What the Autumn 2026 Budget means to you

Posted on 31st October 2026 by Steven Burton

Autumn Budget 2026

28 October 2026

Understanding the Budget is one thing; knowing what to do next is what matters. At Steven Burton & Co, we help you turn tax changes into practical decisions for your business and personal tax affairs, so you can plan ahead rather than react when a bill arrives.

This update highlights the measures most relevant to business owners, individuals and landlords. Alongside the key announcements, our planning notes identify opportunities to review your position, manage costs and consider potential tax savings.

We can help you assess what the changes mean in pounds and pence: reviewing how you take money from your company, planning business purchases, budgeting for employment costs and preparing for tax payments.

Our bookkeeping support and regular financial reviews can give you a clearer picture of your profits, cash flow and tax liabilities, helping you make informed decisions throughout the year, not just at your year end.

If a point in this update affects you, contact us to arrange a review. We can explain your options, identify the actions worth taking and help you put an appropriate plan in place for 2026/27 and beyond.

Personal tax, savings and retirement

Income Tax thresholds remain frozen until 2031

No further tax rises on employment income or dividends were announced from April 2027.

One of the most important announcements is the extension of the freeze on personal tax thresholds through to April 2031. The Personal Allowance, the basic rate band and the higher rate threshold will not rise for five more years. National Insurance thresholds that align with these limits will also remain fixed.

This freeze means that the tax system will take a larger share of income each year as wages continue to rise. A growing number of people will drift into the higher rate band even if their pay only increases in line with normal cost of living adjustments. Anyone with salary growth, investment income or rental income should expect a gradual increase in their overall tax burden.

The government is maintaining the income tax Personal Allowance at £12,570 and higher rate threshold at £50,270 from April 2028 to April 2031. The additional rate threshold remains at £125,140 from April 2028 to April 2031.

PLANNING NOTE: Review bonus structures, pension contributions, gift aid contributions and pension withdrawal arrangements to manage exposure to higher rate tax and to preserve allowances.

National Insurance

For the 2027/28 tax year, the Class 1 Lower Earnings Limit and Class 2 Small Profits Threshold, along with voluntary Class 2 and Class 3 National Insurance contribution rates, will be uprated in line with September CPI inflation of 3.5%. The remaining National Insurance limits and thresholds will be frozen at 2026/27 levels until 2030/31.

Higher tax on dividends

No further tax rises on dividends were announced from April 2027.

Dividend tax rates rose by 2 percentage points from April 2026 and made profit extraction from small companies more costly for owner managers. Many directors take a modest salary and the rest of their remuneration as dividends. This model will still work, although the higher rates will reduce the overall tax advantage.

From 2026-27, the ordinary rate increased by 2% to 10.75% and the upper rate increased by 2% to 35.75%. The additional rate will remain unchanged at 39.35%.

The dividend allowance of £500 will continue to provide protection for those with smaller amounts of income.

PLANNING NOTE: Owner-managed companies who extract profit via dividends should re-evaluate extraction strategies.

Higher tax on savings and property income

Tax rates on property and savings income will increase by a further 2% on top of the previously announced 2% increase from April 2027. This will affect landlords, people with interest from savings and individuals with investment portfolios. The existing allowances, such as the dividend allowance and the personal savings allowance, will continue to provide protection for those with smaller amounts of income, but the overall direction is towards higher taxation of income from wealth rather than work.

The government is creating separate tax rates for property income.  These separate rates mean property income will have its own individual tax rates (as already occurs for the taxation of savings and dividend income). From April 2027, the property basic rate will be 24%, the property higher rate will be 44% and the property additional rate will be 49%. Finance cost relief will be provided at the separate property basic rate (24%).

PLANNING NOTE: Tax-free ISAs will become significantly more valuable, speak to our firm and your Financial Advisor about annual ISA maximisation.

PLANNING NOTE: Larger landlords with (eg with three or more properties) may benefit from forming a limited company, where corporate structures may produce lower effective tax rates, especially where profits are reinvested.  Transferring existing properties can trigger tax, refinancing and legal costs.

