Autumn Budget 2026: The Key Tax Changes

Chancellor John Healey delivered the Autumn Budget 2026 on Wednesday 28 October, his first since taking office.

There were no rises to the headline rates of income tax, National Insurance or VAT. However, several changes will affect business owners, landlords, savers, employers and the self-employed.

Most of these changes start in April 2027. That gives you time to plan, as long as you know what is coming.

Below, we break down the key Autumn Budget 2026 changes in a clear, practical way, with worked examples to show the real financial effect.

Our summary is based on the Budget documents published on 28 October 2026. Many measures still need to pass through Parliament, and some are under consultation, so the detail may change. We will update this article as more information becomes available.

Area	Change	From
Business Asset Disposal Relief	Lifetime limit halved to £500,000	6 April 2027
Founders’ Relief	New 10% CGT rate on up to £10 million of gains	6 April 2027
Savings and property income	Further 2 percentage point rise, to 24%, 44% and 49%	6 April 2027
Capital allowances	First-year allowance rises to 50%; writing-down allowance falls to 12%	January and April 2027
Making Tax Digital	Extends to qualifying income over £30,000, with no penalty points in year one	6 April 2027
Trading allowance	Tripled from £1,000 to £3,000	6 April 2027
Mileage rates	55p made permanent; 35p above 10,000 miles	6 April 2027
Minimum wage	National Living Wage rises to £13.21 an hour	1 April 2027
Income tax thresholds	Remain frozen	Until April 2031
Cash ISA	Planned cut to £12,000 scrapped	April 2027
First Time Buyer ISA	New account replaces the Lifetime ISA for new savers	April 2029
Fuel duty	5p cut extended	Until 30 June 2027

1. Autumn Budget 2026: What Business Owners and Directors Need to Know

The Autumn Budget 2026 brings mixed news for owner-managed businesses. Selling a business becomes more expensive, a new relief arrives for a small group of founders, and tax relief on some equipment slows down.

a. Business Asset Disposal Relief Is Being Halved

Business Asset Disposal Relief (BADR) reduces Capital Gains Tax to 18% on qualifying gains when you sell all or part of your business, or shares in your trading company. For disposals on or after 6 April 2027, the lifetime limit falls from £1 million to £500,000. The 18% rate itself does not change.

Example: £1 million qualifying gain on the sale of a company

Description	Sale before 6 April 2027	Sale on or after 6 April 2027	Difference
Gain taxed at 18% (BADR)	£1,000,000	£500,000	–£500,000
Gain taxed at 24%	£0	£500,000	+£500,000
Total Capital Gains Tax	£180,000	£210,000	+£30,000

Assumption: higher-rate taxpayer with the full lifetime limit available; annual exempt amount and costs of sale ignored.

What this means for you: the most BADR can save you over your lifetime halves. Special rules apply where a contract is signed before 6 April 2027 but completes afterwards, so both timing and how the deal is documented matter.

Recommendation: if you are considering a sale in the next 18 months, speak to us before terms are agreed. Find out more about our support with business disposals.

b. A New Founders’ Relief

From 6 April 2027, a new Founders’ Relief will charge Capital Gains Tax at 10% on up to £10 million of lifetime gains. It is aimed at founders and early investors in high-growth, innovative companies.

The conditions are still under consultation until 30 November 2026. Under the current proposals, you would broadly need to have:

• held at least 25% of the ordinary shares when the company started trading (or preparing to trade)
• owned the shares for at least five years before the sale
• been UK resident for at least five continuous tax years before the sale.

What this means for you: Founders’ Relief is expected to suit a relatively narrow group. In addition, any BADR or Investors’ Relief you have already claimed reduces the £10 million limit. For most owner-managers, BADR will remain the relevant relief.

c. Capital Allowances: More Upfront Relief, Slower Relief on the Rest

Two changes pull in opposite directions:

• First-year allowance: rises from 40% to 50% for new main rate plant and machinery bought on or after 1 January 2027. Second-hand assets and cars do not qualify.
• Writing-down allowance: the main rate falls from 14% to 12% from 1 April 2027 for companies and 6 April 2027 for sole traders and partnerships. It also applies to balances already in your pool.

Full expensing for companies and the £1 million Annual Investment Allowance continue unchanged.

Example: £100,000 balance in the main capital allowances pool

Description	Writing-down allowance at 14%	Writing-down allowance at 12%	Difference
Allowance for the year	£14,000	£12,000	–£2,000
Corporation Tax saved at 25%	£3,500	£3,000	–£500

Assumption: company paying the 25% main rate; first year after the change only. The relief moves to later years rather than being lost.

What this means for you: for most smaller businesses, the Annual Investment Allowance still covers equipment spending in full. As a result, the main effect falls on cars, second-hand assets and existing pool balances.

Recommendation: if you plan a significant purchase around the turn of the year, check how its timing affects your relief.

d. Taking Profits Out of Your Company

The government is pressing ahead with plans to modernise how company distributions and repayments of capital are taxed. The aim is to stop complex arrangements that extract profits at lower tax rates, while protecting genuine commercial deals and family succession. Draft legislation is due in 2027, and the changes take effect from April 2028.

