Chancellor John Healey presented his first Autumn Budget on 28th October 2026 against a challenging economic backdrop, with continued pressure on the public finances and speculation in the weeks leading up to his statement.
Much of the discussion beforehand centered on how the Government would balance its spending priorities with its commitment to fiscal discipline, and whether further changes to the tax system would be required. For individuals and businesses alike, the key question was therefore not only what measures would be announced, but who would be affected and when the changes would take effect.
In this Budget Summary, we set out the key tax and accounting announcements, together with a reminder of previously announced measures coming into force. Most importantly, we consider the practical implications for you and your business, and highlight areas where action or further planning may be appropriate.
Employers
Increase in National Minimum Wage/National Living Wage
It was announced from 1st April 2027, the National Living Wage and National Minimum Wage rates will rise. The hourly rates announced by the Treasury are:
- National Living Wage, age 21 and over: £13.21 per hour. (+3.9%)
- National Minimum Wage, age 18 to 20: £11.27 per hour. (+3.9%)
- National Minimum Wage, age 16 to 17: £8.31 per hour. (+3.9%)
- Eligible apprentice rate: £8.31 per hour. (+3.9%)
Planning point: The increased wage rates will result in some employers (especially those with mainly part-time employees) breaching the Employer NIC threshold. We would remind you that you will likely be able to claim the Employment Allowance, which exempts most employers from the first £10,500 of Employer NIC per tax year.
Planning point: Review staffing budgets and pricing before April 2027 to ensure profit margins can be maintained. Businesses should also check that any salary sacrifice arrangement does not reduce pay below the applicable minimum wage.
Higher business mileage rates for employees and the self-employed
As announced earlier in the year, tax-free and tax-deductible car and van rate for the first 10,000 business miles increased from 45p to 55p from 6th April 2026. It has now been confirmed that the rate for business mileage above 10,000 miles rises from 25p to 35p from 6th April 2027 for Approved Mileage Allowance Payments and self-employed simplified mileage deductions
Planning point: Employers should review mileage reimbursement policies. Sole traders using eligible mileage-based deductions should review their records and claims, and ensure they keep a business mileage log and distinguish qualifying business journeys from ordinary commuting.
Confirmation of Benefits in Kind on company cars and vans
It was announced that company car Benefit in Kind (BIK) percentages for 2030-31 will rise by one percentage point above the 2029-30 rates across all vehicle bands. The zero-emission rate will rise from 9% to 10%; the rate for cars emitting 1-50g CO2/km will rise from 19% to 20%; other rates will rise by one percentage point, subject to a 40% maximum.
The van benefit charge and car and van fuel benefit charges will rise with the Consumer Price Index (CPI) from 6th April 2027.
As previously announced a mileage-based Electric Vehicle Excise Duty for electric and plug-in hybrid cars is due from April 2028. The Treasury has announced work on mileage estimation, optional connected-vehicle reporting and refunds, with further fleet guidance expected. This charge is separate from the business mileage deduction above.
Planning point: The appropriate percentage is applied to the car’s list price when new to work out the BIK. The employee pays income tax and the employer pays Class 1A NIC on this amount. This will often differ from the actual price paid for the car, so care should be taken when completing P11Ds or indeed taxing through the payroll.
Mandatory payrolling of benefits — phased introduction
It has been confirmed that employers will be required to report payroll benefits and taxable expenses through Real Time Information. Company cars and vans, car and van fuel, and medical benefits are brought in from 6th April 2027. Other benefits in kind follow from 6 April 2028, except employment-related loans and employer-provided living accommodation. Legislation is planned in Finance Bill 2026-27.
Planning point: Review employee benefits now to confirm which phase applies and check software readiness, responsibilities and employee communications before April 2027. Do not assume that all benefits move on the same date or that outstanding reporting for earlier years disappears.
Reminder of increased National Insurance for salary sacrifice schemes
As previously announced, from 6th April 2029, only the first £2,000 per employee per tax year of pension contributions made through salary sacrifice will remain exempt from employer and employee National Insurance. The excess will attract Class 1 NIC. Income Tax relief on pension contributions remains subject to the usual limits. Employers will report sacrificed amounts through payroll.
Planning point: This does not impact salary sacrifice schemes used for alternative qualifying measures, such as electric cars and buying extra holiday.
Planning point: This only impacts pension contributions made under a salary sacrifice agreement. Employer pension contributions made outside of such an agreement would not be affected. For example, if you decide to make a director’s pension contribution, this would be unaffected. Please seek advice in advance of making contributions to ensure contributions attract corporation tax relief.
