Budget Briefing: What does it mean for me?

A 'steady as she goes' Budget?

It was a more subdued Budget than we have been used to, with fewer of the leaks, rumours and briefings that have characterised recent years, and fewer big surprises on the day.

With a comprehensive government Spending Review due in 2027, the new Chancellor John Healey delivered a 'steady as she goes' Budget that focused on the cost of living, avoiding significant personal tax increases or major cuts to the welfare bill.

As a result, revenue raising measures were largely confined to those considered to have the broadest shoulders, including the banks and gambling industry.

So, what was in today’s budget for doctors, dentists and teachers?

Spotlight on taxes

After years of changes to tax policy, it was perhaps a relief today did not bring further major complexities to consider.

The biggest announcement was a new Pension Tax Allowance. The State Pension is expected to rise by 3.9% to £13,036.40 a year from April 2027. The new allowance will ensure that eligible pensioners with total income up to this level do not face an Income Tax bill.

While this was a welcome measure, the Chancellor chose not to touch broader income tax thresholds, which were already frozen until 2031. This is not a benign act and will inevitably drag more professionals into the higher and additional rate tax bands.

And it will only exacerbate the cliff edge that affects those whose earnings approach £100,000, when they lose access to valuable childcare support and face an effective marginal income tax rate of 60%, or 67.5% in Scotland.

That can be an incentive to turn down that promotion or scale back working hours. The £100,000 threshold may have been appropriate when it was first introduced in 2009, but it doesn’t reflect today’s realities.

Wilf Moralee, Specialist Financial Adviser at Wesleyan Financial Services, said: "It's disappointing that the Chancellor has missed the opportunity to address the frozen income tax thresholds placing increasing financial pressure on public sector professionals.

"For example, at a time when the NHS desperately needs to increase capacity, the tax system should be encouraging experienced clinicians to work more, not less."

Pensions, savings and investments

The main development for savers and investors was the Chancellor’s decision to reverse the ISA reforms due to come into effect in April 2027.

Under the proposed changes, under-65s would have seen their Cash ISA allowance fall from £20,000 to £12,000, while the Stocks and Shares ISA allowance would have remained at £20,000, in a bid to encourage investment.

In its place, the Chancellor plans to introduce a new ISA incentive for first time investors, but the details of how exactly this will work are still to be worked out.

James Stacey, Investment Specialist at Wesleyan Society, says: "The new ISA incentive could support more first time investors, but investing is as much emotional as it is financial. Financial advisers play a vital role in helping people understand their options, build confidence and make decisions that support their long-term financial goals."

And after ruling out tinkering too much with Capital Gains Tax in the run up to the event, the Chancellor announced a reduction in the lifetime Business Asset Disposal Relief limit from £1 million to £500,000 from April 2027.

Iain Stevenson, Head of Dental at Wesleyan Financial Services, said: "The decision to reduce the Business Asset Disposal Relief limit risks discouraging entrepreneurship and undermining the government's ambition to encourage business growth.

"For dentists, it represents another squeeze on hardworking professionals who have been navigating a shifting tax landscape for years, and should prompt them to review their financial arrangements with a specialist adviser."

The biggest announcement in the run up to the Budget was undoubtedly the decision to replace the triple lock with a double lock on the State Pension, which will continue to rise every year by inflation or 2.5%, whichever is highest.

However, this change does not come into effect until April 2030, providing plenty of time for proactive planning with the support of expert advice.

There is also pipeline of incoming policies not touched on in the Budget that should prompt action.

From April 2027, most pensions will be included in estates for Inheritance Tax purposes, which marks a major shift in retirement planning, as pensions have been one of the most tax-efficient ways to pass on wealth.

Cost of living impact

With household budgets continuing to face pressure from rising living costs, the Chancellor used the Budget to announce a series of measures aimed at easing the financial burden on families.

Motorists were among the beneficiaries, with the Chancellor extended the planned 5p increase in fuel duty, which had been due to take effect from 1 January 2027.

Energy bills were also in the spotlight, with the Chancellor unveiling plans to scrap standing charges on domestic gas bills by the end of 2027, or shortly afterwards. However, with costs shifting to gas unit rates instead, the impact on household bills will depend on how much gas people use.

Alec Collie, Head of Medical and Education at Wesleyan Financial Services, said: "The cost of living support measures announced today will ease the financial pressure on teachers, particularly as many continue to juggle rising household bills with the demands of an increasingly challenging profession.

"While pay rises are important, targeted support with everyday costs could make a real difference to teachers’ financial wellbeing, particularly those at the start of their careers."