Autumn Budget 2026 preview: The five things a salaried professional with a second income should watch on 28 October

the maths of one income

On Wednesday 28 October, John Healey delivers the first Budget of the Burnham government, three months into its term. The headline rates are already off the table: the government has ruled out rises to income tax rates, employee National Insurance and VAT, which between them raise close to 60% of all tax. That leaves the Chancellor looking for money in the places employed professionals feel least prepared for: thresholds, capital gains, pensions, savings and the rules around a second income.

This is a preview, not a prediction. It sets out what is already legislated and will bite regardless of what is said on the day, what commentators expect on the basis of the government's own signals, and the five things a salaried professional with a second income should have in view. A follow-up post on Budget day will cover what actually changed, written from the Treasury documents rather than the speech.

Before 28 October

Free PDF: The Second Income Tax Pack 2026/27

The £1,000 rule, every 2026/27 deadline, what to set aside and how to report it.

Get the free tax pack →

What is already decided

A surprising amount of what will affect your 2027 payslip was settled at the previous government's Autumn Budget in November 2025 and does not depend on 28 October at all. Income tax and National Insurance thresholds are frozen until April 2031, which means every pay rise pulls more of your salary into the 40% band while the bands stand still. Dividend tax rose in April 2026, to 10.75% at the basic rate and 35.75% at the higher rate. The cash ISA allowance falls from £20,000 to £12,000 for savers under 65 from April 2027. And from April 2029 the National Insurance saving on pension salary sacrifice is capped at £2,000 of contributions a year.

Already legislated, whatever happens on 28 October

April 2031

Income tax and NI thresholds frozen until then; £50,270 stays the 40% line

10.75% / 35.75%

Dividend tax at basic and higher rate since 6 April 2026, up two points each

£12,000

Cash ISA limit for under-65s from April 2027, down from £20,000

£2,000

Annual cap on NI-free pension salary sacrifice from April 2029

£3,000

Trading income reporting threshold from 2027/28, up from £1,000; tax still due above £1,000

£30,000

Making Tax Digital threshold from April 2027, then £20,000 from April 2028

Those six items are the floor. Anything announced on 28 October sits on top of them, and a Budget that changed nothing else would still leave most professionals paying more tax in 2027 than in 2025, through the freeze alone. The Commons Library puts the cost of simply resuming indexation of the thresholds at around £8.4 billion a year, which is why nobody expects it.

How the freeze works, in numbers

Because the freeze is the measure that will cost most professionals the most, it is worth seeing it as arithmetic rather than a headline. The higher-rate threshold has been £50,270 since April 2021 and stays there until April 2031. Every pay rise you receive in those ten years moves you towards it while it stands still, and once you cross it every additional pound is taxed at 40% rather than 20%, with employee National Insurance falling to 2% at the same point.

Worked example: three salaries, 3% rises a year, a threshold that does not move

A £42,000 salary rising 3% a year reaches £50,270 in the seventh year, in 2033, after the freeze is due to end. A £45,000 salary crosses it in the fourth year, in 2030, while the freeze is still in force. A £48,000 salary crosses in the second year, in 2028. In each case the crossing would not happen at all if the threshold rose with pay.

For the £48,000 earner, by 2031 roughly £5,800 of salary sits above the line and is taxed at 40% instead of 20%: about £1,160 a year more tax than an indexed threshold would charge, before any second income is added.

Illustrative; assumes 3% annual rises and no other changes. Add a second income on top and every pound of it is taxed at the rate the salary has already reached, which is the arithmetic in section 4 of the tax pack.

This is why a Budget that "does nothing" to income tax is not neutral for an employed professional. The Commons Library estimates the freeze will pull millions more people into higher-rate tax by 2031. The pay rise the ONS measured at 2.9% in the private sector this year is, for anyone near the threshold, partly a tax rise in disguise.