ISA

The government has decided not to reduce the cash ISA limit, so that it remains at £20,000. The cash ISA allowance had been due to be cut to £12,000 with the full £20,000 available by ringfencing £8,000 for stocks and shares.

From April 2029, a new First Time Buyer ISA will replace the Lifetime ISA for new savers. It will provide a 25% bonus on the final account balance up to a maximum government bonus of £20,000, paid on withdrawal, towards a purchase of a first home worth up to £450,000. Existing Lifetime ISA holders will be able to continue contributing to and using their accounts under the current rules.

PLANNING NOTE: If you are concerned by this change please speak to your financial adviser so that you can consider your options.

State Pension

The basic and new State Pension will increase by 3.9% from April 2027. 

From April 2027, people above State Pension age with total income up to and including the value of the new State Pension will not pay Income Tax thanks to the Pension Tax Allowance.

Student Loans

Plan 2 student loans repayment threshold freeze remains in place.

The Plan 2 student loans repayment threshold freeze, first announced in the 2025 Budget and set to last for 3 years, has been left in place and will seemingly go ahead as planned.  This threshold is supposed to rise every year in line with average earnings. The freeze means that, over time, a bigger proportion of income goes towards repaying the student loan.

Inheritance Tax

The inheritance tax nil-rate bands are already set at current levels until April 2030 and will stay frozen at these levels for a further year until April 2031.

From 6 April 2027 most unused pension funds and pension death benefits will be brought within the value of a person’s estate for inheritance tax purposes. This was legislated for in Finance Act 2026.

The government will also introduce legislation allowing those administering an estate to decide whether notional pension property is included in the ‘general’ component of the estate or treated as a separate component for the purposes of calculating the reduced rate of inheritance tax when part of the estate is left to charity.

HMRC is also working on the digitisation of IHT. The new digital Inheritance Tax service will allow executors and representatives to manage and complete IHT cases online, with faster processing, clear guidance, and reduced manual intervention and improved compliance.

PLANNING NOTE: If you are concerned by this change please call asap so we can consider your options.

Business owners: selling, gifting and incorporation

Business Asset Disposal Relief and Investors’ Relief

From 6 April 2026 the rate for Business Asset Disposal Relief and Investors’ Relief increased from 14% to 18%.

From 6 April 2027 the lifetime limit of how much Business Asset Disposal Relief (BADR) an individual can claim will be reduced from £1,000,000 to £500,000.

PLANNING NOTE: If you are considering selling your business, speak to us before agreeing a sale so we can assess the impact of the reduced relief limit and review the timing.

Introduction of a new relief for founders

From 6 April 2027, Founders’ Relief will introduce a 10% Capital Gains Tax rate on qualifying disposals of shares or securities, subject to a £10 million lifetime limit. The relief is intended to support founders and early investors who have made a significant, long-term contribution to developing high-growth and innovative UK companies.  The detailed conditions remain subject to consultation.

PLANNING NOTE: Founders and early investors considering a share sale should ask us to check eligibility for the new relief before agreeing the transaction.

Gift holdover relief

From 6 April 2027, gift holdover relief is changing to take account of assets within the intangible fixed assets regime and shares qualifying for the substantial shareholding exemption.

PLANNING NOTE: If you plan to gift business assets or shares, ask us to check whether the revised holdover relief rules could defer the Capital Gains Tax liability.

Incorporation relief

The government introduced a requirement for taxpayers to actively claim incorporation relief for transfers of a business to a company on or after 6 April 2026. For transfers before 6 April 2026 the relief applied automatically where conditions were met.

PLANNING NOTE: If you are transferring your business into a limited company, contact us before the transfer so we can check the relief available and ensure any required claim is made.

PLANNING NOTE: If you are considering disposals of assets affected by CGT please call so we can consider your options.

Business tax, investment and premises

Trading and Miscellaneous Income Allowance

From 6 April 2027, the UK tax-free Trading Allowance and self-assessment reporting threshold will both increase from £1,000 to £3,000.

