Dan Niedle’s recent work explores what might happen but here is an analysis of what will come from John Mather.
John Mather is a prodigious contributor to this blog. This morning he has posted this comment which deserves a post as a blog.
John Mather
Not all impacts on creating a strong and healthy personal financial balance sheet are viewed through the lens of pensions. It is not news but the UK tax take is only going one way. Navigating this minefield is a challenge for advisers. Pensions are in the cross hairs of the Treasury.
Looking across the full landscape—including Dan Neidle’s policy analysis, recent real-world fiscal decisions, and official policy timelines over the next 4 years (2026–2030)—the UK’s strategy for raising taxes is clearly defined.
Because the government explicitly ruled out raising the headline rates of the “big three” (Income Tax, VAT, and National Insurance), the approach relies heavily on fiscal drag and targeting passive asset wealth (dividends, savings, property, and pensions).
The map of confirmed and predicted tax increases over the next 4 years breaks down as follows:
Phase 1: Already Underway or Looming (2026–2027)
The Baseline Engine: Extended Fiscal Drag (Huge Revenue)
The freeze on personal allowance (£12,570) and the higher-rate threshold (£50,270) has been officially extended out to April 2031. As inflation and wages rise over the next four years, hundreds of thousands of people will naturally cross into higher tax brackets. This is the single largest multi-billion-pound stealth tax generator in play.
Dividend Tax Increases (April 2026)
Basic and higher-rate dividend taxes are increasing by 2 percentage points. The basic rate rises from 8.75% to 10.75%, and the higher rate rises from 33.75% to 35.75%.
Business Asset & VCT Relief Slashes (April 2026)
The tax rate for capital gains under Business Asset Disposal Relief (BADR) is increasing from 14% to 18%. Simultaneously, upfront tax relief on Venture Capital Trusts (VCTs) is being slashed from 30% down to 20%.
Remote Gaming Duty Jump (April 2026)
Online gambling companies are facing a significant sector-specific tax hike, with remote gaming duty practically doubling from 21% to 40%.
The Fuel Duty Unwind (Late 2026)
The long-standing fuel duty freeze is ending, with incremental increases scheduled across 2026 (including reversals of the temporary 5p cut).
Phase 2: The Next Horizon (2027–2028)
New Property and Savings Income Tax Brackets (April 2027)
The government is introducing an entirely separate, higher tax regime for passive asset income. Tax on property rental income and savings interest will jump by 2 percentage points across all bands, creating a new structure:
Basic Rate: Rises to 22%
Higher Rate: Rises to 42%
Additional Rate: Rises to 47%
Pensions Squeezed via Inheritance Tax (April 2027)
Unspent private pensions—historically exempt from inheritance tax (IHT) and a primary tool for passing wealth down generations—will officially be brought into the IHT net.
The Cash ISA Squeeze (April 2027)
The maximum amount individuals under 65 can deposit cleanly into a tax-free Cash ISA will drop sharply from £20,000 down to £12,000. (The remaining £8,000 allowance will be restricted strictly to Stocks & Shares ISAs).
Phase 3: Longer-Term Revenue Seekers (2028–2030)
The “Mansion Tax” / High-Value Council Tax Surcharge (April 2028)
Properties in England valued over £2 million will be hit with a new annual surcharge. It acts as a de facto wealth tax on primary residences, starting at £2,500 per year and rising to £7,500 per year for homes worth over £5 million (indexed to inflation thereafter).
Inheritance Tax Cap Freeze Renewal
The core IHT nil-rate bands (£325,000 and £175,000) will remain completely frozen until at least 2031, ensuring more estates face the 40% tax over the coming four years as property values grow.
Highly Probable Future Policy Options
If a future Chancellor needs to bridge immediate structural gaps (like the unfunded £4.7bn defense spending noted in Neidle’s piece), the options that fit within the government’s strict rules but haven’t been fully deployed yet include:
Closing the Commercial Property Stamp Duty Loophole:Applying standard Stamp Duty Land Tax (SDLT) to high-value commercial buildings sold via offshore corporate “envelopes” (estimated at £1bn+).
Aligning Capital Gains Tax with Income Tax:Reforming CGT thresholds to target non-risk assets rather than active investments.
Targeting Lifetime Giving:Limiting the “7-year rule” or clamping down on the “normal expenditure out of income” exemption for large, untaxed lifetime gifts.