Why Budget 'breathing space' doesn't apply to everyone - especially landlords: Alan Lazenby
Chancellor John Healey’s first Budget was framed as giving families and businesses “breathing space” amid global shocks. For many households across Yorkshire, the short-term cost-of-living help is welcome, but the longer-term tax changes on savings, property income and pensions mean careful planning remains essential.
With the challenges of global events, and increasing pressures around domestic policy, this will not be the last time this man will be rummaging around your pockets for spare change!
The headline measures for households include a one-off £100 Household Energy Payment for around 20 million homes in England in council tax bands A to D, paid into bank accounts this winter and funded by a temporary rise in the bank surcharge.
My parents welcome this. But it doesn’t help everybody, and for many it won’t touch the sides of the expected rises in bills coming in January.
The VAT cut on electricity is extended to July 2027, taking roughly £50 off the annual price cap, while gas standing charges are set to be abolished and shifted onto unit rates, expected to save many households around £45 a year. The 5p fuel duty cut is also extended to July 2027, and the National Living Wage rises 3.9 per cent to £13.21 from April 2027. Tariffs are being removed on more than 100 everyday products.
For many Yorkshire families facing high energy and motoring costs, this provides some genuine near-term relief.
High-street businesses also benefit from a rise in the Small Business Rate Relief threshold from £12,000 to £18,000 for retail, hospitality and leisure, taking tens of thousands more firms out of rates altogether. For Yorkshire businesses and households, the increasing devolution of ‘power’ and funds to the regional Mayors could provide some future relief, but what this looks like practically remains to be seen.
On savings, the Cash ISA annual limit stays at £20,000 for all ages, a clear U-turn on his predecessor’s previous plan to reduce it to £12,000 for under-65s. That is good news for cautious Yorkshire savers, particularly older clients who value simplicity and safety over market risk. However, tax rates on savings interest and property/rental income rise by a further two percentage points from April 2027 (on top of the two already legislated), taking them to 24 per cent, 44 per cent and 49 per cent.
I’ve already heard from very angry landlords today about this, they feel the government hate you owning a second home. I can see why they think this way, and property companies are not affected in the same way. With the Personal Savings Allowance unchanged, holding cash outside an ISA becomes more expensive. The government also plans to launch a new “Starter ISA” to encourage first-time investment in stocks and shares, and is reducing the Lifetime ISA withdrawal charge to 20 per cent while introducing a First Time Buyer ISA. The Your First Home equity loan scheme aims to help around 70,000 first-time buyers with lower deposits.
For pensioners, a new Pension Tax Allowance protects those whose income is no higher than the full new State Pension (rising under the triple lock to roughly £13,036) from paying income tax on it, at least until around 2030. This avoids small HMRC bills for modest incomes. The previously announced inclusion of most unused pension funds and death benefits in the estate for Inheritance Tax from April 6, 2027 remains in place.
No change was made to the 25 per cent tax-free lump sum. From April 2028, the High Value Council Tax Surcharge applies to homes in England valued at £2 million or more.
The OBR forecasts modest growth of 1.2 per cent this year, dipping to 1 per cent next year before recovering, with fiscal headroom of £15 billion in 2029/30 rising later, and debt falling as a share of GDP after peaking. Borrowing costs are higher this year due to global factors.
In short, this Budget offers practical short-term help on energy and fuel while protecting the Cash ISA limit that many Yorkshire savers rely on. The higher tax on
non-ISA savings and rental income, the 2027 pension IHT change, and the future high-value property surcharge mean clients with significant cash, property or pension wealth should review their arrangements.
However, the headlines tell only part of the story. The real impact of any Budget depends on your own circumstances: your income, savings, property, pension arrangements, family commitments and longer-term ambitions.
As ever, tracking income and expenses closely, maximising tax-efficient wrappers, and seeking independent advice will help households and businesses across the region make the most of the “breathing space”.
Alan Lazenby is Managing Director of Lazenby’s Financial Services