What’s Changed: Budget 2026

Another Autumn, another Budget. The problem with new Chancellors/governments is that they like to make their mark. I knew we would be in for a barrage of changes today.

I've been through as much of the information that is currently available (as always, the devil is in the detail, which will be released over the coming weeks and months). I’ve split them in two, so you can skip to the part that applies to you (or read both, if you’re a landlord who also runs a company...or just interested, you crazy people exist!).

This year’s Budget brings higher taxes for landlords and savers, a smaller relief for business owners selling up, and more cost and admin for employers. There’s good news too: a bigger Trading Allowance, a new relief for founders, and help with business rates for shops, pubs and cafés. Bad news: HMRC is also changing how and when it expects to be paid.

There’s been plenty of political commentary, so we’ve been through the small print, including the government’s overview of tax changes, to work out what matters to you: what’s changing, when, and what it means in practice.

It’s a long read, so skip straight to personal tax or business tax if you prefer.

Personal tax: what’s changing?

Landlords face higher tax on rental profits

This is big news. From 6 April 2027, Income Tax on property income will be four percentage points higher than it is today. Last year’s Budget had already announced a two-point rise from April 2027, and this Budget adds another two on top.

The tax credit for mortgage interest and other finance costs rises to 24% as well, which takes a little of the sting out.

This means that a landlord with £15,000 of taxable rental profit, all within the basic-rate band, will pay £3,600 in Income Tax instead of £3,000: an extra £600 a year.

Your own position will depend on your other income, your allowances and your finance costs. If you already have mortgage costs, repairs and agent fees eating into the rent, it’s a good time to look at whether each property still pays its way. (We’re happy to help with this).

Savings income is taxed more heavily too

From 6 April 2027, the savings rates rise to 24%, 44% and 49%, up from 20%, 40% and 45% today.

The Personal Savings Allowance stays at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, so most people with modest savings won’t pay any more. If you hold substantial savings outside an ISA, expect a bigger bill.

There’s some better news on ISAs. Last year’s plan to cut the Cash ISA limit from April 2027 has been reversed, so you can still put the full £20,000 a year into cash.

Income Tax thresholds stay frozen

As expected the Personal Allowance stays at £12,570, and Income Tax thresholds remain frozen until April 2031. As pay rises, more people are pulled into higher tax bands.

Self Assessment: changes to payments on account

This is a biggie, although it won’t start until April 2029. We all knew this was coming when MTD was brought in.

At the moment, most people who make payments on account pay twice a year, in January and July. Under the new system, payments will be made more regularly through the tax year by automated methods such as Direct Debit. If you have enough PAYE income, you’ll be able to pay through your tax code instead. HMRC hasn’t yet decided how often the payments will be.

The total tax you owe doesn’t change, only when you pay it. This is supposed to help people spread the cost... In unrelated news, HMRC will get your tax from you earlier than it does now...

This could mean a cash-flow squeeze during the changeover. A landlord or sole trader could be settling the balance for one year while starting regular payments for the next. If you’re used to putting money aside for January and July, you’ll need a different plan. However, I don't think this is a really bad thing and it might help people to spread the tax rather than have 2 big nasty months - one of those being January which is already pretty grim!

There’s plenty of time to prepare, and we’ll be in touch once HMRC confirms the details.

Increase in Trading Allowance

This is a good one! From 6 April 2027, the Trading Allowance rises from £1,000 to £3,000. The threshold at which trading income has to be reported through Self Assessment rises to £3,000 too.

We already use this allowance a lot for clients and it is great news that it can be used for more people now. You can claim the allowance instead of deducting your actual expenses, but not as well as them. Sadly it isn’t an extra £3,000 tax-free on top of your normal business costs!

Pension Tax Allowance

From 6 April 2027, a new Pension Tax Allowance (because we need more allowance names) will apply for three tax years, to April 2030.

It’s for pensioners whose total income is no more than the full new State Pension (£13,036.40 in 2027/28). It stops them facing small tax bills just because the State Pension has risen above the frozen Personal Allowance. It’s worth about £93 a year and tapers away by £1 for every £3 of income above the State Pension level.

Pensions and Inheritance Tax

From 6 April 2027, most unused pension funds and pension death benefits will count as part of your estate for Inheritance Tax. This was announced previously and is already law, but today’s Budget adds more detail on how the tax will be administered and paid.