On a more positive note, proposed new reporting rules for company payments to shareholders and directors, such as directors’ loan accounts, will not go ahead for now. Corporation Tax also stays at 25% for the main rate and 19% for the small profits rate.

2. Autumn Budget 2026: What the Self-Employed and Landlords Need to Know

a. Making Tax Digital: Next Phase Confirmed

Making Tax Digital (MTD) for Income Tax began on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. Qualifying income means your combined turnover from self-employment and property, before expenses.

The Autumn Budget 2026 confirms that the next phase goes ahead. From 6 April 2027, MTD extends to qualifying income over £30,000, based on your 2025-26 tax return. The threshold is then due to fall to £20,000 from April 2028.

The Budget also announced two changes:

• No penalty points in year one: if you join in April 2027, HMRC will not apply late-submission penalty points to your quarterly updates for 2027-28. You must still send all four updates before you can file your tax return.
• Some groups exempt: people eligible for qualifying care relief (such as foster carers), non-UK resident entertainers and sportspeople, and expected non-residents are exempt until further notice.

What this means for you: if your qualifying income for 2025-26 was over £30,000, you need compatible software and digital records in place by 6 April 2027. Our guide to Making Tax Digital quarterly reporting explains what you will send to HMRC.

b. Trading Allowance Tripled to £3,000

From 6 April 2027, the trading allowance rises from £1,000 to £3,000. If your gross income from trading and certain miscellaneous sources is £3,000 or less, you will not need to declare it or pay tax on it. The Self Assessment reporting threshold for trading income also rises to £3,000.

For example, someone earning £2,400 a year from a small online craft business currently has to report that income. From 2027-28, the allowance would cover it.

What this means for you: this helps people with small side incomes. The separate £1,000 property allowance is not changing.

c. Savings and Property Income: A Further 2% Rise

Last year’s Budget had already set savings and property income tax rates to rise by two percentage points from April 2027. This Budget adds a further two points on top.

Taxpayer	2026-27	Previously planned for 2027-28	Now confirmed for 2027-28
Basic rate	20%	22%	24%
Higher rate	40%	42%	44%
Additional rate	45%	47%	49%

The savings rates apply across the UK. The property rates apply in England, Wales and Northern Ireland, and the Scottish and Welsh governments can set their own. Tax relief on landlords’ mortgage interest and other finance costs will follow the property basic rate, rising to 24%.

Example: £12,000 rental profit

Description	2026-27	2027-28	Difference
Tax rate	20%	24%	+4 points
Tax due	£2,400	£2,880	+£480

Assumption: basic-rate taxpayer; fully taxable rental profit after allowable expenses; no finance costs.

Dividend tax rates stay at 10.75%, 35.75% and 39.35%. Property held in a limited company pays Corporation Tax, so these rates do not apply to the company’s rental profits.

What this means for you: landlords and savers with larger portfolios will feel this most. Now is a good time to review how your properties and savings are held. Find out more about our support for landlords.

3. Autumn Budget 2026: What Employers Need to Know

a. Approved Mileage Rates: Higher Rates Made Permanent

The temporary rise to 55p a mile for the first 10,000 business miles, introduced in May 2026 and backdated to 6 April 2026, is now permanent. From 6 April 2027, the rate above 10,000 miles also rises from 25p to 35p. The same rates apply to the simplified mileage rates used by the self-employed.

Vehicle	2026-27	From 6 April 2027
Cars and vans, first 10,000 business miles	55p	55p
Cars and vans, above 10,000 business miles	25p	35p
Motorcycles	24p	24p
Bicycles	20p	20p

The 5p passenger rate is unchanged.

Example: employee driving 15,000 business miles a year in their own car

Description	2026-27	2027-28	Difference
First 10,000 miles at 55p	£5,500	£5,500	–
Next 5,000 miles	£1,250 (at 25p)	£1,750 (at 35p)	+£500
Maximum tax-free payment	£6,750	£7,250	+£500

Recommendation: update your expenses policy and payroll settings before April 2027.

b. Minimum Wage Rises From 1 April 2027

All rates rise by 3.9%. The government estimates the new National Living Wage is worth £910 a year more to a full-time worker.

Age group	Now	From 1 April 2027
21 and over (National Living Wage)	£12.71	£13.21
18 to 20	£10.85	£11.27
16 and 17	£8.00	£8.31
Apprentices	£8.00	£8.31

c. Benefits in Kind Move Into Payroll

From 6 April 2027, employers must report and tax company cars, vans, car and van fuel, and medical benefits through payroll in real time, rather than on annual P11D forms. Most other benefits follow from 6 April 2028, except employment-related loans and employer-provided accommodation.

