Chris Exley DipFA Creator of MoneyGeek | Financial Coach | Financial Planner

MoneyGeek Digest - Issue 5:
5 Years: Lots Of Big Tax Changes

Just over a month until the tax year comes to a close — and along with it, what has been a wet and miserable start to the year.

With that in mind, people are talking about topping up their ISAs (£20k), maxing out their pensions or SIPPs, and using carry forward relief where they can.

And so they should — because looking ahead, there is an absolute slurry of tax changes that'll drip through over the next five years, right up to the next general election.

Budget announcements tend to land with a bang before disappearing from the news cycle, leaving us to get on with our lives.

But this time, the impact will linger for many years to come.

By 2031, the UK tax landscape is going to look markedly different.

So this week, I've mapped out every significant change I can see on the horizon — from 2026 through to 2031 — so you know exactly what's coming and when.

Here's a summary of the changes that I think matter most:

Lifetime ISA: being scrapped for new savers (2026–2028)

A consultation on a replacement is currently underway, and Lifetime ISAs are expected to cease to exist for new savers by 2028.
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This is a shame - particularly for the young and self employed earning under £50k as it was more efficient in many ways than a pension.

If you currently hold a Lifetime ISA and are using it towards a first home or retirement, you're still fine. But the window to open a new one and benefit from the bonus is closing. Anyone planning to use one should act before 2028.

Those currently saving for retirement are expected to be able to continue, but I'd be surprised if the £4,000 allowance and £1,000 bonus ever increase with inflation again.

Pensions and Inheritance Tax: 40% (2027)

This is the big one, and the number that matters is 40%.

Right now, your pension sits outside your estate. It doesn't count for Inheritance Tax purposes, which is why pensions have become one of the most powerful wealth transfer tools available.

Many people deliberately leave their pension untouched, drawing from ISAs and other assets first in retirement, specifically because of this advantage.

From April 2027, that changes.

Any money remaining in your pension when you die could be subject to 40% IHT. A £500,000 pension pot you planned to pass to your children could see £200,000 go straight to HMRC instead.

And that's before income tax of up to 45% if the pension holder dies aged over 75.

This doesn't mean pensions become bad. It means the strategy around them needs to change, specifically how you sequence withdrawals, how you use other assets, and how you approach estate planning. If you have a sizeable pension, this is the one change I'd prioritise getting proper advice on.

Cash ISA allowance drops to £12,000 — and savings tax rises (2027)

The annual Cash ISA allowance is set to fall from £20,000 to £12,000. The stated aim is to nudge savers towards stocks and shares ISAs, but the practical effect is that new cash savings above £12k per year lose their tax-free shelter and become subject to income tax.

After a 2% rise in the tax rate on savings interest and rental income, the new rates will be 22%, 42% and 47% depending on your tax band.

For higher and additional rate taxpayers with meaningful cash savings, this is a real and material hit.

If you habitually max your Cash ISA each year, use this window now while the £20,000 allowance remains.

High Value Council Tax Surcharge (2028)

From 2028, properties valued over £2 million will face an additional council tax surcharge of at least £2,500 per year.

It's not a headline-grabber, but for anyone in that bracket — particularly in London and the South East where £2m buys a fairly ordinary family home — it's an additional fixed cost that doesn't go away.

Pension access age rises to 57 (2028)

The minimum age at which you can access your private pension rises from 55 to 57 in 2028. If you were planning to retire or draw down at 55 or 56, that option disappears unless your scheme has a protected retirement age written in before the change.

Some workplace and personal pension schemes do carry these protections — but many people don't know whether theirs does. It's worth checking now, and keeping it in mind if you ever consider transferring or consolidating.

Electric and hybrid vehicle mileage charges (2028)

If you use an electric or hybrid vehicle for business mileage, a new per-mile charge arrives in 2028. It's 3p per mile for 100% electric vehicles and 15p per mile for hybrids. This one in particular reminds me of when diesel was promoted to be the better alternative to petrol in the early 2000s - only for it then to be found to make air quality worse...

Salary Sacrifice: NI savings capped at £2,000 (2029)

Salary sacrifice arrangements - most commonly used for pension contributions, cycle to work schemes, and electric vehicles - currently allow both employer and employee to benefit from unlimited National Insurance savings.

From 2029, those NI savings will be capped at £2,000 per year.

For higher earners this reduces one of the key advantages of the strategy, though it doesn't eliminate it entirely. My bigger concern is what this means for employers whose employee pension bills are likely to rise by 15% in some cases.

Will they find a smart way around the rules, or will they pass some of this cost onto their employees?

That's a real possibility worth watching.

IHT and Income tax threshold freeze: What it's actually costing you (ongoing until 2031)

The nil rate band for Inheritance Tax has been frozen at £325,000 since 2009. House prices have more than doubled in the same period.

But it's not just IHT — the Income Tax personal allowance and higher rate threshold will be frozen until 2031 too, and the numbers are stark.

Had the personal allowance (0% tax rate) risen with inflation, it would sit at around £16,385 by April next year. Instead it remains stuck at £12,570 — nearly £4,000 lower. The higher rate threshold would have reached £65,500. Instead it stays frozen at £50,270.

The real-world cost?

According to AJ Bell, a basic rate taxpayer will pay almost £3,000 more in tax over the full period of the freeze. But someone earning £50,000 is hit far harder — because pay rises that would previously have stayed below the higher rate band now get taxed at 40%.

Over the full duration of the freeze, that works out at nearly £15,000 in additional tax. If you earn 6 figures or more, I recommend you not try and work out how much this policy has cost you (for your own sanity!).

The OBR has confirmed that by 2027/28, tax as a share of GDP will have reached a historic high of 37.7% — the biggest tax take relative to the economy since World War Two. Frozen thresholds and rising wages are a major factor.

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None of these changes are unnavigable. Most can be planned around.

But only if you know they're coming and act with enough lead time to make a difference.

In the coming weeks, I'll go deeper on the IHT pension changes specifically.

It's the one I think will catch the most people off guard - and the one where early action makes the biggest difference.

As always, this is education — not advice. If any of these changes affect your situation materially, it's worth getting proper regulated advice tailored to your numbers.

Until next week,