Budget 2026: A “steady as she goes budget” with no fireworks… Or kicking the can down the road?

On 28^th October 2026, Labour announced their third Budget of the Parliament and the first under our new Prime Minister Andy Burnham and new Chancellor of the Exchequer John Healey. It had already been billed as a “steady as she goes budget” after the first two more high profile budgets but it left the Chancellor facing accusations of not being bold enough in tackling the problems the UK currently faces. Currently the UK has debt of £3trillion pounds, rising inflation, the highest tax burden now in our history and growth rates that have been upgraded for this year but downgraded for the future. There had been a chorus of calls for the Chancellor to grasp these thorny problems and now accusations that instead he has kicked the can down the road.

It’s fair to say that there weren’t many headline grabbers in this Budget. That all said, we did a very recent podcast discussing what might be in this budget where we predicted that very little that would change…. there was certainly more in this budget to discuss than expected! Read on to see some of the changes that will impact healthcare professionals.

Income Tax

An unexpected change sees an increase in the rate of taxation for savings income and for income from properties. The rates were due to increase by 2% from 6 April 2027. Instead they will increase by 4% (so for example the basic rate tax on bank interest or rental profits will be 24% not 20% as it is now and the higher rate 44% not 40% etc (higher in Scotland)). There is no change to the Personal Savings Allowance, Property Allowance or the tax rates on salaries, self-employment profits or dividends.

From 6 April 2027 the government will increase the Trading Allowance from £1,000 to £3,000, allowing individuals to receive up to £3,000 of trading and miscellaneous income tax-free each year. This may be of interest to self employed doctors whose trading expenses do not exceed £3,000.

In a big change that has already got accountants very excited, the government intend to change the rules relating to payments of income tax for those taxpayers who make payments on account. These rules will come in from April 2029 and will require those taxpayers to make more regular, in year, payments towards their final tax bill. This will likely affect most, if not all, taxpayers who pay their income tax and National Insurance via the payment on account system including GP partners.

A lot of people will know that we at Medics’ Money have a guide which I wrote about 8 years ago now that helps Doctors to claim the tax back on their allowable expenses. If you haven’t made a claim to get the tax back on your professional expenses as a doctor then definitely head to our website and download that free guide (https://medicsmoney.co.uk/free-guide/). For those of you who have downloaded our guide you will know that you cannot use it for any tax year where your expenses exceed a value of £2,500 – instead you must do a self assessment tax return for that year. In the footnotes to the budget it was announced that the government will remove the £2,500 expenses threshold from 6 April 2028 so it will be possible to claim the tax back the usual way (as per our guide!) and won’t require a self assessment tax return.

The tax-free mileage rates for employees and self-employed people who use their own car or van for work will change. The 55p rate for the first 10,000 miles, that was announced earlier this year, will be made permanent and the rate above 10,000 miles will be 35p per mile instead of 25p per mile.

Note that many things remain unchanged including the personal allowance, which means the problem of fiscal drag and the marginal rate tax trap continues, and pension taxation including the Annual Allowance.

Investment Tax

Last year Rachel Reeves announced that, from April 2027, there would be a maximum limit of £12,000 (out of a possible £20,000 total ISA limit) that could be invested into Cash ISAs for those under the age of 65. The Government has announced a decision not to reduce the cash ISA limit now so going forward it will remain at £20,000 for everyone no matter how old they are.

The Lifetime ISA (LISA) will be replaced from April 2029 with a new First Time Buyer ISA (FTB ISA). This FTB ISA will provide savers looking to buy a new house up to the value of £450,000 with a 25% bonus on withdrawal. Existing LISA holders will be able to continue contributing to, and using, their accounts under the current rules.

Currently if money is withdrawn from a LISA for an unauthorised reason there is a punitive withdrawal charge. From midnight 29 October 2026 the withdrawal charge is abolished for those who withdraw money from a LISA to buy a house costing more than £450,000 (it remains if withdrawn for any other non-qualifying reason).

Capital Gains Tax (“CGT”)

There had been much talk before the Budget about an increase in CGT rates with some advocating for an increase in CGT rates that would match Income Tax rates. This was ruled out before the Budget by the Chancellor so it was not unexpected that there would be no changes. There were however a couple of changes to CGT of interest to those healthcare professionals who own or will own their own limited company:

• The lifetime limit of gains that qualify for Business Asset Disposal Relief (which currently offers a reduced CGT rate of 18% for qualifying disposals) will be reduced from £1m to £500k from 6 April 2027.
• A new CGT Founders Relief will be introduced for qualifying founders of high growth innovative companies from 6 April 2027. This will provide a 10% CGT rate on up to £10 million of lifetime gains. They are currently consulting on the details of this but it looks unlikely it will make much difference to healthcare professionals who own their own companies (as it is expected there will be a £10 million turnover threshold to qualify). We mention it as the details are not finalised and things could change before April 2027.

The NHS

The notes to the Budget have outlined a plan to invest £190 million to ease winter pressures in the NHS (with no outline as to where it will go) and £100 million investment in robotic assisted procedures. Many will argue that this £190 million towards the NHS is a drop in the ocean and of course there is nothing here regarding pay.

An independent review has been launched looking at NHS productivity and AI which will report in early 2027.

Other

There were many other announcements in the Budget (such as an additional tax on banks and help for pensioners who will start paying tax as the state pension exceeds the personal allowance etc). Here are some of the other ones that might affect healthcare professionals:

• The Government have announced some help towards day-to-day living expenses. This includes extending the 5p Fuel duty cut and the VAT cut on electricity bills until July 2027. It also includes a £100 payment towards energy bills for those in Council tax bands A to D.
• The National Minimum Wage is to increase by 3.9% and the rates will now be £13.21 per hour for anyone over 20 years old, £11.27 for 18-20 year olds and £8.31 per hour for 16-17 year olds. While this will be welcome news for many of our patients it will likely increase costs within the NHS.
• It was announced that self-employed fathers will now be entitled to parental allowance from April 2029.
• And finally the Government also announced the scrapping tariffs on various goods from toffees and cough sweets to kerosene and fertiliser to help ease the cost of living.

Conclusion

Overall this was a Budget that won’t be bringing big headlines but against all expectations it will bring some substantive changes as well as some breathing space for people. However, some big decisions have been postponed and the “global economic storms” the Chancellor referenced in the Budget are sadly not going away anytime soon.