The allowance provides relief for trading and miscellaneous income and simplifies the system for those individuals who choose to use the relief, where the allowances cover all their relevant income before expenses, as they will no longer have to declare or pay tax on this income. The trading income reporting threshold for Self Assessment will also be increased to £3,000. These changes will take effect from 6 April 2027.

PLANNING NOTE: If you have a small sideline business, ask us whether claiming the increased trading allowance or your actual expenses gives the better tax result, or if you can avoid self assessment completely.

Corporation Tax

The main Corporation Tax rate will remain at 25% for the entire Parliament. This provides a degree of certainty for businesses planning future investment.

Capital Allowances

Writing down allowances for assets that do not qualify for full expensing will be reduced again from April 2027.  The main rate writing-down allowance will be reduced from 14% to 12% from April 2027 and the new 40% first-year allowance introduced from 1 January 2026 will be increased to 50% from 1 January 2027.

The Annual Investment Allowance will continue to offer 100% first-year relief for plant and machinery investments up to £1m for all businesses, including unincorporated ones.

Writing down allowances will remain flexible, allowing businesses to choose which allowances to claim for main and special rate machinery.

From 1 January 2026 a new First-Year Allowance of 40% for main-rate assets was introduced, and this will be increased to 50% from 1 January 2027. The relief will apply to certain assets beyond the current availability of full expensing and the AIA. This will enable the leasing sector, which is currently excluded, to now be eligible for first year allowances. Cars, second-hand assets and assets for leasing overseas will not be eligible.

From 1 April 2027 for corporation tax and 6 April for Income Tax, main rate writing-down allowances will reduce from 14% to 12%.

Research & Development (R&D) claims

From 1 April 2027 the R&D Claim Notification Form (CNF) requirement will be removed for claims made on or after that date. This removes the challenging requirement for a business to make a pre-notification to HMRC that it intends to make an R&D tax relief claim.

In addition, from autumn 2027, HMRC will rationalise the Additional Information Form (AIF) that companies must submit to HMRC in support of an R&D tax relief claim. The improvements will include reducing unnecessary duplication, improving the information requested on contracting and on externally provided workers, and providing greater clarity on project information requirements and the Enhanced R&D Intensive Support intensity ratio.

Support for the high street and hospitality sector

Small Business Rates Relief thresholds for Retail, Hospitality and Leisure (RHL) – The government is increasing the SBRR eligibility thresholds for qualifying RHL properties in England from 1 April 2027. The threshold for 100% relief will increase to a rateable value of £18,000, and the threshold for tapered relief will increase to a rateable value of £21,000. These thresholds will provide ongoing support to qualifying properties, with their level kept under review alongside the 2029 revaluation.

The government will extend the existing Transitional Relief Supplement in England for a further two years. This 1p supplement only affects properties that have seen smaller increases or reductions in their business rates bills and will help fund the two-year real-terms freeze for qualifying RHL properties.

SDLT

From 1 May 2026, Stamp Duty Land Tax (SDLT) no longer applies to the rent element of assured tenancies, and tenants are no longer required to file SDLT returns solely because rent is payable under an assured tenancy.

Employers and pensions

Employers and HR

National Living Wage increases from April 2027.

On 1 April 2027, the National Living Wage will increase by 3.9% to £13.21 per hour for those aged 21 and over; the National Minimum Wage will increase by 3.9% to £11.27 per hour for 18 to 20-year-olds and by 3.9% to £8.31 per hour for 16 to 17-year-olds and eligible apprentices; and the accommodation offset will rise by 3.9% to £11.53 per day.

There will be stricter enforcement through the new Fair Work Agency.

Most business owners we work with want to do the right thing, but this Budget will make the next two years more expensive and far less forgiving for employers.

PLANNING NOTE: If you are concerned about the impact of this change on your employee costs, please call asap so we can budget for the change and consider your options.

PLANNING NOTE: Get good HR advice to protect your business.

Restriction to pension salary sacrifice benefits

As announced in the previous Budget, from April 2029 the amount of employee pension contributions made through salary sacrifice that is exempt from National Insurance contributions (NICs) will be capped at £2,000 per year.

