Autumn Budget 2026: what it means for your business and your tax
05/11/2026
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Chancellor John Healey delivered the Autumn Budget 2026 on 28 October 2026. The main rates of Income Tax, National Insurance, VAT and Corporation Tax are unchanged, but a series of changes, most of them from April 2027, will affect landlords, savers, employers and business owners. Most of these measures still need to be passed by Parliament, so some details could change.
The biggest changes are higher tax on property and savings income, a £3,000 trading allowance, new capital allowance rates, a lower limit for Business Asset Disposal Relief and a higher National Living Wage. This guide explains each Autumn Budget change, when it starts and who it affects, with worked examples. HMRC’s overview of tax legislation and rates has the full detail.
Autumn Budget 2026 at a glance
What stays the same: Income Tax and National Insurance rates, Corporation Tax at 25% and 19%, dividend tax rates, and VAT at 20% with a £90,000 registration threshold.
| Date | Change | Who it affects |
|---|---|---|
| 29 October 2026 | Lifetime ISA charge falls to 20% for homes over £450,000 | First-time buyers |
| 1 January 2027 | First-year allowance rises to 50% | Businesses buying equipment |
| 1 April 2027 | National Living Wage rises to £13.21 an hour | Employers |
| 1 April 2027 | Writing-down allowance falls to 12% for companies | Limited companies |
| 6 April 2027 | Property and savings income tax rises to 24%, 44% and 49% | Landlords and savers |
| 6 April 2027 | Trading allowance rises to £3,000 | Sole traders and side income |
| 6 April 2027 | Business Asset Disposal Relief limit falls to £500,000 | Business owners planning a sale |
| 6 April 2027 | Car, van, fuel and medical benefits taxed through payroll | Employers |
| 6 April 2027 | Mileage rate above 10,000 miles rises to 35p | Employees and the self-employed |
| October 2027 | Online marketplaces collect VAT for UK sellers | Online sellers |
| April 2029 | Electronic VAT invoices and more regular Self Assessment payments | VAT-registered businesses and Self Assessment taxpayers |
Watch out: the Personal Allowance and Income Tax thresholds stay frozen until 2030/31, so any pay rise can push more of your income into a higher tax band.
Autumn Budget changes for employers
National Living Wage and minimum wage
The Autumn Budget confirmed a 3.9% rise in the National Living Wage, to £13.21 an hour from 1 April 2027, with similar rises for younger workers and apprentices.
| Age or category | Current rate | From 1 April 2027 |
|---|---|---|
| 21 and over (National Living Wage) | £12.71 | £13.21 |
| 18 to 20 | £10.85 | £11.27 |
| Under 18 and apprentices | £8.00 | £8.31 |
For example, staff paid £12.71 an hour must be paid at least £13.21 from 1 April 2027. The apprentice rate applies to apprentices under 19, and to those aged 19 or over in the first year of their apprenticeship.
Benefits in kind through payroll
The Autumn Budget confirmed that from 6 April 2027, employers must report and tax company cars, vans, fuel and medical benefits through payroll, using Real Time Information. Most other benefits follow from 6 April 2028, except employment-related loans and employer-provided accommodation.
For example, a company car benefit of £6,000 a year is reported as £500 a month through payroll. The tax is then collected through PAYE, rather than through a P11D after the year ends.
Company car and van benefits
The fixed benefit charges for fuel and vans rise from 6 April 2027, in line with inflation.
| Benefit | 2026/27 | 2027/28 |
|---|---|---|
| Car fuel benefit multiplier | £29,200 | £30,200 |
| Van benefit charge | £4,170 | £4,310 |
| Van fuel benefit charge | £798 | £825 |
For example, an employee with a company van for private use, plus private fuel, has a taxable benefit of £5,135 (£4,310 + £825) in 2027/28. At 20% Income Tax, that is £1,027 a year.
Mileage allowance
The Autumn Budget made the 55p rate for the first 10,000 business miles permanent; it has applied since 6 April 2026. From 6 April 2027, the rate above 10,000 miles rises from 25p to 35p. Both rates apply to employees’ mileage payments and to the simplified mileage rate for the self-employed.
| Business mileage | Calculation | Allowance |
|---|---|---|
| First 10,000 miles | 10,000 × £0.55 | £5,500 |
| Next 5,000 miles | 5,000 × £0.35 | £1,750 |
| Total for 15,000 miles | £7,250 |
At 2026/27 rates, the same 15,000 miles would give £6,750, so the employee could receive £500 more tax-free, as long as the employer pays the full approved rates.
