The Budget, decoded for the self-employed and savers
Yesterday’s Budget left the headline rates of income tax, National Insurance and VAT alone. For most of you, the change that matters is a higher tax rate on savings interest from April 2027, alongside a few welcome tidy-ups for the self-employed.
Last week I promised you a plain-English breakdown the morning after. Here it is. Nothing below needs a decision today. Plan, don’t panic.
One Scottish note before we start: Holyrood sets the income tax rates and bands on earnings, self-employed profits and pensions for Scottish taxpayers, and the Scottish Budget lands on 3 December. Where something below applies UK-wide, I’ve said so.
If you’re self-employed
Trading allowance triples. From 6 April 2027 it rises from £1,000 to £3,000. If your trading income is under £3,000 a year, you won’t need to declare it or pay tax on it. Handy for side businesses and people just starting out.
Mileage goes further. From 6 April 2027 the tax-free rate for business miles above 10,000 a year rises from 25p to 35p a mile, and the main rate for your first 10,000 miles is being made permanent. This covers the self-employed as well as employees.
Parental pay for self-employed dads. From April 2029, self-employed fathers, partners and adopters in Great Britain become eligible for parental pay for the first time.
Making Tax Digital breathing room. If you’re due to join Making Tax Digital for Income Tax in April 2027, you won’t get late-submission penalty points on your quarterly updates in that first year (2027-28).
Selling your business? The lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000 for disposals on or after 6 April 2027. This applies across the UK.
Class 4 National Insurance stays at 6% and 2%, with the same thresholds.
If you’re a saver
Savings tax goes up. From 6 April 2027, tax on savings interest rises to 24% (basic rate), 44% (higher) and 49% (additional). That’s the 2-point rise announced last year plus another 2 points on top. These rates apply across the whole UK, Scotland included.
Your allowances stay. The Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate) and the 0% starting rate on up to £5,000 of savings income are both kept. Only interest above those allowances is taxed.
ISAs are safe. The £20,000 ISA allowance stays, and the planned cut to the cash ISA limit has been reversed: you can still put the full £20,000 into cash if you’re 18 or over.
Lifetime ISA. From 29 October 2026, the withdrawal charge drops from 25% to 20% if you buy a home above the £450,000 price cap. A new First Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029.
Dividend tax rates are unchanged for 2027-28. If you let out property, tax on rental income rises to 24%, 44% and 49% from April 2027 in England, Wales and Northern Ireland. Scotland can set its own rates.
If you’re planning for later life
A new Pension Tax Allowance. From 6 April 2027, for three tax years, if you’re over State Pension age and your total income is no more than the full new State Pension, you won’t pay income tax. Above that, the allowance tapers away (£1 for every £3 of extra income). I’ll come back to how this sits alongside Scottish rates once HMRC publishes the detail.
Pensions and inheritance tax. As already legislated, unused pension pots will count towards your estate for inheritance tax from 6 April 2027. New detail lets executors ask the pension scheme to pay the tax due. The £325,000 nil-rate band is unchanged.
The triple lock. The government plans to adjust it from the next Parliament, so the State Pension tracks earnings over time. Nothing changes for today’s pensioners yet.
What didn’t change
No rise in the headline rates of income tax, National Insurance or VAT.
Tax-free pension cash: despite weeks of speculation, nothing in the Budget changes the tax-free lump sum. If you were tempted to rush a withdrawal, breathe out.
The feared cut to cash ISAs didn’t happen. It was scrapped.
Capital Gains Tax rates stay at 18% and 24%, with the £3,000 annual exempt amount.
The £12,570 Personal Allowance stays frozen, as previously planned.
What I’d do this week
If you’re self-employed: jot down this year’s trading income and business miles so far. You’ll know in five minutes whether April 2027’s changes help you.
If you’re a saver: add up the interest you earned in the last 12 months outside ISAs and compare it with your Personal Savings Allowance. That one number tells you whether the rise affects you, and by roughly how much.
If you’re planning for later life: check your State Pension forecast on GOV.UK and make a simple list of your pensions and who you’d want to inherit them. Then pencil in a review before April 2027.
None of this needs fixing overnight. Most of it starts in April 2027, which gives you time to make calm, informed choices.
If you’d like to talk through what it means for you, book a free 15-minute clarity call. No jargon, no products, just a clearer picture.
ndgo edge™ provides financial coaching and education, not regulated financial advice. Nothing in this article is a personal recommendation. Budget measures can change before they become law, and their effect depends on your circumstances.
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