Employees who contribute up to £2,000 into their pension each year via salary sacrifice can continue to benefit in full, but employee and employer NICs will be charged in the usual way on the amount above £2,000.

The government also confirmed that employees who use salary sacrifice to access Tax-Free Childcare or Child Benefit can continue to do so, but any pension contributions above the £2,000 cap will now be subject to NICs.

PLANNING NOTE: High earning individuals should begin planning pension contributions for the 2026 to 2027 year now, particularly where they use sacrifice to manage tax bands.

Vehicles and travel

Approved Mileage rates

The government is permanently increasing tax-free mileage rates for employees and self-employed people who use their own car or van for work. The tax-free, per mile rate will be 55p for the first 10,000 miles (from April 2026) and 35p per mile (from April 2027) for mileage above 10,000 miles.

PLANNING NOTE: Review your business mileage claims and reimbursement rates so that qualifying journeys benefit from the increased tax-free rates.

Company Car Tax

As previously announced, the government set company car tax rates (benefits-in-kind) for tax year 2030/31, with further details to be published.

Appropriate percentages for zero emission and electric vehicles will increase by 1% rising to an appropriate percentage of 10% in tax year 2030/31.

Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 20% in tax year 2030/31.

Appropriate percentages for all other vehicle bands will increase by 1% for 2030/31. This will be to a maximum appropriate percentage of 40% for tax year 2030/31.

PLANNING NOTE: Before committing to a company car, ask us to calculate the tax cost over the full ownership or lease period, including the announced future increases.

Electric car and charging equipment allowances

Budget 2025 extended the 100% first year allowances (FYA) for qualifying expenditure on zero emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle (EV) charge points until 31 March 2027 for corporation tax purposes, and 5 April 2027 for income tax purposes. This has not been extended in the Budget 2026 and the 100% FYA rate will end on the above dates.

PLANNING NOTE: If you plan to buy a qualifying electric car or install charging equipment, speak to us about the timing before the 100% first-year allowances expire.

Mileage based tax for electric vehicles

Electric vehicles and plug in hybrids will face a new per mile levy from April 2028. This is intended to replace some of the fuel duty revenue that has been lost as petrol and diesel vehicles decline. Electric vehicle running costs will rise and the long term cost difference between electric and petrol or diesel cars will narrow. The levy is 3p for wholly-electric vehicles and 1.5p for hybrids.

Fuel Duty

The government will extend the temporary 5p fuel duty cut for a further six months.

VAT and invoicing

VAT Thresholds

There have been no announcements to the VAT thresholds and registration/deregistration limits.

VAT online marketplace liability (OMPL)

Subject to the rules being finalised, from October 2027, VAT OMPL rules will be extended to UK businesses. Online marketplaces will be responsible for collecting VAT on sales by UK VAT-registered businesses and any other UK business with a minimum annual sales threshold per platform of £90,000. The rules will not apply to non-business (i.e. personal) sales, second-hand goods, or business-to-business transactions.

Reverse charge

From April 2027, the VAT reverse charge for B2B supplies of services from overseas will be restricted to cases where the receiving UK business is VAT registered. Where the UK business is not VAT registered, the overseas supplier will be required to charge and account for UK VAT. The government will introduce legislation in Finance Bill 2026–27 to implement this change.

E-invoicing

The government will require VAT invoices to be issued in a specified electronic format from 1 April 2029. The government has published an implementation roadmap, which sets out the key elements of the e-invoicing regime, and by April 2028 will provide full details on the policy and technical design of e-invoicing. The government has also published a consultation on potential future uses of structured invoice data generated through e-invoicing.

Tax administration, payments and compliance

MTD Making Tax Digital

Making Tax Digital (MTD) for Income Tax will be extended to sole traders and landlords with income over £20,000 from April 2028. This expands the rollout of MTD for Income Tax, which is April 2026 for sole traders and landlords with income over £50,000 and April 2027 for those with income over £30,000.

