Analysis and writing by Jon Yarker
In his first speech as chancellor, several of John Healey’s announcements underlined the importance of seeking expert advice around the role that cash plays in saving ambitions.
Wednesday 28th October saw chancellor John Healey make his first budget speech, in what he vowed would help the “working people of Britain.” Though some of the announcements had already been announced or leaked before the speech itself, a number of steps confirmed how the government is looking to promote more strategic approaches to saving.
Here, we analyse the most significant announcements for individuals and SMEs alike.
The chancellor confirmed he would scrap plans to reform cash ISA allowances, with his predecessor Rachel Reeves initially proposing the allowance to be cut from £20,000 to £12,000.
Commenting, Insignis executive chairman Giles Hutson described the move as “welcome news” and should mean “greater certainty and simplicity” for savers and advisers across the country.
“Cash ISAs remain among the nation’s favourite savings vehicle for good reason,” said Giles. “Whether saving a for a house deposit, a rainy-day fund or as the low-risk part of an investment portfolio, holding a cash balance is not inherently financially irresponsible.
Cash provides security, flexibility and peace of mind when life’s big financial commitments come calling. Instead of penalising cash, we should be encouraging savers to put the appropriate percentage of assets to work in tax-efficient, high-interest accounts. Cash ISAs offer precisely that opportunity, turning money that might otherwise sit idle into a strategic financial asset.”
The government also confirmed it is increasing the rate of income tax applied to savings income by 2%. The savings basic rate will be 24%, the savings higher rate will be 44%, and the savings additional rate will be 49%. This change will be legislated for in Finance Bill 2026-27, likely to take effect from 6th April 2027.
With the Personal Savings Allowance unchanged, this means more savers could be caught in this and have to pay more on their savings. Not only does this heighten the value of savers’ ISA allowances, but makes it even more important to discuss such matters with clients. A higher income tax on savings will impact individuals differently, depending on their own tax bracket, which will prompt further discussions with their advisers.
This wasn’t the only tax change that could require greater support from advisers, with an amendment to IHT rules also tabled, with the aim of clarifying when liabilities relating to trust property may reduce the value of assets for IHT purposes. Again, this underlines the importance of speaking to advisers given the changing tax landscape and what this means in reality for many.
Also in the speech, it was confirmed that the reformed Help to Save scheme - which the government consulted on earlier this year - will be rolled out in Spring 2028. A key change will see the scheme adopt a multi-provider model with banks, building societies and other providers allowed to offer Help to Save products directly to eligible customers instead of routing this directly via NS&I.
As the name suggests, this could help promote a healthier and more strategic approach to saving. Wider inclusion with banks and building societies will only heighten publicity and widen access to Help to Save products.
The government is also seeking to modernise the rules that determine how distributions from companies to individual (non-corporate) shareholders are taxed, with the aim of ensuring a more consistent tax treatment. The reforms are designed to protect capital treatment for genuine changes in ownership, including families passing down their business.
The government will consult on these changes, with the aim of publishing draft legislation next year before rolling out any changes in 2028. This could be a significant development for finance leaders in SMEs, and influence how they make decisions around operational cash. This will likely put greater emphasis on the cash sitting in a company’s account, and the way in which this plays a role in any long-term plans.
A core theme in the chancellor’s budget was the ambition to support the UK’s entrepreneurs, and this was clear in several announcements.
For one, a ‘founders relief’ was tabled to introduce a 10% Capital Gaints Rate on up to £10m of lifetime gains for qualifying founders of “high-growth, innovative companies.” Like many announcements in the speech this is due to be consulted on, with the aim of being introduced through the Finance Bill 2026-27. Elsewhere, Healey announced that the threshold for small business rate relief would be increased from £12,000 to £18,000, which he said would take 70,000 British businesses in the retail, leisure and hospitality sectors out of paying rates altogether.
It’s encouraging to see founders receiving greater recognition, and there is potential for these measures to be of support to those setting up and managing SMEs. Whether or not these will have a materially positive impact will depend on individual circumstances, which is why expert advice will play such a crucial role.
A Pension Tax Allowance (PTA) will be introduced, with the aim of helping eligible pensions avoid paying Income Tax. The value of the PTA will be calculated by applying the basic rate of income tax (20%) to the difference between the full new State Pension and the Personal Allowance. Individuals over State Pension age are eligible for the automatic tax deduction if their income, regardless of source, is below or at the value of the full new State Pension.
For those with incomes just above the value of the full new State Pension, the allowance will be gradually withdrawn through a taper. The PTA will apply from 6th April 2027 until 5th April 2030 and will be uprated in line with the full new State Pension across the current parliament.
This is particularly relevant for older savers, those of whom who could have greater cash savings. People in this situation could benefit from greater support and advice around how to assess their cash holdings, and how this can meet their wider liquidity needs and retirement plans.
The details of the budget are still being analysed but as it stands, but there are positives from what today’s announcements could mean. Not only could these mean support for more strategic savings but also highlighted a greater recognition of the challenges that founders face. For Giles Hutson, the overwhelming response was a positive one.
“The overwhelming response to this budget has been one of relief,” said Giles. “Advisers and clients are still responding to material changes made in previous years so not piling change on top of change is good news.
“The recognition of the importance of entrepreneurs is also welcome. The only material negative is actually from the OBR rather than the chancellor, as they revised the countries growth figures down from 1.60% to 1% for 2027.”
To find out more about how these measures could impact you, your clients or your business, get in touch with the Insignis team today.
Find out how the budget’s changes to Cash ISAs, savings income tax and pensions could affect you or a clients cash strategy. Our team can help you turn the detail into action.
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