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Published 28 October 2026. All tax measures below are checked against HM Treasury and HMRC’s Budget 2026 documents on GOV.UK, linked at the end. Proposals may change as the Finance Bill passes through Parliament.

Chancellor John Healey delivered his first Budget on Wednesday 28 October 2026. Many of the headlines were about energy bills and the cost of living, but there are important tax changes for small business owners, landlords, savers and the self-employed, most of them starting on 6 April 2027. Here are the points that matter most for our clients.

Union flag flying from a stone government building in Whitehall under a cloudy sky

At a glance

  • Tax on savings and property income rises to 24%, 44% and 49% from April 2027
  • Trading allowance triples from £1,000 to £3,000
  • Business Asset Disposal Relief lifetime limit halves to £500,000
  • New Founders’ Relief: 10% Capital Gains Tax on up to £10 million of lifetime gains
  • Main rate first-year allowance increases to 50%, and the writing-down allowance falls to 12%
  • Higher mileage rate rises from 25p to 35p per mile, and the 55p standard rate is made permanent
  • National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027
  • Fuel duty cut and 0% VAT on household electricity extended to 30 June 2027
  • Corporation Tax rates and Personal Allowance unchanged

Income tax: savings and property income

From 6 April 2027, separate rates will apply to savings income and property income (HMRC OOTLAR 1.1 and 1.2):

Band Savings income Property income
Basic rate 24% 24%
Higher rate 44% 44%
Additional rate 49% 49%

The savings rates apply across the UK. The property rates apply in England, Wales and Northern Ireland, and the Scottish and Welsh governments have been given the power to set their own property income rates. Scottish landlords should watch for the Scottish Budget to see what rates will apply to them.

The Personal Allowance stays at £12,570 for 2027/28, and dividend rates are unchanged at 10.75%, 35.75% and 39.35% above the £500 dividend allowance.

For small businesses and the self-employed

Trading allowance tripled

From 6 April 2027 the trading allowance rises from £1,000 to £3,000, and the Self Assessment reporting threshold for trading income rises to match. People with small side businesses whose gross income is covered by the allowance will no longer need to declare it or pay tax on it.

Capital allowances

The main rate first-year allowance increases to 50% for expenditure on or after 1 January 2027, and the main rate writing-down allowance falls from 14% to 12% from 1 April 2027 (Corporation Tax) and 6 April 2027 (Income Tax). Timing of equipment purchases may matter, so talk to us before buying.

Mileage rates

The approved mileage rate for cars and vans is already 55p per mile for the first 10,000 business miles in 2026/27, and the Budget makes this permanent. From 6 April 2027, the rate for each mile over 10,000 rises from 25p to 35p. This applies to employee mileage payments and to the simplified mileage rate for the self-employed.

National Living Wage

From 1 April 2027 the National Living Wage rises by 3.9% to £13.21 an hour. Employers should budget for the increase now.

Payrolling benefits in kind

Confirmed: from 6 April 2027 employers must report company cars and vans, car and van fuel and medical benefits through payroll, with most other benefits following from 6 April 2028. Employment-related loans and living accommodation are excluded. Read our P11D guide.

Making Tax Digital for Income Tax

Sole traders and landlords joining MTD for Income Tax in April 2027 (qualifying income over £30,000) will not receive late submission penalty points for quarterly updates in 2027/28, though the updates must still be sent before the tax return. See our MTD for Income Tax guide.

National Insurance

Most National Insurance thresholds remain frozen at 2026/27 levels until 2030/31. The Class 2 Small Profits Threshold rises to £7,355 for 2027/28.

Looking further ahead

  • E-invoicing: VAT invoices will need to be issued and received electronically from April 2029.
  • Direct Debit: businesses will be required to set up a Direct Debit for VAT and PAYE liabilities from April 2029, with some exceptions.
  • Self Assessment: people who make payments on account will make more regular in-year payments from April 2029.
  • Online marketplaces: platforms will collect VAT on sales by UK businesses selling over a £90,000 annual threshold per platform from October 2027.

Selling your business: Capital Gains Tax

  • Business Asset Disposal Relief: the lifetime limit falls from £1 million to £500,000 for disposals on or after 6 April 2027. If you are planning to sell or wind up your company, timing could make a significant difference.
  • Founders’ Relief: a new relief offering a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains, for founders and early investors in high-growth companies, on qualifying disposals from 6 April 2027. A consultation on the detail closes on 30 November 2026.

Business rates and energy costs

  • England: the Small Business Rates Relief threshold for retail, hospitality and leisure businesses rises from £12,000 to £18,000, with a two-year real-terms freeze on their bills. Business rates are devolved, so these changes do not automatically apply in Scotland, though the Scottish Government receives funding it can use for similar measures.
  • Energy-intensive businesses: from April 2027 the British Industrial Competitiveness Scheme will cut electricity bills by up to 25% for over 10,000 eligible businesses.
  • Banks: the bank Corporation Tax surcharge rises from 3% to 6% from 1 January 2027 to 31 March 2028.

Households, savers and first-time buyers

  • Energy: a £100 Household Energy Payment in 2027 for up to 20 million homes in council tax bands A to D in England, with funding for similar support in Scotland, Wales and Northern Ireland. The 0% VAT rate on household electricity is extended to 30 June 2027.
  • Fuel duty: the 5p cut is extended to 30 June 2027, with rates returning to their pre-2022 level and rising with RPI from 1 July 2027.
  • ISAs: the cash ISA limit stays at £20,000 for all savers over 18.
  • First Time Buyer ISA: will replace the Lifetime ISA for new savers from April 2029, with a 25% government bonus on balances up to £20,000 towards a first home worth up to £450,000. The Lifetime ISA withdrawal charge for homes over the £450,000 cap is cut to 20% from today.
  • Pensioners: the new Pension Tax Allowance from 6 April 2027 means pensioners whose total income is no more than the full new State Pension will not pay income tax.
  • Parental pay: extended to more than 160,000 additional parents, including self-employed fathers and partners.

What hasn’t changed

Corporation Tax stays at 19% for profits up to £50,000 and 25% above £250,000. The VAT registration threshold remains £90,000 and the Personal Allowance remains £12,570.

What to do now

  • Landlords and savers: review how property and savings income is held before April 2027, including whether incorporation or a change in ownership makes sense.
  • Business owners planning an exit: consider whether a sale before 6 April 2027 makes sense while the £1 million BADR limit is still available.
  • Employers: budget for the National Living Wage increase and prepare payroll for benefits in kind.
  • Investing in equipment: plan purchases around the new capital allowance rates.

If you would like to discuss how the Budget affects you, contact us, call 0845 862 6009 or message us on WhatsApp.

Sources

This article is general information based on the Budget announcements on 28 October 2026 and does not constitute professional advice. Many measures are subject to legislation and consultation.