Separately, the government has scrapped the two-year rule, which could make certain pension death benefits taxable if they weren’t paid within two years of the member’s death. The change applies to payments made from today, 28 October 2026.

If you have a substantial pension fund, now is a good time to speak with your financial advisor (we can recommend some great ones).

Higher mileage rates for business journeys

There’s more good news (and you guys think I'm all doom and gloom...)

If you use your own car or van for work, the tax-free rate of 55p a mile for the first 10,000 business miles, introduced in April 2026, is here to stay. From 6 April 2027, the rate for miles above 10,000 rises from 25p to 35p. Woo hoo!

This means someone driving 15,000 business miles a year can claim an extra £500 (10p on each of the last 5,000 miles), either as tax-free reimbursement from their employer or as a deduction. The tax saving depends on how you claim and your own circumstances.

Ordinary commuting between home and a permanent workplace still doesn’t count.

Business tax: what’s changing?

Selling your business? There are two big announcements if you’re thinking about a future sale.

Business Asset Disposal Relief

For disposals on or after 6 April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) halves from £1 million to £500,000. BADR lets qualifying business owners pay Capital Gains Tax at 18% on eligible gains up to that lifetime limit. Anything above it is taxed at the normal rate. Here’s how that plays out on a £1 million qualifying gain, assuming no previous BADR claims and a normal CGT rate of 24% on the excess:

That’s an extra £30,000 in Capital Gains Tax. (The example ignores the annual exempt amount and assumes all the qualifying conditions are met.)

If you’re thinking about retirement, succession or selling your company, the timing and structure of the sale matter more than ever. There are special rules for contracts entered into before the change, so talk to us before you sign anything.

New Founders’ Relief

At the same time, the government is introducing a new Capital Gains Tax relief for founders of high-growth, innovative UK companies.

From 6 April 2027, qualifying founders could pay 10% CGT on up to £10 million of lifetime gains. I don't think this is going to be available for the many and I suspect the conditions are going to be quite demanding.

The consultation on the detail closes on 30 November 2026, so we’ll need to see the final rules before we know who can benefit.

A new Young Entrepreneurs Allowance

The government has also announced a Young Entrepreneurs Allowance, to help young founders with their living costs during their first year of business.

Who qualifies, how much it pays and how to apply haven’t been confirmed yet. We’ll share more when we have it.

Changes to company distributions and share buybacks

This is one for company directors and shareholders to keep an eye on.

HMRC consulted over the summer on reforming the rules for how money and assets pass from companies to their shareholders. The government has confirmed it’s going ahead, with some changes to the original design. Draft legislation is due in 2027 and the new rules are expected from April 2028.

The areas under review include:

• Companies buying back their own shares
• Capital reductions and demergers
• The anti-avoidance rules on transactions in securities
• Some loans to shareholders

The aim is to draw a clearer line between taking profits out of a company, which is taxed as income, and real capital transactions, which may be taxed as capital gains.

The detailed rules are still being worked out, but they could make a big difference to some owner-managed businesses.

So what should you do? If you’re considering a restructure, share buyback, capital reduction or succession plan, talk to us about the tax before you make any decisions.

No new quarterly reporting for directors’ dividends and loans

You may have heard about plans to make companies report dividends, directors’ loans and other payments to shareholders more often. HMRC consulted on this earlier in the year.

The government has confirmed it won’t be going ahead with these reporting requirements at this time. So, for now, there’s no new reporting obligation for dividends or loan account transactions. Your existing accounts and tax reporting still apply. This is a relief, but I suspect this is just a pause in the plan.

National Minimum Wage increases from April 2027

The constant Chancellor favourite (because they don't need to find the money). Yet again employers will need to budget for another rise in wage costs. These are the new rates from 1 April 2027:

Ages 21 & over: £13.21

Ages 18 to 20: £11.27

Ages 16 to 17: £8.31

Eligible Apprentices: £8.31

All four rates are up 3.9%.

In practical terms, this means an employee aged 21 or over working 37.5 hours a week will cost you £975 more a year in gross pay (from £12.71 to £13.21 an hour, over 52 paid weeks). That’s before any extra employer National Insurance or pension contributions.

If several of your team are on or near minimum wage, the extra cost soon adds up. Remember too that minimum wage compliance isn’t only about the hourly rate. Working time, deductions, uniforms and the treatment of apprentices can all catch employers out. See our recent articles about this.

