, you get the 25% from the government, £1,000. But when you withdraw that, if you need to withdraw it, you end up paying [back] more [than you put in]. So that’s being addressed.

PHILIPPA: OK.

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Tax on savings and property

PHILIPPA: What about tax on savings outside ISAs?

MAIKE: Yeah, so that was quite sneaky, I think. So here we’ve got the Chancellor saying, “Hand on heart, making a U-turn on Cash ISAs. The Cash ISA will remain as it is with a £20,000 allowance”. But tucked away in that Budget document, as always, he’s increasing the tax you pay on savings held outside of a tax-efficient wrapper -

PHILIPPA: OK -

MAIKE: and it’s important to remember that actually [the previous] Chancellor Rachel Reeves increased that rate by two percentage points [from April 2027] in the last Budget, and now Chancellor John Healey is increasing it [by] another two percentage points -

PHILIPPA: so, it’s four percentage [points] in total -

MAIKE: it’s four percentage [points] in total. It’s kicking in April next year. And it means if you’re a basic rate taxpayer, you’ll pay 24% tax. If you’re a higher rate taxpayer, you’ll pay 44%. And if you’re an additional rate taxpayer, you’ll pay 49%.

Now remember, there’s a savings allowance that you can - that you have, and if it’s above that savings allowance. So, for basic rate taxpayers, it’s £1,000. For higher rate taxpayers, it’s £500. And for additional rate taxpayers, they don’t have any allowance.

But the point really is that the Chancellor and the Treasury are going to make a lot of money from this change. If you look at the figures in that Budget document. And the message to all of us is: we’ve got to wrap our savings within tax-efficient wrappers like an ISA, because the chances are you’ll be clobbered by those rates going up.

PHILIPPA: It’s interesting you say that, because of course, this is going to hit landlords, isn’t it, with rental properties -

MAIKE: yes -

PHILIPPA: as part of their portfolio? -

MAIKE: yes. So, that big backlash on that, because we know that small landlords are so important to the mobility of labour. Not everyone’s going to be able to afford their own home. And these landlords who have in the last few years need to contend with huge changes to Buy-to-Let [rules] and to the tax regime - 

PHILIPPA: yeah, we’ve see that this year -

MAIKE: again. The income that they receive, they’ll also be paying two percentage points extra. So, really not great news for people who are asset-rich and cash-rich. And there have been quite a few headlines saying this is a Budget that really targets the Baby Boomers.

PHILIPPA: What do we think that’s going to do to the rental market? Obviously, it’s speculation at the moment, but landlords were feeling a bit hard-pressed already and now there’s this. Do you think it’s going to squeeze the number of properties?

MAIKE: Perhaps, and I’m speculating here, the government is thinking by squeezing landlords we’ll bring more [housing] stock onto the market. That’ll help the next generation get a foot on the property ladder. The reality is that the interest rates we are seeing on mortgages at the moment mean they’re simply not within reach for a lot of people.

PHILIPPA: Yeah. And you can see rents going up as a consequence, can’t you? -

MAIKE: absolutely -

PHILIPPA: short supply, higher rents -

MAIKE: 100%.

PHILIPPA: So having said that, there was some good news for people who actually do think they could become a first-time buyer.

MAIKE: Yes. So, what the Chancellor is proposing is something called a First-Time Buyer ISA that’ll replace the Lifetime ISA [in April 2029]. You’ll be able to pay £4,000 into that ISA and get the 25% government bonus when you withdraw it to buy your first home up to £450,000. The bonus is capped at £20,000 and there’s no upper age limit. So, you could be a first-time buyer right up into your 50s and 60s.

PHILIPPA: OK. And also, an equity loan for first-time buyers, this new [Your] First Home scheme.

MAIKE: Yes. And it’s important to distinguish that from the First Time Buyer ISA. This is called the [Your] First Home scheme and it’s specifically targeted at people who don’t have access to the bank of Mum and Dad -

PHILIPPA: which is good news. We’ve heard a lot about this issue, haven’t we? -

MAIKE: it’s good news. So first-time buyers can put down a deposit of just 2.5% with a government equity loan worth 20% of the property value and then the loan is interest-free for the first five years. So [it’s a] really interesting development.

