We have summarised the announcements we think are relevant to you when saving, managing your money and investing for the future.
There was widespread speculation and leaks to the media ahead of the Autumn Budget, with talk of possible tax rises – from income tax and VAT, to National Insurance, electric vehicle charges, and even a so-called Mansion Tax. Understandably, there was nervousness among many consumers who were worried about what any of the announcements could mean for their household finances.
Budgets can often bring feelings of uncertainty, with many changes potentially affecting your finances. At Scottish Friendly, we wanted to understand what was on our customers’ minds, so we ran a short survey before the Budget. The results spoke volumes, with 92% of respondents saying that they expected their household budgets to be impacted.*
Individual Savings Accounts (ISAs)
In the run-up to the Budget there was significant press coverage around the annual cash ISA allowance which was almost certainly set to reduce. And that speculation came to fruition, with a reduction to £12,000 (from the current £20,000) taking effect from the 2027–28 tax year, starting on 6 April 2027. Under‑65 savers will now have this lower annual limit for new contributions, with the remaining £8,000 having to be invested. However, it is important to note that individuals aged 65 or over will continue to receive the full £20,000 annual cash ISA allowance.
The Government is hoping this change will encourage people to invest more of their money into stocks and shares, and forms part of its wider strategy to develop a culture of investing in the UK. Scottish Friendly is supportive of the Government’s commitment to ISA reform and you can read our response here: Our CEO, Stephen McGee Responds to the Autumn Statement.
Savings
The government has announced changes to the tax rates applicable to savings income. From the 2027–28 tax year, the savings basic rate will rise to 22%, and the savings higher rate will increase to 42%. This means savers will see a 2 percentage point increase across the tax bands. For example, if you earn £100 in interest and you’re a basic-rate taxpayer, you’ll pay £22 in tax instead of £20.
Personal Tax
Rumours about a possible increase to Income Tax and National Insurance thresholds before the Budget – were changes that would have gone against Labour’s manifesto promises on personal tax.
In our pre-budget survey, 81%* of respondents told us income tax was a major concern. While many will be relieved that the government chose not to raise rates, they did announce a freeze on the Income Tax Personal Allowance (£12,570) and the higher-rate threshold (£50,270) from April 2028 through April 2031.
However, even though rates aren’t changing, the impact of ‘fiscal drag’ – where rising incomes push people into higher tax brackets, could result in more tax being paid over time.
Pensions
Ahead of the Budget, many people were worried about possible changes to pensions – 78%* of respondents in our survey said it was a concern, especially with speculation around salary sacrifice. The Chancellor has now confirmed that from April 2029, salary-sacrificed pension contributions over £2,000 a year will no longer be exempt from National Insurance.
The Government continues to commit to the triple lock which guarantees the annual increase of the State Pension by the highest of three key fiscal metrics; price inflation, average earnings growth and the 2.5% flat rate. From April 2026, the State Pension will be increased by 4.8%, adding around £575 a year to a pensioners’ income and supporting in the region of 12 million people.
Fuel Duty
For many of us the cost of fuel is a significant part of our monthly budget so there will be relief that the 5p fuel duty will be frozen until the end of August 2026 followed by increases from September 2026.
With fuel duty revenue set to reduce as more electric vehicles (EVs) join the road, the Government has sought to plug their revenue gap with plans to introduce a mileage-based tax for EVs and plug-in hybrids with a mileage-based tax applied to EVs and plugin-hybrids, however this won’t be introduced until 2028.
Energy Bills
Energy costs have never been too far from the headlines with consumers continuing to feel the impact on their cost of living. However, consumers will be happy to hear that the Government is removing green levies from energy bills. This means families could save around £125 on average next year, and some lower-income households could save up to £300.
Keep in mind that stock market investments can go down as well as up, so you could get back less than you've paid in.
Tax-free means your investment will grow free from tax, except for any tax we pay on your behalf (such as on dividends from UK shares). Tax treatment depends on individual circumstances and tax rules could change in the future.
Scottish Friendly doesn’t provide advice. If you’re seeking advice, you should contact a financial adviser. Advisers may charge for providing such advice and should confirm any cost beforehand.
*Source: Autumn Pre-Budget Survey – BASE 1,340 respondents.