What this means for you: if you provide these benefits, check now that your payroll software and processes are ready. Our payroll services can help you prepare.

d. Other Changes for Employers

• Employee share schemes: from 6 April 2027, the Company Share Option Plan (CSOP) individual limit rises to £120,000. The window to exercise EMI options after a disqualifying event also extends to 180 days.
• Subsistence rates: from 6 April 2028, the benchmark rates for reimbursing travel subsistence without receipts become £20 (over 5 hours), £60 (over 10 hours) and £75 (over 24 hours).
• Direct Debit: from April 2029, businesses will need a Direct Debit in place for VAT and PAYE liabilities, with some exceptions.
• National Insurance: most thresholds stay frozen until 2030-31.

4. Autumn Budget 2026: What Individuals and Families Need to Know

a. Income Tax Thresholds Stay Frozen

The Autumn Budget 2026 leaves income tax rates and thresholds unchanged. In England, Wales and Northern Ireland, the Personal Allowance stays at £12,570, higher rate tax starts at £50,270 and additional rate tax at £125,140.

These thresholds remain frozen until April 2031, as announced last year. As earnings rise, more income is pulled into higher tax bands. Scottish income tax rates will be set in the Scottish Budget on 3 December 2026.

b. The Cash ISA Cut Is Scrapped

The planned cut to the cash ISA limit from April 2027 will not go ahead. Savers aged 18 and over can continue to put up to £20,000 a year into a cash ISA. The government will also explore a new incentive for people investing in a stocks and shares ISA for the first time.

In addition, from 29 October 2026 the Lifetime ISA withdrawal charge falls from 25% to 20% when the money buys a first home costing more than the £450,000 cap.

c. A New First Time Buyer ISA From April 2029

A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029. It will add a 25% government bonus to the final balance, capped at £20,000 and paid on withdrawal, towards a first home worth up to £450,000.

Existing Lifetime ISA holders can keep using their accounts under the current rules. Legislation is still to follow, so the detail may change.

d. Pension Tax Allowance for Lower-Income Pensioners

From 6 April 2027, people over State Pension age whose total income is no more than the full new State Pension will pay no income tax. The new Pension Tax Allowance is worth up to about £94 a year and tapers away above that income level.

It applies for three tax years, from 2027-28 to 2029-30. In practice, it mainly removes small tax bills that HMRC would otherwise collect from pensioners.

e. Fuel Duty Cut Extended to June 2027

The temporary 5p a litre cut in fuel duty is extended until 30 June 2027, and the planned inflation increase is deferred. On 1 July 2027, however, fuel duty returns to its pre-2022 level and rises with inflation at the same time.

f. Inheritance Tax on Pensions: A Reminder

From 6 April 2027, most unused pension funds and pension death benefits will count towards your estate for inheritance tax. This is already law. The Budget made technical changes to how the tax can be paid, but the main change is going ahead.

What this means for you: if you have significant pension savings, review your estate plans and nominated beneficiaries. Find out more about our inheritance tax and estate planning services.

g. Help With Energy Bills

The 0% VAT rate on household electricity is extended to 30 June 2027. In 2027, households in council tax bands A to D in England will also receive a one-off £100 Household Energy Payment, with funding for similar support elsewhere in the UK.

Also Worth Knowing From the Autumn Budget 2026

• Self Assessment payments: from April 2029, people who make payments on account will pay smaller amounts more regularly through the year instead of two lump sums. They will also be able to pay through PAYE.
• Employment expenses: from April 2028, employees will no longer need to file a tax return just because they claim more than £2,500 in work expenses. Instead, they can claim through PAYE.
• Medical deputising services: from 1 May 2027, the VAT exemption for supplying a deputy for a registered medical practitioner will be removed. Deputising services that mainly provide medical care stay exempt. Nichols Medical supports doctors and medical practices with questions like this.
• Online marketplaces: from October 2027, platforms will collect VAT on many sales that UK businesses make through them.
• E-invoicing: VAT invoices will need to be issued and received electronically from April 2029. Our VAT compliance and planning team can help you prepare.
• High value homes: the High Value Council Tax Surcharge on homes worth £2 million or more in England starts in April 2028, as announced last year.
• Business rates: retail, hospitality and leisure properties in England will see bills frozen in real terms, reduced or removed, and more small businesses will pay no business rates at all.

Our Final Thoughts

The Autumn Budget 2026 avoided rises in the headline tax rates. Even so, it continues the shift in tax towards savings, rental income and the sale of businesses, while slowing relief on some business investment.

Because most changes start in April 2027, there is a window to act. In particular, it is worth reviewing any planned business sale, your readiness for Making Tax Digital, how your rental and savings income is held, and your payroll arrangements.

Nichols & Co will keep monitoring developments and will update this article as the detail is confirmed. To talk through how the Budget affects you, please contact us or find out more about our tax compliance and planning services.

This article summarises announcements made in the Budget on 28 October 2026 and is for general information only. Many measures are subject to consultation and parliamentary approval and may change. It is not advice on your individual circumstances, so please speak to us before acting. Source: HMRC Budget 2026 overview of tax legislation and rates.