Nobody outside the Treasury knows what the Chancellor will announce on Wednesday 28 October 2026, so the sensible approach is to use allowances you would use anyway, finish plans that were already in motion, and avoid irreversible moves made purely on rumour. A few changes can take effect on Budget day itself, which is why timing matters for anyone already part way through a sale or a gift.
Why Budget day itself can matter
Most tax changes start on 6 April, but not all. In the Budget of 30 October 2024, the main capital gains tax rates rose from 10% and 20% to 18% and 24% for disposals made on or after that same day. Anyone who had planned to sell shares the following week paid the higher rate.
That is why people worry before a Budget, though it is no reason to panic. Any change this year could start immediately, from 6 April 2027, or later, and the Government also introduces rules to stop people getting ahead of a change. In 2024, special rules applied to contracts signed before the Budget but completed afterwards. So a rushed transaction may not even achieve what it was meant to.
Allowances worth using anyway
These are available in the 2026/27 tax year whatever happens on 28 October. If the rules stay the same, using them now usually has little downside, and it may help if they change.
- ISA allowance: up to £20,000 per adult this tax year. Moving savings or investments into an ISA shelters future income and gains.
- Capital gains tax annual exempt amount: £3,000 per person. If you hold investments with gains outside an ISA, selling enough to use this, and perhaps buying back inside an ISA, is routine housekeeping. Note that buying the same shares back outside an ISA within 30 days does not reset the base cost.
- Dividend allowance: £500. Company owners may want to review the timing of dividends for this year, bearing in mind the ordinary and upper dividend rates already rose to 10.75% and 35.75% from 6 April 2026. See salary or dividends in 2026/27.
- Pension annual allowance: £60,000 for most people, lower for high earners under the taper or anyone who has flexibly accessed a pension. Unused allowance from the previous three tax years can usually be carried forward if you were a scheme member in those years.
- Inheritance tax annual exemption: £3,000 of gifts each tax year, plus last year's if it was not used.
Pension contributions
Personal pension contributions get tax relief at your highest rate of income tax: the scheme adds basic rate relief, and higher and additional rate taxpayers claim the rest through Self Assessment (see how to claim higher-rate pension tax relief). For someone with income between £100,000 and £125,140, the effective relief can be higher still, because a contribution can restore some of the personal allowance.
Pension tax relief is regularly the subject of Budget speculation, but speculation may not turn into a change. If you were planning a contribution this tax year anyway, and have the earnings and allowance to support it, there is little downside in making it now rather than in March. Relief is limited to the higher of your relevant UK earnings and £3,600 gross, and see our 2026/27 tax rates for the taper thresholds.
Business owners with a sale already in progress
Business asset disposal relief is already charged at 18% for disposals from 6 April 2026, up from 14% last year, on up to £1 million of lifetime gains. Our guide to business asset disposal relief covers the conditions.
For capital gains tax, the date of disposal under an unconditional contract is the date the contract is made, not the date of completion. If a contract is conditional, for example on regulatory approval or shareholder consent, the disposal happens when the condition is met. So if a sale is genuinely close, the question is whether contracts are exchanged, and unconditional, before 28 October.
Two cautions. First, do not rush a deal or accept worse commercial terms to beat a date that may not matter. Second, as in 2024, any rate change could come with rules aimed at contracts signed shortly before the announcement. Talk to your lawyers and to us before changing the timetable.
Gifts that are already planned
If you had already decided to help a child with a deposit or to fund a trust, there may be sense in completing it rather than waiting. Gifts to individuals generally fall outside your estate after seven years, and the £3,000 annual exemption and small gifts of up to £250 per recipient (which cannot be combined with another exemption for the same person) are exempt straight away. Gifts into most trusts work differently: they are chargeable at once, at 20% on anything above your available nil rate band of £325,000, and the trust then faces its own ten-yearly charges, so take advice before funding one.
Regular gifts made out of surplus income, which leave you able to keep up your usual standard of living, are also exempt with no seven-year wait. This exemption is unlimited but needs good records. If you are thinking of starting such a pattern, see our inheritance tax planning service.
What not to do
- Do not make irreversible transfers in a hurry. Giving away a house or shares you may later need is a lifetime decision, and a gift of anything other than cash can itself trigger capital gains tax.
- Do not trigger large gains just in case. Selling now locks in tax at 18% or 24% on a gain you might otherwise have deferred for years, or never paid.
- Do not cash in a pension on rumour. Tax-free cash speculation before the 2024 Budget came to nothing. Money taken out of a pension usually cannot go back in on the same terms, and taxable withdrawals can cut your future annual allowance to £10,000.
| Worth doing anyway | Only if already planned | Wait and see |
|---|---|---|
| Use your £20,000 ISA allowance | Exchanging contracts on a business sale | Selling assets purely to beat a possible rate rise |
| Use the £3,000 capital gains exemption | Large gifts to family or trusts | Drawing tax-free cash from a pension |
| Make pension contributions you intended to make | Starting regular gifts out of income | Restructuring a company or property portfolio |
| Use the £3,000 inheritance tax annual exemption | Bringing forward a dividend | Anything you could not undo if the rumour is wrong |
What to do now
- List what you were already planning to do this tax year, and separate it from what you are only considering because of headlines.
- Check how much of your ISA, capital gains and pension allowances you have used, including carry forward from 2023/24, which is lost after 5 April 2027.
- If you are selling a business or a significant asset, confirm with your lawyers whether contracts will be unconditional and when they will be exchanged.
- Keep records of any gifts, including the date, amount and recipient.
- After 28 October, read what was announced, and the start date for each change, before acting.
If you would like to talk through your position before or after the Budget, book a consultation and we will help you decide what is worth doing now and what can wait.
This article is general information about UK tax, based on the law and HMRC practice at the date shown above. It is not advice, and reading it does not make you our client. Tax rules change and their effect depends on your circumstances, so please speak to us before acting on it.