The 5 Budget Changes That Could Hit Your Wallet — And What You Should Do Next

When the UK Budget landed, we did what we always do here at The Tax Faculty — we grabbed a coffee, rolled up our sleeves and got stuck into the paperwork so you wouldn’t have to.

Budgets can feel a bit like reading a foreign language, especially when tax rules change in ways that aren’t immediately obvious. But after taking the time to unpack it all, we’ve pulled out the five tax changes we think matter most to the people we speak to every day — business owners, employees, savers, investors and retirees across the UK.

Here’s what we found, and more importantly, what it could mean for you.

Here’s What Really Matters Behind the Headlines

1. Income tax & NIC thresholds are staying frozen — which quietly increases your tax bill

You might not feel this change immediately, but it’s a sneaky one. Because the Personal Allowance and tax bands are staying frozen for several more years, even a small pay rise could tip you into a higher tax band.

What it means for you: Rising wages won’t feel quite as generous. You may notice your take-home pay creeping down over time — even though no “new tax” was announced. It’s one to keep an eye on when planning your finances.

2. Dividend tax is going up in 2026

Whether you take dividends from your own company or receive them from investments, the rates are rising by 2%.

Impact: If dividends form part of your income, expect a slightly lower net return. It might be time to review how you extract income from your business or structure your investments.

3. Savings interest will be taxed more heavily from 2027

Savings outside of ISAs will attract higher tax rates in a couple of years.

What it means: If you’ve recently enjoyed higher interest rates on savings, a chunk of that might soon be heading to HMRC. Now’s a good moment to check whether your savings are in the most tax-efficient place.

4. Capital allowances are changing — good news if you’re buying new kit

A new 40% first-year allowance is coming in for qualifying equipment, but the standard writing-down allowance is dropping.

Translation: Buy something new for your business and you’ll be able to claim more upfront tax relief. But if you rely on the slower annual deductions for older assets, those will shrink a bit. Planning ahead will be important here.

5. More pensioners may find themselves paying tax

The state pension is rising again — which is great — but because the Personal Allowance is frozen, more pensioners could be nudged into paying income tax for the first time.

What it means: Even if you’ve never paid tax on your pension before, this could change. It may be worth reviewing your full income picture for the next few years.

The 5 Biggest Tax Takeaways — in Real People Terms

Don’t panic — but do stay informed.

None of these changes are designed to shock, but over time they can make a real difference to your take-home pay, your savings growth or the amount of tax coming out of your pension or business.

That’s exactly why we take the time to break these Budgets down. Understanding what the changes really mean is the first step in making confident decisions.

And of course, if you’d like us to look at how any of this affects your personal situation, we’re always here to help.

So… how worried should you be?

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Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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