Families in the United Kingdom are set to face significant tax increases starting in April 2027, regardless of the details in Chancellor John Healey’s upcoming budget. Several tax changes introduced during Rachel Reeves’s tenure at No 11 Downing Street are scheduled to take effect, collectively impacting pensioners, savers, landlords, and a broad range of taxpayers.

One of the major measures involves inheritance tax (IHT) being applied to unspent pension pots left to heirs. According to the government, the policy aims to prevent pension savings from being used primarily as a mechanism for wealth transfer rather than retirement funding. Experts suggest this change will result in tens of thousands of additional estates paying inheritance tax. Tom Evennett, a partner at PwC, noted that this policy, alongside others, will add a substantial tax burden on families.

In addition, income tax rates on savings income will increase by two percentage points across all taxpayer bands—basic, higher, and additional—raising an estimated £500 million for the Treasury. Similar rate rises will apply to rental income, projected to generate up to £590 million. These increases coincide with a near halving of the annual cash ISA allowance for non-pensioners, dropping from £20,000 to £12,000. Robert Salter, a tax accountant with Blick Rothenberg, described this combination as a “double whammy” for individuals affected by both changes.

Further compounding the tax burden, many thresholds for various taxes will remain frozen, a mechanism known as “fiscal drag.” This means that as incomes rise, more individuals will be pushed into higher tax brackets, increasing overall tax revenues. Fiscal drag has been a significant factor in raising government income under both Conservative and Labour administrations in recent years.

Healey’s forthcoming budget is anticipated to include tax rises targeting banks, intended as a key revenue-raising measure. The government’s fiscal space has reportedly narrowed in recent months, from around £24 billion to roughly £12 billion, partly due to the rise in government bond yields linked to ongoing geopolitical tensions in the Middle East. Tax revenues as a percentage of GDP are on track to reach levels not seen since the post-Second World War period.

Commentators emphasize that the upcoming budget will build on an already extensive slate of tax reforms, with more than 100 tax measures announced or planned over the past two years. Both Tom Evennett and Amanda Tickel, head of tax and trade policy at Deloitte UK, highlight that the tax landscape is undergoing significant change, which will affect households and businesses alike.

Requests for comment from the government were not returned.