Personal tax changes in the Autumn Budget
Income Tax rates are unchanged, and the £12,570 Personal Allowance and tax thresholds stay frozen until 2030/31. Dividend tax rates are also unchanged at 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate). Our guide to salary vs dividends explains how directors can take money out of their company.
National Insurance thresholds
From 6 April 2027, the Lower Earnings Limit rises from £6,708 to £6,916 a year (£133 a week), and the Class 2 Small Profits Threshold rises from £7,105 to £7,355.
Trading allowance rises to £3,000
For people with side income, the Autumn Budget raises the trading allowance from £1,000 to £3,000 from 6 April 2027. The Self Assessment reporting threshold for trading income rises with it.
For example, if you earn £2,500 from freelancing and the £3,000 allowance covers it, your taxable trading profit is £0. No tax is due, and you may not need to file a tax return unless you need one for another reason. Our Self Assessment tax return guide explains when you need to file.
Property income tax
Under the Autumn Budget, from 6 April 2027 property income in England, Wales and Northern Ireland is taxed at 24% (basic rate), 44% (higher rate) and 49% (additional rate). That is four percentage points more than in 2026/27.
For example, a landlord with £20,000 of taxable rental profit, all in the basic rate band, would pay £4,800 at 24%, compared with £4,000 at 20%: £800 more.
Savings income tax
From 6 April 2027, taxable savings income is taxed at 24%, 44% and 49% across the UK, after any allowances and reliefs.
For example, a higher-rate taxpayer with £5,000 of taxable savings interest would pay £2,200 at 44%, compared with £2,000 at 40%: £200 more.
Autumn Budget changes for companies
The Autumn Budget keeps Corporation Tax at 25% for the main rate and 19% for the small profits rate. The main changes are to capital allowances, R&D claims and share schemes. Fusion Accountants can check how they affect your plans.
Writing-down allowance falls to 12%
The main pool writing-down allowance falls from 14% to 12%, from 1 April 2027 for Corporation Tax and from 6 April 2027 for sole traders and partnerships. Accounting periods that span these dates may need a transitional calculation.
For example, a company with a main pool balance of £100,000 and no additions or disposals would claim £14,000 at 14%, but £12,000 at 12%: £2,000 less tax relief that year.
First-year allowance rises to 50%
From 1 January 2027, the main rate first-year allowance rises from 40% to 50% for qualifying new plant and machinery. It doesn’t cover cars or second-hand assets.
For example, a business buying qualifying machinery for £100,000 would get a £50,000 deduction in the first year, up from £40,000, with the rest relieved in later years. Our guide to full expensing explains how capital allowances work for companies.
R&D tax relief
The Claim Notification Form is no longer needed for R&D claims made on or after 1 April 2027. From autumn 2027, HMRC will also simplify the Additional Information Form that supports a claim.
Employee share schemes
From 6 April 2027:
- CSOP: the maximum option value per employee rises from £60,000 to £120,000, the exercise period rises from 10 to 15 years, and CSOP and EMI limits no longer count against each other;
- EMI: employees get 180 days instead of 90 to exercise options after a disqualifying event, new grants are reported through the annual Employment Related Securities return, and some companies moving to Employee Ownership Trust control become eligible.
For example, options worth £100,000 couldn’t fully qualify under the old £60,000 CSOP limit, but could under the new £120,000 limit. Our guide to share options for staff explains how EMI works.
Foreign branches and amended returns
For accounting periods beginning on or after 1 January 2027, the foreign branch exemption becomes mandatory for qualifying UK companies. Profits from a qualifying overseas branch will generally be exempt from UK Corporation Tax, and branch losses will generally not be deductible against UK profits. From 1 April 2028, amended Company Tax Returns must be filed online.
