London Daily

Focus on the big picture.
Sunday, Oct 04, 2026

Budget means tax rises ahead – and little new for first-time buyers

Budget means tax rises ahead – and little new for first-time buyers

Analysis: Freezing allowances will lead to more people paying income tax, while the stamp duty holiday is driving up house prices
We can hardly call them “stealth tax rises” this time around, as the chancellor was at pains to spell out the impact of his decision to freeze both personal allowances and the amount you can put in your pension over your working life. But for many people the increases outlined in the budget may remain under the radar for a while.

Personal allowances will rise as planned in April. The first £12,750 of income will still be tax-free, while the 40% rate will kick in at £50,270. But after that there will be no change until 2026. Any inflation-linked increase in pay or benefits will therefore be eroded by the extra tax you will pay.

On pensions, it is only those with the biggest pots that will rub against the limit, which will be just over £1m.

Freezing income tax thresholds does not mean taking home less, but more people move into paying tax, or pay the higher rate – so much so that Treasury expects to make £19bn from this move over four years.

By 2026, the OBR reckons 1.3 million more people could become taxpayers and another 1 million could be pushed in to the 40% bracket.

The upside is that this has all been put off by at least a year, and if things go better than expected a future budget might even see plans change.

But family budgets already need to stretch further. Unmentioned in the budget, but coming down the track, are big rises in council tax, with some local authorities planning to increase bills by the maximum 4.99% they are allowed.

Energy bills have started to tick upwards, and other services are also getting more expensive. If inflation takes off, the chill of those freezes will be felt.

As is often the case with Tory budgets, the housing market played an important part in Sunak’s speech with confirmation of the heavily trailed return of 95% mortgages, and an extension of the stamp duty holiday. It was all good news for those who can afford to buy or are almost there, but is unlikely to be enough to turn “generation rent” into “generation buy” as billed.

The stamp duty threshold will remain at £500,000 until the end of June, which means it is likely that the scramble for bigger homes could continue throughout the spring. After that it will drop to £250,000 until the end of September – and we can expect an autumn of calls for it to stay that way, rather than reverting to the previous level of £125,000.

So far the stamp duty holiday has driven up prices, creating almost as many problems for would-be buyers as the withdrawal of 95% mortgages. With the announcement of a government guarantee to get large loans going again, Sunak will help some thwarted buyers.

But as well as pulling those large loans since the crisis hit, lenders have also spent the last year fiddling with criteria and more closely scrutinising the would-be borrowers who come through their doors. Some have limited the loans they will give to the self-employed, others have ruled out mortgages for those on furlough. Until the country is on a more even keel generally, it seems likely many people will still be locked out of large loans.

And Sunak’s fixes are all at the demand side: there is nothing new to stimulate supply. That 5% buyers need to save as a deposit will keep getting bigger as long as prices go up, so homebuying will still remain outside the grasp of many.
Newsletter

Related Articles

0:00
0:00
Close
UK Police Release Six Iranian Nationals on Bail After RAF Fairford Security Alert
UK Business Confidence Falls as Energy Costs and Tax Uncertainty Rise
Cornwall Insight Warns UK Energy Bills Could Rise 16% in January
UK Introduces Zero VAT on Household Electricity Bills
UK 30-Year Gilt Yield Hits 6% as Bond Market Pressures Intensify
UK Introduces Stricter Subcontractor Checks and Expanded Trade Union Access
Green Party Proposes Three-Year Emergency Freeze on Private Rent Increases
UK Treasury Committee Seeks Tax Clarification Over Manchester City Investigation
Royal Marines Deploy to Faroe Islands for Northern European Security Exercise
UK Business Confidence Weakens as High Costs Delay Investment
UK GDP Growth Revised Up to 0.5% in Second Quarter
Bank of England Warns of Financial Stability Risks From Autonomous AI
UK Expands Early Prisoner Release Scheme to Ease Overcrowding
UK Records Worst Bluetongue Outbreak on Record Across Livestock Farms
UK Government Faces Shrinking Fiscal Headroom Ahead of October 28 Budget
UK 30-Year Gilt Yield Reaches 6% as Energy Shock Drives Borrowing Costs Higher
Church of England to Apologize for Role in Historical Forced Adoptions
UK Defence Ministry Investigates Historical Use of RAF Bases by Jeffrey Epstein
Scottish Housing Completions Fall to 11-Year Low
Welsh First Minister Calls for Expanded Devolution Settlement
UK Pledges £50 Million to Expand Domestic Military Drone Capabilities
UK Opens First Commercial Geothermal Plant in Cornwall
Green Party Wins Gorton and Denton By-Election as Labour Falls to Third
Prime Minister Andy Burnham Opens Review of UK-EU Relationship
UK Inflation Rises to 3.1%, Adding Pressure on Household Finances
UK Removes VAT From Domestic Electricity Bills to Ease Winter Energy Costs
Counterterrorism Police Arrest Sixth Suspect Over RAF Fairford Incident
UK Councils to Receive Sweeping Planning Powers to Ban New Vape and Betting Shops
Chancellor John Healey Faces Tax and Pension Scrutiny Ahead of Autumn Budget
Metropolitan Police Apologise for Accidental Disclosure in High-Profile Investigation
UK Universities Report Record International Enrolment as Housing Pressure Grows
UK Logistics Firms Monitor Rhine Disruption as Low Water Threatens European Supply Chains
UK Food Industry Warns Inflation Could Approach 7%
UK Introduces Vaping Duty and Mandatory Retail Stamps
Scotland Raises Property Taxes and Expands Child Payment in Annual Budget
Greggs Plans Four Factory Closures With 740 Jobs at Risk
OECD Raises UK 2026 Growth Forecast to 1.1%
UK Inflation Rises to 3.1% as Bank of England Faces Rate Debate
Andy Burnham Criticises Brexit and Says Rejoining EU Single Market Remains an Option
UK Imposes New Sanctions on Russian Military Networks and Propagandists
UK Launches Nationwide Early-Release Prison Scheme
Andy Burnham Says Security Services See Signs of Iranian Involvement in RAF Fairford Incident
Manchester City Found Guilty on Premier League Financial Charges After Independent Investigation
Scottish Court to Rule on Bid to Force No-Confidence Vote Against Aberdeen Council Co-Leader
UK Bans Extra Charges for Seating Children Under 12 Beside Accompanying Adults
UK Introduces Vaping Duty and New Licensing Requirements
Greggs to Close Four UK Factories and Cut 740 Jobs
Hundreds of Prisoners Released Early as England and Wales Prisons Reach 98% Capacity
UK Unveils New Russia Sanctions Targeting War Funding and Shadow Fleet
Burnham Says There Are Strong Indications of Iranian Involvement in RAF Fairford Security Breach
×