Taxpayers joining MTD for income tax in April 2027 will not receive penalty points for late submission of their first four quarterly updates for the tax year 2027-28.

PLANNING NOTE: A key element of MTD ITSA is converting accounting records into a digital format that can “talk” to government servers. As we approach the April 2027 deadline, it is imperative that affected traders and landlords have converted to the use of MTD approved software. If you are an affected sole trader or landlord and you have not yet converted your record keeping to an approved format, please get in touch. We can help you choose an appropriate software product and assist with training. If required we can also organise bookkeeping for you.

More timely payment for self-assessment

From April 2029, the government will require Income Tax Self Assessment (ITSA) taxpayers who are liable to make Payments on Account to pay more of their tax payments in year, through direct debit by default. Those who also have PAYE income may be able to elect for payments to be settled via PAYE.

HMRC has said it will release a new web and app functionality for ITSA taxpayers to estimate their liability, make voluntary payments towards it and track how their payments are covering their forecasted tax liability. The budget documents say this functionality will become available in 2028, supporting taxpayers to proactively make pre-payments and prepare for the transition to the new arrangements from April 2029.

The government has indicated an intention to “design arrangements that reflect the realities of self-employment, responding to the concerns raised through the consultation. This includes considering the appropriate frequency of payments, how taxpayers can update forecasts when their income changes, and what safeguards and flexibilities may be needed for taxpayers experiencing cashflow difficulties”.

Further detail will be published next year on:

• the frequency and timing of in-year payments
• the safeguards and flexibilities needed for taxpayers facing financial difficulty
• approach to compliance, including penalties and interest
• communications and support for customers
• detail on how the transition to the new arrangements will work

PLANNING NOTE: Speak to us about our daily bookkeeping service to ensure you have confidence in your numbers.

Payment of VAT and PAYE liabilities by direct debit

From April 2029, businesses will be required to set up a Direct Debit instruction for HMRC VAT and PAYE return payments unless exempt. However, HMRC have stated that the DD mandate will only be used as a safeguard to collect any return liability which remains unpaid at the due date; businesses will retain the flexibility in how they pay before the due date.

HMRC has indicated that it will work with stakeholders and use the time before the change is introduced to address concerns around misallocations, system errors and compatibility with the direct debit process.

PLANNING NOTE: Check that your VAT and PAYE balances agree with HMRC’s records and resolve discrepancies before automatic collection begins. Speak to us about our daily bookkeeping service to ensure you have confidence in your numbers.

Close company reporting

Following consultation on company payments to participators, the government will not implement the proposed new reporting requirements at this time.

The proposed additional reporting requirements would see close companies being required to provide HMRC with details of transactions between the company and its participators. This could include cash withdrawals, loans, debts, dividends, other distributions, and transfers of assets to and from the company.

Investing in additional HMRC compliance staff

The government will recruit an additional 670 HMRC compliance officers, building on previous commitments to recruit 5,500 additional compliance officers, by 2029-30.

PLANNING NOTE: If you are concerned about the risk of an HMRC tax enquiry, please talk to us about our Tax Investigations Service.

We can help

This latest government announcement means that now is the time to ensure you have a tight grip on your numbers and a clear financial plan. 

Please call if you need more information on any of the announcements made, or to learn more about how Steven Burton & Co can help you to better understand your business finances & tax affairs.

Source:

You can read the full UK Autumn budget on the GOV website

All of the above comments are made prior to seeing the draft legislation that will enact the various changes. The large government majority in Parliament will probably mean that the changes will go ahead as planned.  However, readers are advised to take professional advice before making any changes to their personal or business affairs based on the above commentary.

Get in touch with us to find out more here

Finally ……

This material has been prepared for informational guidance purposes only.  Whilst every effort has been made to ensure the contents are accurate, information contained may not be comprehensive.  Furthermore, it is not intended to provide, and should not be relied on for, tax or accounting advice.  Steven Burton & Co Limited can not accept any liability for any errors or omission or for any person acting on or refraining from acting on the information provided.  Steven Burton & Co Limited are not financial advisors.