FE CashCalc gross cashflow updates to reflect UK's frozen tax thresholds

We've updated FE CashCalc's Gross Cashflow tool to reflect two confirmed changes to UK tax law. Frozen Income Tax and National Insurance thresholds are now held flat in projections instead of rising with inflation, and the Finance Act 2026 changes to property and savings income tax are built in for forecast years from 2027/28 onwards. Both changes take effect automatically from Thursday 1 October 2026.

Here's what we've updated, why we’ve changed it and how it affects the forecasts you're already running.

The background

Hopefully this isn’t the first you’re hearing about the freeze on Income Tax and National Insurance thresholds. Dating back to the Spring Budget 2021, which fixed the Personal Allowance and higher rate threshold from April 2022 to April 2026, it was extended twice since. First to April 2028, and then again at the Autumn Budget on 26 November 2025, which pushed the freeze out to April 2031. If you want a refresher on the wider implications of that Budget, you can see that in this article: Autumn Budget 2025: what financial advisers need to know.

Other allowances sit outside this legislated freeze but move only when the government reviews them. The Dividend Allowance has only ever decreased since it was introduced, the Pension Annual Allowance, the Money Purchase Annual Allowance and the Capital Gains Tax Annual Exempt Amount have moved in both directions at different points, but none of them rise automatically with inflation.

Separately, the Finance Act 2026 introduced three related changes to how property and savings income is taxed, effective from the 2027/28 tax year. Allowances are now set against income in a new statutory order, a new property income category has been introduced, and property and savings tax rates have increased by 2 percentage points.

The changes we've made

Two updates go live in Gross Cashflow on 1 October 2026.

Frozen thresholds now stay frozen in projections. Previously, the projection engine increased every threshold each year in line with the forecast's assumed inflation rate, even where a freeze had already been confirmed. That could overstate a client's projected surplus and understate their future tax liability. Gross Cashflow now holds frozen thresholds in flat cash terms and only moves them when the government legislates a change. Where a forecast displays figures in real terms, a frozen threshold now shows as gradually declining year on year, rather than flat or rising. This reflects the threshold's shrinking real value and is the correct outcome, not an error.

For example, the Lump Sum Allowance now reduces in real terms. Previously, the £268,275 Lump Sum Allowance stayed fixed in cash terms indefinitely. Gross Cashflow now reduces it in line with the forecast's inflation assumption when figures are displayed in real terms, the same treatment applied to the frozen Income Tax thresholds. In cash terms, the allowance remains fixed at £268,275 going forward.

Finance Act 2026 rules apply from 2027/28. Three changes are built into every new forecast:

Allowances such as the Personal Allowance are now set against general income first (employment, self-employment, pensions), then property income, then savings income, then dividend income, matching the new statutory hierarchy.
A new “Property income” option is available when adding an income source, so property income is flagged separately from earned income and taxed in the correct order.
Property income and savings income, including chargeable event gains on investment bonds, are taxed 2 percentage points above the main rates: 22%, 42% and 47%, instead of 20%, 40% and 45%. (Scottish savings income follows the same UK wide rates. Scottish property income continues under existing Scottish non-savings, non-dividend rates, pending separate Scottish legislation.)

The impact to existing cashflows

Changes apply to new forecasts created from 1 October 2026 onwards, and to existing forecasts only if you clone them after that date. Nothing will change retrospectively and any forecast already saved before 1 October 2026 is unaffected and stays exactly as it was run.

No action is required to receive the frozen threshold update. It applies automatically inside the cashflow planning software the moment you create or clone a forecast after the effective date.

For the Finance Act 2026 changes, existing income entries are unaffected and nothing is reclassified automatically. If you want to model a client's property income separately from 2027/28 onwards, you can use the new “Property income” option when adding that income source into the cashflow. This is the only manual step involved in either update.

If you want to see how a specific client case is affected, you can also review the change directly by opening a new forecast, or by cloning an existing one, inside your client cashflow modelling workspace.

Part of a more tax-aware FE CashCalc

This update is one of several we're making to keep FE CashCalc's tax logic ahead of legislation, not just compliant with it. As the rules governing thresholds, allowances and income taxation get more complex, we want advisers to trust that every forecast reflects the law as it stands today, without having to build in workarounds or caveat the numbers themselves.

The frozen threshold and Finance Act 2026 updates sit alongside other tax-aware work already in Gross Cashflow, from pension drawdown modelling to the income hierarchy changes covered here. Each one is aimed at the same goal: giving you a forecast you can put in front of a client without second-guessing the assumptions underneath it.

We'll keep building on this as tax law continues to change, and we're always keen to hear which scenarios you're finding hardest to model accurately.

Summary

As key financial planning software for advisers, we know that FE CashCalc needs to reflect the realities of the tax system.

As such, the Gross Cashflow modeler now holds frozen tax thresholds flat instead of inflating them and has built in the 2027/8 rules from the Finance Act. Both changes are live from 1 October 2026, apply automatically to new and newly cloned forecasts, and leave every forecast you've already saved untouched. The only action available to you is the new Property income option, which you can use whenever you're ready to flag a client's property income separately.

To review how these updates apply to your own forecasts, log in to FE CashCalc and open the Gross Modeller tool, or contact our Client Support and Services team with any specific case questions.

FAQs

Frequently asked questions

The update went live on Thursday 1 October 2026. It applies to new forecasts and to existing forecasts only if cloned after that date. Forecasts already saved are unaffected.

The projection engine used to increase every threshold each year in line with the forecast's assumed inflation rate, even after the government confirmed a freeze. This could overstate a client's projected surplus and understate their future tax liability.

No. The frozen threshold update applies automatically. If you want an existing forecast to reflect the new logic, clone it after 1 October 2026. The only manual step is using the new Property income option if you want to flag a client's property income separately from 2027/28 onwards.

It's a way to flag an income source as property income, separate from earned income, so it's taxed and stacked in the correct order under the Finance Act 2026 rules. It applies to forecast years from 2027/28 onwards and does not affect existing income entries.

From the 2027/28 tax year, property income and savings income, including chargeable event gains on investment bonds, are taxed 2 percentage points above the main rates: 22%, 42% and 47%, instead of 20%, 40% and 45%. Scottish savings income follows the same UK wide rates, while Scottish property income continues under existing Scottish rules for now.

The £268,275 Lump Sum Allowance stays fixed in cash terms. Where a forecast displays figures in real terms, the allowance now reduces in line with the forecast's inflation assumption, the same treatment applied to the frozen Income Tax thresholds.