UK budget faces tax rise pressure amid difficult fiscal outlook

The UK's upcoming October 28, 2026, Budget is anticipated to bring further tax changes as the government grapples with a difficult fiscal outlook. Despite pledges from Prime Minister Andy Burnham and Chancellor John Healey not to increase headline rates of income tax, National Insurance, or VAT, the need to raise revenue means other areas are likely to be targeted.

Several tax adjustments are already confirmed and in motion. Dividend tax rates rose in April 2026, and savings and property income tax rates are legislated to increase from April 2027. Additionally, the Cash ISA limit for individuals under 65 will be reduced to £12,000 from April 2027, while the overall ISA allowance remains at £20,000. A high-value council tax surcharge on homes over £2 million in England is also confirmed for April 2028.

While income tax rates and thresholds are currently frozen for 2026/27, fiscal drag—where rising wages push taxpayers into higher tax brackets without a rate change—is already increasing tax bills for many. Capital Gains Tax (CGT) is a key area of speculation, with potential for rates to be brought closer to income tax levels or for reliefs to be tightened. However, current CGT rates for most individual gains above the £3,000 annual exempt amount are 18% or 24%, and any changes remain speculative until officially announced.