What Does the Budget Mean for You and Your Family

A reflection on the Budget, and what it could mean for the way you protect the people who rely on you.

There’s some real help for households in this Budget, including an energy payment for many homes and a higher minimum wage. But when it comes to protection, a lot of what matters was announced before and has now been confirmed, and most of it lands in April 2027.

So here’s our take on the changes that could affect how well you and your family are looked after: if you die, if you can’t work, if you’re starting a family, or if you own rental property.

Pensions are about to count towards your estate

From April 2027, most unused pension funds and pension death benefits will count towards your estate for inheritance tax. For a lot of people, a pension has been the most tax-efficient thing to pass on, and that’s changing. It could push an estate over the threshold, and if someone dies after 75, the person who inherits may pay income tax on what they draw from it too.

There’s some good news. Death-in-service lump sums paid through a registered pension scheme sit outside the new rules, and the tax-free lump sum you can take from your pension hasn’t been cut.

At the same time, the inheritance tax thresholds are frozen until at least April 2031. The nil-rate band stays at £325,000 and the residence nil-rate band stays at £175,000. As house prices, savings and pensions grow, more families will find themselves over the line. Anything above it is usually taxed at 40%.

So it’s worth asking yourself a few things:

• Is your life cover written in trust? A policy that isn’t can be paid into your estate, which could add to the inheritance tax bill and slow things down while probate is sorted. Putting a policy in trust is often straightforward

• Would your family have to sell assets, like the home, to pay a tax bill? Whole of life cover written in trust is one common way to fund it

• Are you giving money away? Gifts can still be taxed if you die within seven years, and gift inter vivos cover is designed to pay that tax

• Is your death-in-service nomination up to date? Remember it stops when you leave the job or go self-employed

Our advice is don’t rush to empty your pension to dodge the tax. It can leave you short later in life, so get advice first.

Sick pay still won’t go as far as you’d think

There was nothing new on Statutory Sick Pay this time. The big changes came in April 2026: it’s now paid from day one, and lower earners qualify for the first time. But it’s still just £123.25 a week, which is around 18% of pay for someone earning £35,000. It stops after 28 weeks, and if you’re self-employed, you don’t get it at all.

Some employers pay more, but many only pay the minimum, and company sick pay often runs out after a few months. Universal Credit is going up by 4.3% from April 2027, but it’s means-tested. It’s reduced once you have savings over £6,000, stops completely above £16,000, and your partner’s income counts too. So many people who become too ill to work won’t qualify. And further welfare reforms are expected in early 2027.

If you couldn’t work for six months or more, how would you pay the mortgage or rent and the bills? For many people, the state isn’t going to fully cover it.

• Income protection pays a proportion of your income if you can’t work through illness or injury, and it can start after your sick pay ends

• Critical illness cover pays a lump sum if you’re diagnosed with a serious illness covered by the policy, which can give you breathing space to focus on recovery

• If you’re self-employed, there’s no sick pay at all, so this is even more important

A new little one changes the sums

Statutory maternity, paternity, adoption and shared parental pay rises to £201.11 a week from April 2027. That’s around £870 a month, so most families take a big income drop when a baby arrives. Self-employed fathers and partners will get paid parental leave for the first time from April 2029, but it’s two weeks’ pay and it’s a few years away.

A new baby is also when protection matters most. More people depend on your income, and the mortgage doesn’t stop. Life cover can pay off the mortgage or give your family a lump sum. Family income benefit pays a monthly income to your family until the children are older, and it can be a more affordable way to protect a young family. And income protection and critical illness cover help if you can’t work, especially if one parent is at home or working fewer hours.

If you took out cover before the children came along, it’s worth checking it’s still enough.

If you’re a landlord, the tax is going up

From April 2027, rental income gets its own tax rates, 4 percentage points higher than normal. Basic-rate taxpayers will pay 24% (up from 20%), higher-rate 44% (from 40%) and additional-rate 49% (from 45%). Tax on savings interest goes up by the same amount.

That affects protection in a few ways:

• Income protection doesn’t usually cover rental income. It’s designed to replace earned income, so if you have a job alongside your properties, it’s that income you need to protect

• Buy-to-let mortgages still need repaying if you die. Without cover, your family may have to sell quickly, possibly at a poor price. Life cover in trust can clear the debt and give them options

• Property counts in full for inheritance tax. With frozen thresholds and pensions joining the estate, a rental portfolio can mean a big bill, and whole of life cover in trust can help fund it

• Higher tax means lower net rent, so there’s less of a cushion if your other income stops

What to look at now

Most of this starts in April 2027, so it’s a good time for a quick check:

• Is your life cover in trust?

• What’s your estate worth, including your home, savings, investments and (from April 2027) your pension, and how would any inheritance tax get paid?

• Are your pension and death-in-service nominations up to date?

• What does your employer pay if you’re off sick, and for how long?

• How long could you manage without your income, and would income protection or critical illness cover fill the gap?

• Expecting a baby or just had one? Is your life cover still enough?

• Self-employed? You’ve got no sick pay and no death-in-service, so do you have your own cover?

• A landlord? Are your buy-to-let mortgages covered, and how would your properties be handled in your estate?

Our takeaway

This Budget didn’t turn protection on its head, but it did make a few things matter more: where your pension sits, how far sick pay stretches, and what happens to a property or a mortgage if you’re not around. A quick check now can save your family a lot of stress later.

How we can help

Our advisers can look over the cover you already have, help you spot any gaps, and search the whole market for cover that fits your circumstances and budget. We can also help you put existing policies into trust.

Important information: This article is for general information only and reflects our understanding of the Budget announcements on 28 October 2026. Some measures are still subject to legislation and may change. It is not tax, legal or financial advice. Tax treatment depends on your individual circumstances, so speak to a qualified tax or financial adviser before making decisions about your estate or pension. Insurance cover is subject to underwriting, and policies have terms, conditions and exclusions. Trusts are not regulated by the Financial Conduct Authority.