What the 2026 Budget means for you

Key tax changes for individuals, professionals and business owners

The latest Budget brings several important tax changes that will affect individuals, professionals and business owners over the coming year. At Eaves and Co we believe clarity matters. You should understand what the changes mean for you and how to plan around them. This summary sets out the main points in clear terms, along with practical guidance that you can act on.

Income tax and National Insurance

The Government has confirmed that income tax and National Insurance thresholds will remain frozen for several more years. On the surface nothing appears to change. In reality this means more of your income may fall into higher tax brackets as wages and profits rise. This effect is often called fiscal drag. Many employees and self employed professionals will feel it over time.

If your income is rising, it is now more important to review how and when you draw income. Small decisions can influence your final tax position. A planned approach is worth the effort.

Savings, dividends and property income

The Budget brings increases to tax on income from savings, dividends and property. This includes interest from bank accounts, dividends from shares and income from rental properties. For people who depend on these sources, the changes may create a noticeable shift in overall tax liability.

It is sensible to review how you hold investments and how you take income. For company directors, this is a good moment to reconsider the balance between salary and dividends. For landlords, it may affect decisions about future investment, improvement works or ownership structure.

High value property measures

A new additional charge has been announced for high value residential property above a certain level. This affects owners who hold property either personally or through a company. The charge will increase the ongoing cost of holding the most valuable homes. Anyone planning to buy, sell or transfer property at this level should consider the long term position before making decisions.

Property planning is already complex and the new charge adds another layer. Careful assessment is important, particularly for family estates where more than one property may be involved.

Pension relief and reward structures

The Government has introduced adjustments to pension tax relief and certain forms of reward planning. Some arrangements that previously offered clear tax savings may become less effective. The rules remain favourable for long term pension saving, but the details now matter more than ever.

If you rely on pension contributions as part of your tax planning, take time to consider whether the structure still delivers the results you expect. For employers offering pension support for staff, it may also be wise to review your approach.

Business planning and company considerations

For limited companies, the most immediate concern relates to how profits are extracted. With higher tax applying to dividends, the overall cost of taking profits may increase. Some directors may decide to take a higher salary, while others may retain profits in the business for future investment. There is no single answer. It depends on your plans, your cash flow and your long term goals.

Relief for some business investments and asset disposals is also being reviewed. Anyone planning a sale, restructure or succession event should revisit their strategy early. Timely planning often protects the value you have built.

What you can do now

There are several practical steps individuals and businesses can take following the Budget.

• Review your income position and consider any steps that may reduce the effect of frozen thresholds.
• Assess your savings and investment income and consider whether the structure remains efficient.
• If you own rental property, factor in higher taxes when planning improvements or future purchases.
• If you own a high value home, examine how the new charge will affect long term plans.
• Business owners should revisit salary and dividend planning.
• Anyone who uses pension contributions for tax planning should review the detail carefully.

At Eaves and Co we can help you understand your position and plan for the years ahead. Tax changes often create opportunities as well as challenges. Early planning helps you make the most of both.

FAQs

Will my take home pay fall because of the Budget
It may do. With thresholds frozen, rising wages can push you into a higher tax band even if your income only increases slightly.

Are dividends still worth taking for company directors
Yes. Dividends remain an important part of profit extraction. The recent changes mean the balance between salary and dividends should be reviewed to keep your position efficient.

I own rental property. How will the Budget affect me
Tax on property income will rise. This means landlords should check projected returns and consider how future investment or improvements fit into their plans.

Does the high value property change affect every homeowner
No. It applies only to properties above a certain value. If you own or plan to buy a high value home, you should review the long term effect of the additional charge.

Do pension contributions still offer good tax benefits
Yes. Pension saving remains valuable. Some arrangements will change, so it is important to understand whether your current plan is still the most effective option.

Should I seek advice now
In many cases, yes. The cumulative impact of frozen thresholds, increased taxes on investment income and new property measures can be significant. A tailored review will help you understand the full picture.