Savings, pensions and Capital Gains Tax
The Autumn Budget also changes several savings, pension and Capital Gains Tax rules.
| Measure | What changes | From |
|---|---|---|
| Cash ISA | Annual limit stays at £20,000 for all savers aged 18 and over | April 2027 |
| Lifetime ISA | Withdrawal charge falls from 25% to 20% for first homes over the £450,000 price cap | 29 October 2026 |
| Pension Tax Allowance | Income Tax reduction for pensioners whose income is no more than the full new State Pension | 6 April 2027 to 5 April 2030 |
| Pension death benefits | The two-year rule is removed | 28 October 2026 |
| Business Asset Disposal Relief | Lifetime limit falls from £1 million to £500,000; qualifying gains are taxed at 18% | 6 April 2027 |
| Founders’ Relief | New 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains | 6 April 2027, subject to consultation |
The Budget also announced a new First Time Buyer ISA, which will replace the Lifetime ISA for new savers from April 2029. Existing Lifetime ISA holders can carry on under the current rules.
Some examples:
- Lifetime ISA: a first-time buyer withdrawing £20,000 to buy a £475,000 home would pay a £4,000 charge at 20% and keep £16,000, compared with £15,000 at 25%.
- Pension Tax Allowance: for 2027/28, the full new State Pension is £13,036.40 a year (£250.70 a week). A pensioner whose only income is the full new State Pension would otherwise owe £93.28 in Income Tax (20% of the £466.40 above the Personal Allowance); the allowance cancels it in full. It is withdrawn at £1 for every £3 of income above the full new State Pension.
- Business Asset Disposal Relief: an owner selling qualifying shares with a £700,000 gain would pay 18% on £500,000 (£90,000), and the remaining £200,000 would be taxed at the normal Capital Gains Tax rates.
- Founders’ Relief: a qualifying founder with a £2 million gain would pay £200,000 if the whole gain qualifies for the 10% rate. The £10 million limit is reduced by any Business Asset Disposal Relief claimed from 6 April 2027, and the consultation on the detailed rules closes on 30 November 2026.
VAT
The Autumn Budget leaves VAT rates and thresholds unchanged: the standard rate stays at 20%, the reduced rate at 5%, the registration threshold at £90,000 and the deregistration threshold at £88,000.
| Measure | What changes | From |
|---|---|---|
| Overseas services | The reverse charge applies only if the UK business receiving the service is VAT-registered; otherwise the overseas supplier charges UK VAT | April 2027 |
| Online marketplaces | Platforms collect VAT on sales by UK VAT-registered sellers and other UK sellers with £90,000 or more of sales a year per platform | October 2027 |
| Domestic electricity | Temporary 0% VAT continues for qualifying household supplies | Until 30 June 2027 |
| Electronic invoicing | VAT invoices must be issued and received electronically | April 2029 |
For example, a UK business that isn’t VAT-registered and buys £5,000 of consultancy from an overseas supplier would be charged £1,000 of VAT by the supplier, making the invoice £6,000. The marketplace rules don’t cover personal sales, second-hand goods or business-to-business sales.
Making Tax Digital, Self Assessment and other changes
If you must join Making Tax Digital for Income Tax from April 2027, you won’t get late-submission penalty points for your 2027/28 quarterly updates. You still need to send them before you can file your tax return. Some groups are exempt until further notice, including people eligible for qualifying care relief and certain non-UK resident taxpayers. Our guide to Making Tax Digital for landlords explains the quarterly updates.
The Autumn Budget also announced some longer-term changes:
- from April 2028, employees can claim employment expenses over £2,500 through PAYE, without filing a tax return just for that claim;
- from April 2029, Self Assessment taxpayers who make payments on account will pay more regularly during the year, with payments collected automatically and an option to pay through PAYE;
- from April 2029, businesses must set up a Direct Debit for VAT and PAYE liabilities, with some exceptions.
The temporary 5p-per-litre fuel duty cut is extended to 30 June 2027. From 1 July 2027, rates return to their pre-2022 level and rise with the Retail Prices Index.
Not sure how the Autumn Budget affects you? Contact our team and we can talk you through it.
Plan ahead for the Autumn Budget changes
Most Autumn Budget changes start in April 2027, so there is time to plan, whether that means reviewing rental and savings income, timing equipment purchases or updating payroll. Our tax advisory team can help you work out what the changes mean for you and your business.
This article provides general information only and is not personalised tax, accounting or legal advice. Requirements depend on your circumstances, so take professional advice before acting.
Fusion Accountants is a firm of ICAEW Chartered Accountants helping UK businesses and individuals plan for tax changes. Book a free consultation with Fusion Accountants to talk through your plans for 2027.