Employers’ National Insurance

I was really hoping this would be reduced. Sadly not, but at least there’s no new increase to the headline employer National Insurance rate.

However, with the rate at 15% and the secondary threshold frozen at £5,000, every pay rise increases your National Insurance bill too. The Employment Allowance stays at £10,500 for eligible employers.

When you budget for April 2027, look at wage increases, National Insurance and pension contributions together.

Payrolling benefits in kind becomes mandatory

I've already talked about this numerous times over the last few months but this is a big admin change for employers.

From 6 April 2027, you’ll have to put certain taxable benefits through payroll instead of reporting them once a year on a P11D. It’s happening in two stages:

• From 6 April 2027: company cars, vans, car and van fuel, and medical benefits
• From 6 April 2028: almost all other taxable benefits

Employment-related loans and employer-provided living accommodation will stay outside the mandatory rules.

This means that your payroll will need accurate benefits information and will calculate the tax throughout the year. We’ll be working with affected clients to get you ready well before April.

Business rates: some welcome relief

There’s better news for some retail, hospitality and leisure businesses in England.

From 1 April 2027 until March 2029, the Small Business Rate Relief thresholds for qualifying properties in those sectors rise. Properties with a rateable value up to £18,000 (currently £12,000) will get 100% relief, tapering to nothing at £21,000.

Bills for other qualifying retail, hospitality and leisure properties will be frozen in real terms for two years. Relief for pubs, social clubs and most live music venues rises from 15% to 35%.

These changes don’t apply to every commercial property (vape shops, for example, are excluded), so it depends on your business and premises.

Changes to capital allowances

For spending on or after 1 January 2027, the main-rate first-year allowance rises from 40% to 50%.

However, the main-rate writing-down allowance falls from 14% to 12% from April 2027 (1 April for companies, 6 April for sole traders and partnerships). This also applies to existing pool balances.

The £1 million Annual Investment Allowance and full expensing for companies are unchanged, so the effect on you depends on what you’re buying and which reliefs you can claim.

This change won't affect many businesses, unless you spend a lot of money on assets. If you’re planning a big spend on equipment, talk to us about the timing before you commit.

Corporation Tax rates stay the same

The main rate of Corporation Tax stays at 25% and the small profits rate at 19%. The associated company rules and marginal relief still affect the rate many companies pay in practice.

Employee share schemes

The Budget makes tax-advantaged share options more flexible.

From 6 April 2027, the Company Share Option Plan (CSOP) individual option limit doubles from £60,000 to £120,000, and the maximum exercise period extends to 15 years. The rule that links the CSOP and EMI individual limits is also being removed.

If you use share options to recruit, keep and reward your team, these changes could open up more options.

R&D tax relief claims are being simplified

For claims made on or after 1 April 2027, the separate R&D Claim Notification Form is being scrapped. The Additional Information Form will also be simplified from autumn 2027.

Small company accounts: less information made public

There’s welcome news on Companies House filing too. Just before the Budget, the government paused plans that would have required small and micro companies to file a profit and loss account from April 2027.

Making Tax Digital

Making Tax Digital for Income Tax is still rolling out, and from April 2027 it applies if your self-employment and property income is over £30,000. Sorry guys, I had everything crossed for him to postpone this tranche of tax payers.

We'll be in touch with our affected clients in February to discuss your next steps.

VAT and PAYE payments: changes to Direct Debits

From April 2029, most businesses will need a Direct Debit in place for VAT and PAYE, with some exceptions.

That doesn’t mean you lose other ways to pay. You’ll still be able to pay earlier by another method, with the Direct Debit collecting any balance at the deadline.

I actually think this is a good thing. So many businesses end up paying penalties or interest because they forgot to set up a bank payment, so this stop this problem.

Separately, electronic VAT invoicing becomes mandatory from April 2029.

These changes are some way off, but your accounting and payment systems will need to be ready. We’ll help you get there.

Our take

As with every Budget, some announcements take effect straight away, while others won’t arrive for several years. A number still need consultation or legislation before the final rules are confirmed.

For most of our clients, the changes that matter now are the landlord tax rise and, for anyone planning an exit, the smaller BADR limit. The payments on account and Direct Debit changes are further off, but they’ll change how you manage cash flow, so we'll start discussing this with clients over the next 12 months.