The Budget left pension tax limits and salary sacrifice alone, but higher tax on savings, a reprieve for the cash ISA and a confirmed timetable for payrolling benefits in kind will all affect employers. Here is what corporate advisers need to know.

In reading this article you will understand:

  • Which pension tax limits, salary sacrifice rules and inheritance tax changes the Budget confirmed, and the technical pension changes in Finance Bill 2026-27.
  • How the savings tax rise, the reversal of the cash ISA cut and the new First Time Buyer ISA affect the case for tax-efficient workplace saving.
  • What the confirmed timetable for payrolling benefits in kind, the frozen employer NIC thresholds and the State Pension changes mean for employer clients.

For corporate advisers, the main message from the Budget on 28 October is what didn’t change. Chancellor John Healey left the annual allowance at £60,000, the money purchase annual allowance at £10,000 and the lump sum allowance at £268,275. He made no change to rates of pensions tax relief and announced nothing new on the £2,000 cap on salary-sacrificed pension contributions. After a year in which salary sacrifice and inheritance tax dominated pension planning conversations, a quiet pensions Budget gives employers some room to plan.

The changes that matter for employers are elsewhere: tax on savings income, the ISA regime, the way benefits in kind are reported, and the State Pension. Each feeds into the advice employers are likely to want over the next 18 months.

Pensions Tax and Salary Sacrifice: Stability for Now

The National Insurance Contributions (Employer Pensions Contributions) Act 2026, which received Royal Assent on 29 April, still brings salary-sacrificed pension contributions above £2,000 a year into employee and employer NICs from 6 April 2029. The Budget document refers to the cap only as a decision already taken. No draft regulations were published and the cap has not been extended to other salary sacrifice benefits. Employers that were waiting for the Budget before reviewing their arrangements have no new information, so the case for modelling the cost of the cap now still stands.

Inheritance tax on most unused pension funds and death benefits still starts on 6 April 2027, as legislated in Finance Act 2026. Finance Bill 2026-27 also makes technical changes to pension death benefits. A prospective personal representative will be able to direct scheme administrators to pay the IHT due, and lump sum death benefits above the lump sum and death benefit allowance will be taxed as a separate charge at the recipient’s marginal rate, backdated to payments made on or after 6 April 2024. The two-year rule is also being removed, so a death benefit paid on or after 28 October 2026 will no longer become taxable just because it is paid more than two years after the administrator learned of the death. The same Bill sets the tax treatment of surplus payments from defined benefit schemes to members from 6 April 2027.

Savings Tax Rises, but the Cash ISA Survives

From 6 April 2027, tax on savings income will be 24% at the basic rate, 44% at the higher rate and 49% at the additional rate, two points more than was announced at last year’s Budget. The personal savings allowance stays at £1,000 for basic rate and £500 for higher rate taxpayers, and the Budget document says 84% of income tax payers will be unaffected by the higher savings and property income rates. With income tax thresholds frozen until April 2031, though, more savers will drift into the higher bands.

The government has also dropped the planned cut to the cash ISA limit. Under-65s were due to be restricted to £12,000 a year in cash from April 2027. Instead, the cash limit stays at £20,000 for all adults, with secondary legislation due in November. Together with the savings tax rise, this makes tax-free wrappers more valuable to employees with money on deposit.

The Lifetime ISA will be replaced for new savers by a First Time Buyer ISA from April 2029. The new account allows £4,000 a year, pays a 25% government bonus on the final balance up to a maximum bonus of £20,000 and keeps a £450,000 property price cap. It is aimed at first-time buyers only, and the Treasury’s costing assumes that some people who would have used a LISA to save for retirement will use a personal pension instead. Separately, the LISA withdrawal charge for buying a first home above the price cap falls from 25% to 20% from 29 October 2026.

Payrolling Benefits in Kind Is Confirmed

Finance Bill 2026-27 legislates for mandatory payrolling of benefits in kind. From 6 April 2027, employers must report and tax company cars, vans, car and van fuel and medical benefits, including private medical insurance, through payroll in real time instead of reporting them on P11Ds after the tax year ends. Most other benefits follow from 6 April 2028, with employment-related loans and living accommodation left out for now. HMRC plans a one-year easement from penalties for non-deliberate inaccuracies in 2027-28, and the voluntary payrolling registration service reopens on 5 November 2026.

Medical benefits are in the first wave, so employers that provide private medical insurance need their insurer, payroll provider and adviser to agree how premium data will reach payroll in time for April. Benefits Guru will look at the practical steps in more detail in December.

Elsewhere, the employer NIC rate stays at 15%, the secondary threshold at £5,000 a year and the Employment Allowance at £10,500. The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027, which is a prompt for employers with salary sacrifice schemes to check that no worker’s pay will fall below the minimum after the sacrifice.

The State Pension, and What Was Missing

The full new State Pension rises by 3.9% in April 2027, to £13,036.40 a year. A new Pension Tax Allowance, worth up to £94 in 2027-28, will mean pensioners whose total income is no more than the full new State Pension pay no income tax from 2027-28 to 2029-30. The government also plans an adjusted triple lock from April 2030, which still needs legislation.

What the Budget left out matters as well. There was nothing on auto-enrolment contribution rates or the 2027-28 earnings thresholds, which are normally set by the DWP’s annual review. There was no timetable for using the powers in the Pensions (Extension of Automatic Enrolment) Act 2023 to lower the minimum age for auto-enrolment to 18 and remove the lower limit of qualifying earnings, and nothing new ahead of the Pensions Commission’s final report, which the Pensions Minister has said will come in February 2027.

What It Means for Advisers

For most employer clients, the existing timetable still holds. The salary sacrifice cap still arrives in April 2029 and is worth modelling now, while the inheritance tax changes in April 2027 make nomination forms and member communications a priority for trustees and providers. Higher tax on savings outside a wrapper strengthens the case for pension contributions and ISA-based workplace savings. Any employer providing private medical insurance has around five months to get payrolling right.

Things to reflect on for CPD

  • How would you explain to an employer client why the Budget’s silence on salary sacrifice does not change the April 2029 timetable, and what modelling would you recommend now?
  • Which of your clients provide private medical insurance as a benefit in kind, and who in each organisation is responsible for getting it onto payroll from April 2027?
  • How does higher tax on savings income change the way you would present pension contributions and workplace ISAs to employees in different tax bands?