What the 2026 Autumn Budget means for divorcing/separating couples
The Autumn Budget announcement has highlighted some financial updates which will be important considerations for couples who are either about to divorce/separate or are already undergoing a divorce or separation process.
The updates are relevant for both individuals and business owners and it is important that divorcing/separating couples are aware on what this change could mean for them and how it may impact on any future settlement that they reach.
Tax on savings and property income
Whilst CGT rates generally remain unchanged, there will be increases in personal tax on savings income and property income from 2027/2028 as follows:
- 24% for the basic rate band
- 44% in the higher rate band and
- 49% in the additional rate band.
Whilst no changes were announced to other income tax rates (and those rates will be frozen until 5 April 2031) the impact to the changes to savings and property income on settlements will need to be considered in circumstances such as:
- If one party is due to receive a large cash lump sum which they are going to invest as part of their settlement. This means that any income they receive from the investment will be subject to a higher rate of tax.
- If they are going to receive a rental property as part of their settlement. They may be intending to rely on the rental income to pay outgoings, but the rental income will be impacted by higher levels of tax which will need to be considered.
- If an individual is keeping a rental property, it may not provide the same level of income that they previously had due to the tax increase.
- All of this will be relevant to how separating couples meet their short and long term financial needs.
High value properties
Properties worth in excess of 2m will be subject to a High Value Council Tax Surcharge from April 2028. This will increase outgoings for owners of those properties . Again this will need to be taken into account if properties over that price bracket are being retained by an individual as part of a separation/divorce settlement).
Businesses/ Information for business owners
The main rate of corporation tax is being kept at 25%, and there are unlikely to be changes that impact most businesses.
However, there are two significant changes to business reliefs which will be relevant for some business owners:
- From 6 April 2027, the limit to Business Asset Disposal Relief (BADR) is halved from £1m to £500k. This could increase the CGT costs on disposal of a business interest by up to a maximum of £30,000.
- From 6 April 2027 a new Founders Relief will be introduced, offering a reduced 10% CGT rate on up to £10m of lifetime gains for founders of high growth, innovative companies. What will count as a qualifying company for this relief is not yet clear (and specialist accountancy advice will need to be taken), however it is a development that needs to be considered and that business owners/family lawyers all need to be aware of.
The implications of the new reliefs are likely to be relevant in cases where:
- There needs to be a business valuation or valuation of an individual’s shares in order to work out a fair settlement between a divorcing couple;
- A business is being sold or shares are being transferred as part of a financial settlement;
- There has already been a business valuation but the implications of the above reliefs may need to be considered.
Why is all of this important
When individuals are going through a divorce or separation process, in order to reach a fair financial settlement there needs to be a clear understanding of:
- The value of assets and businesses;
- Ongoing financial implications/costs of retaining certain assets and income;
- The financial implications for a party of receiving a certain settlement (whether that is made up of property, business interests or cash lump sums).
The financial implications arising from the Autumn Budget are therefore an important part of that overall analysis and must be considered.
At McAlister Family Law, we advise both individuals and business owners on what a fair financial settlement would look like when separating/divorcing. That includes looking at the specifics of each case and their individual financial circumstances.