What commentators expect

With the big three rates ruled out, the speculation from the large accountancy firms and consumer bodies in mid-September clusters around four areas. Capital gains tax is the most consistently mentioned: the rate went from 20% to 24% in October 2024, a further headline rise is seen as counterproductive by HMRC's own modelling, but reform of the reliefs, including the "uplift on death" that wipes out gains when assets are inherited, is widely expected and has been costed by commentators at £1.5 to £2 billion a year. Property taxation is described as an area to watch, with stamp duty and council tax confirmed as staying but incremental reform not ruled out. Inheritance tax reliefs for agricultural and business property, curtailed in 2024, may be revisited. And a "review" of the personal allowance has been mentioned without commitment, which could mean anything from a token rise to nothing.

Two things are notable by their absence from the informed guesswork: pensions and the self-employed. Nobody has reported a plan to touch the tax-free lump sum or pension relief this time, though the topic returns before every Budget. Nothing specific has surfaced for sole traders beyond the changes already in train. Treat both as unknowns rather than safe.

"When the rates are ruled out, the thresholds, the reliefs and the definitions do the work. Those are exactly the parts of the system a person with two incomes touches most."

Five things to watch on the day

The thresholds, and any word on the personal allowance

The freeze to 2031 is the single biggest tax rise most employees will pay this decade, and it is invisible on the day. Listen for any change to the £12,570 allowance or the £50,270 higher-rate line. A rise would be worth more to you than any headline measure; confirmation of the freeze is the expected outcome.

Capital gains tax, if you will ever sell what you are building

A second income that becomes a business becomes an asset. Business Asset Disposal Relief, the rate on gains, and the reliefs on death are all in play. If you hold shares, a rental property or a company, the CGT section of the Red Book is the one to read first.

Pensions: the lump sum, the relief and salary sacrifice

The £2,000 salary sacrifice cap from 2029 is set. Watch for anything that brings it forward, touches the 25% tax-free lump sum, or changes relief for higher-rate taxpayers. If you are using pension contributions to stay under £100,000 or £60,000 for the child benefit charge, this section decides whether that still works.

The second-income rules: trading allowance, dividends, Making Tax Digital

The £1,000 allowance, the £3,000 reporting threshold due in 2027/28, the dividend rates that rose in April, and the MTD timetable are the rules a side income lives under. Any of them can move on the day. The sole-trader-versus-company question depends on the dividend and corporation tax lines in particular.

Savings: the ISA and the rate on cash

The cash ISA cut to £12,000 from April 2027 is legislated. Watch for changes to the overall £20,000 limit, the stocks and shares side, or the personal savings allowance. If your runway or your emergency fund sits in cash ISAs, the April 2027 date is already a planning point.

Earning on the side? Get the tax pack

Sixteen pages: the trading allowance, the registration test, the 2026/27 calendar, payments on account, Making Tax Digital and a twelve-point checklist. Nothing to buy.

Get the free tax pack →

What to do before 28 October

Nothing dramatic. Budgets reward people who already know their numbers and punish people who react to headlines. Three preparations are worth the hour they take. Know your total income for the year, salary plus side profit plus anything else, because every threshold in the list above is measured against it. Know where your savings sit, cash ISA or otherwise, and what the April 2027 cut means for your plan. And if you are near a cliff, £50,270, £60,000 or £100,000, know how much a pension contribution before 5 April would move you, so that if the rules on relief change on the day you can decide quickly rather than in March.

Do not make an irreversible decision on a rumour. Incorporating a company, moving money out of an ISA, or crystallising a gain because a newspaper says the rate will rise is how people lose money on Budgets. The measures that matter come with dates, usually April 2027 or later, and there will be time to act on the actual text.

What to do after

Read the Treasury's own summary rather than the coverage, because the speech emphasises what the Chancellor wants remembered and the documents contain what was decided. The Budget-day post on this site will do exactly that, on the day, for the measures that touch employed professionals with a second income. Then update the one number that matters, your marginal rate on the next pound of side income, and adjust what you set aside.

Then carry on building. Every Budget since 2021 has raised the effective tax on a salary through the freeze, and none of them has changed the arithmetic that makes a second income the only line on the household balance sheet you control. The second income versus pay rise post shows that arithmetic in full. The Budget will move the rate by a point or two. It will not move the order: build first, leave second, choose third.