PHILIPPA: Yeah, helpful. Investors, there was talk of a rise in Capital Gains Tax (CGT), wasn’t there? -

MAIKE: yeah -

PHILIPPA: but no -

MAIKE: yes, there was a lot of concern about this, whether the Chancellor would increase, or even equalise, Capital Gains Tax with Income Tax. He didn’t. That’s good news because Capital Gains Tax is often seen as a tax on success, wealth, ambition.

It’s important to remember though that the annual tax-free allowance for Capital Gains Tax is £3,000. That isn’t a lot. So, when you realise a gain, maybe you sell a business or a property, the chances are that you might still pay Capital Gains Tax. So, the message once again is that any gains outside of a tax-efficient wrapper can trigger a tax bill.

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Your pay packet

PHILIPPA: Thinking about other taxes, we knew already, before the Budget, that the Chancellor wasn’t going to put up the big three taxes that affect working people.

MAIKE: That’s right. So, they’ve stuck to the 2024 Labour Party manifesto where they pledged not to increase those three main taxes paid by working households. But I do think we need to talk about the fact that the Personal Allowance that has remained unchanged since [April] 2021. And they remain unchanged [until April 2031]. And what that’s causing is that a lot of people are being pulled into higher rate tax bands. And even though your wages might be going up in line with inflation, you don’t feel better off because of those freezes. It’s known as tax by stealth -

PHILIPPA: fiscal drag -

MAIKE: fiscal drag. Plucking the goose for more feathers. And it’s really hitting a lot of people hard, because people see this as work being punished. “I’m working hard, I’m having to contend with inflation, my salary’s going up, but I’m not feeling better off because the tax bands remain frozen”.

PHILIPPA: So essentially, even though no big overt tax rises, we’re still paying more. But the government has - they’ve got to get the money from somewhere and they hit the banks, didn’t they?

MAIKE: They did. So, despite John Healey referencing the banks as the jewel in the economic crown of Britain - 

PHILIPPA: yes, he was very flattering about them, wasn’t he? -

MAIKE: he was very flattering about them, but he still pushed up the surcharge, which was first introduced by George Osborne, from 3% to 6% [from 1 January 2027 to 31 March 2028].

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Take-home pay

PHILIPPA: So, getting back to basic take-home pay, [the] National Living Wage went up?

MAIKE: That’s right. So, from 1 April next year, the National Living Wage increases by 3.9% to £13.21 an hour. For a full-time worker, that’s around £910 a year before tax -

PHILIPPA: OK -

MAIKE: the rate for 18 to 20-year-olds also rises by 3.9% and that’ll be £11.27 an hour. The government previously said that it wants to bring this rate in line with the adult rate. But that’s not happening yet, which is why younger workers were on our losers list right in the beginning -

PHILIPPA: yeah, disappointing for people just entering the workforce.

MAIKE: Oh, yes. And another important point, Philippa, on that National Living Wage increase. If you get an increase, if you get a pay rise, and you’re auto-enrolled into a pension, that means that your pension contributions increase too. So that’s welcome news.

PHILIPPA: Yeah. Side hustles. I think those people were on your list of winners as well, weren’t they?

MAIKE: Yes. So, small change there, and that’s in something known as the Trading Allowance. It’s in fact tripling from £1,000 to £3,000 from April next year. That means you can earn £3,000 a year from things like selling crafts or freelancing without paying tax on it.

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Pensions

PHILIPPA: Now, we’re The Pension Confident Podcast, so we need to talk about pensions. We knew quite a lot of stuff about pensions already, didn’t we? We knew the triple lock was changing to a - well, effectively a double lock [from the next Parliament, around 2030]. What was new about pensions in the speech?

MAIKE: Not a lot, which is good news. But the one thing we’ve all been holding out for is more detail on what happens to pensioners whose State Pension exceeds the Personal Allowance? So, there’s been a lot of talk about pensioners being dragged into paying Income Tax. We know that come April next year, the full new State Pension will overtake the threshold, £12,570, that Personal Allowance, and that would mean that pensioners would be paying small amounts of tax for the first time.

Now thankfully, the Chancellor has given us some detail on that. So, from the 6 April next year, there’ll be something known as the new Pension Tax Allowance, and what that means is if you’re State Pension age and your income from any source is at or below the full new State Pension, not the Personal Allowance, the full new State Pension, you won’t pay tax on it.

PHILIPPA: If your income is just above that?

MAIKE: If your income is just above that level, which a lot of people probably will be if they’ve got other sources of income, the allowance is gradually withdrawn.

PHILIPPA: And it’s not a permanent fix, this?

MAIKE: It’s not a permanent fix. That’s quite key. This is in place until 2030. What happens after that, there’s still some uncertainty around.

PHILIPPA: If you’ve got some private or some workplace pension, on top of your State Pension, even if it isn’t very much, you’re going to be paying some Income Tax on that.

MAIKE: Yes, you will. And we always say to people, it doesn’t matter how frugal you are, none of us will survive on the State Pension alone. So, it’s really important to have that personal pension and to have that workplace pension to supplement your income in retirement. But what it does mean, in essence, because we have that tax by stealth, more and more people will be pulled into tax, and you’ll see retirees paying [more] tax.

PHILIPPA: And quite rightly, there is a lot of talk about the affordability of life when people have stopped working. There’s a new report coming out, isn’t there? Is it February [2027]?

MAIKE: Yes. So, the Pensions Commission report, which is a really interesting piece of work, and I'd encourage people to go read that, you don’t just have to be working for a pensions company, but it will set out how private pensions deliver an adequate retirement.

PHILIPPA: And crucially, last year’s big changes around salary sacrifice and Inheritance Tax (IHT), those are still going ahead?

MAIKE: Those are still going ahead. So, we know the big changes around salary sacrifice [are] coming in in 2029. No change on that. We know that pensions will form part of your estate for Inheritance Tax purposes from April next year. A hugely unpopular change -

PHILIPPA: yeah -

MAIKE: that isn’t changing. So, from April next year, most defined contribution pensions and pension death benefits will count towards your estate for Inheritance Tax purposes.

PHILIPPA: But the tax-free lump sum, that stayed the same?

MAIKE: No mention of that, which is good news. A lot of damage was done with [the] previous two Budgets, where there were so many rumours swirling that the Chancellor at the time would abolish that 25% tax-free lump sum. And the net effect of that was that a lot of people accessed their pensions because they were worried that that would change. And I guess the bigger point for us as consumers is to never make knee-jerk decisions off the back of rumours.

PHILIPPA: Yeah, absolutely, ahead of a Budget. 

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Final tips

PHILIPPA: I think we’re kind of getting to the final tips, aren’t we? There’s a lot. I mean, having said there wasn’t much, we seem to have found a lot to talk about, don’t we? What should we be doing? And I know this is a big question now that we’ve had the Budget.

MAIKE: OK, well, five key tips. The first one is [to] make the most of your ISA allowance. It’s good news that we’ve had that U-turn on the Cash ISA. However, tax on savings outside of the tax-efficient wrapper is going up. So, if you have savings and they’re not in a tax-efficient wrapper, you’ve got to check the rates on that because you could be in for a nasty tax bill.

Check your State Pension forecast, but again, never ever rely on the State Pension alone. Make sure you’re also looking at making the most of a workplace pension if you’re in formal employment, and of course a personal pension. Everyone should have a personal pension.

Make sure that you update your [pension] beneficiaries. The changes around pensions and Inheritance Tax change [aren’t] going away, and you don’t want your beneficiaries to have to turn detective to find your [old] pensions.

And of course, update your will. Always good to have an updated will.

And then the final thing I'd say, there was nothing in the Budget around salary sacrifice. So, the changes coming in April 2029, [salary sacrifice is] hugely beneficial. Perhaps you’re getting a bonus, perhaps you’ve got a pay rise - make sure you’re making the most of salary sacrifice while it’s still around in its current form.

PHILIPPA: Yeah, plan for that right now. Thank you so much, Maike. I don’t know how you remember it all.

MAIKE: I’ve been swotting up.

PHILIPPA: Stay tuned for our next episode. We’ll hear James’s story of how he’s using his pension to fight the climate emergency and what savers like you can learn from him. If you’ve missed an episode, catch up anytime on your favourite app or on YouTube. Or if you’re a PensionBee customer, in the PensionBee app.

Here’s a reminder before we go, as ever, anything discussed on the podcast shouldn’t be regarded as financial advice or as legal advice, and when investing, your capital is at risk. Thanks for being with us. We’ll see you next time.

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Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.