Other Business announcements
Changes to Capital Allowances
It was announced the main rate First Year Allowance (FYA) increases from 40% to 50% for qualifying expenditure incurred on or after 1st January 2027. The change applies for both Corporation Tax and Income Tax.
The main rate annual writing down allowance reduces from 14% to 12%, effective from 1st April 2027 for Corporation Tax and 6th April 2027 for Income Tax. This slows the rate of relief on main pool expenditure not relieved upfront. It is a further reduction, following the earlier reduction from 18% to 14%.
The Annual Investment Allowance remains £1 million for a 12-month accounting period and gives a 100% deduction for qualifying plant and machinery. It is available to companies, sole traders and partnerships consisting entirely of individuals, subject to the applicable restrictions. The Treasury also maintains full expensing for qualifying company investment.
Full expensing is available only to companies for qualifying new and unused plant and machinery. The £1 million limit is the AIA limit, not a full expensing limit. Many smaller businesses can continue to obtain upfront relief through AIA, so the new FYA rate will not necessarily change the deduction for every equipment purchase.
Planning point: Review how AIA is allocated, especially where special rate expenditure is involved or companies share an allowance. Consider private use, losses and future asset disposals as well as the initial deduction.
Planning point: Where qualifying expenditure would otherwise rely on the main rate FYA, compare purchase timing before and after 1st January 2027. Consider whether to defer essential investment: AIA or full expensing may already give full relief.
Trading Allowance increases to £3,000
From 6th April 2027, the annual Trading Allowance increases from £1,000 to £3,000. This also confirms that the trading income reporting threshold for Self-Assessment rises to £3,000. Where the allowance covers all relevant trading and miscellaneous income before expenses and the qualifying rules are met, individuals choosing the relief will not have to declare or pay tax on that income. This does not remove a requirement to file a return for other reasons, and is not an allowance for company profits or employment income.
Planning point: Keep records even for small-scale trading and review whether the allowance or actual deductible expenses gives the better result. Do not treat the allowance as an automatic extra deduction on top of all your business expenses; check the qualifying rules and reporting position with us. If you have more than one trade, the allowance can only be claimed once.
Parental Allowance for eligible self-employed parents
It was confirmed that, from April 2029, a Parental Allowance will extend parental pay to eligible self-employed fathers, partners and adopters. It will also cover certain recently employed or unemployed people, and those with irregular employment who do not qualify for statutory paternity or adoption pay, provided they have sufficient work and earnings history.
Planning point: Self-employed clients planning a family should monitor the detailed eligibility, payment amounts, duration and application rules as they are published. Retain work and earnings records and plan for any reduction in business income.
Young Entrepreneurs Allowance — England pilot
The government will pilot a Young Entrepreneurs Allowance in England, providing successful applicants with support towards living costs during the first year of their business. The entrepreneurship prospectus says the pilot will begin shortly, but neither it nor the Budget report specifies a launch date, age range, payment amount or detailed eligibility conditions.
Planning point: This may help new business owners, but it is a pilot rather than a universal allowance. Do not include an assumed payment in a startup budget until eligibility and an award are confirmed. We will monitor the scheme details as they become available.
EMI and EMI2 (formerly CSOP) changes — employee share options
From 6th April 2027, The Company Share Option Plan (CSOP) will be known as Enterprise Management Incentives 2 (EMI2). Its individual option limit increases from £60,000 to £120,000 and the exercise period extends from 10 to 15 years. The existing combined EMI/CSOP limit will be removed: the entrepreneurship prospectus states that eligible employees can hold up to £250,000 of EMI options and up to £120,000 of EMI2 options under the respective scheme rules.
EMI2 is intended for growing companies that have moved beyond EMI or are not eligible for it.
From 6th April 2027, the EMI exercise window following a disqualifying event extends from 90 to 180 days. The EMI exception for Employee Ownership Trusts will extend to companies arranging to become EOT-controlled. The period for certain employee shares and options reserved by third parties to be excepted from disguised remuneration rules extends to 15 years.
Planning point: Review eligibility, valuations, option agreements and reporting requirements before granting or amending options. The larger EMI2 limit may assist recruitment and retention, but tax advantages depend on satisfying the detailed scheme rules.
Business rates support for retail, hospitality and leisure
The Chancellor announced from 1st April 2027, the Small Business Rates Relief thresholds for qualifying retail, hospitality and leisure properties in England will increase. The rateable value threshold for 100% relief rises from £12,000 to £18,000, and the upper threshold for tapered relief rises from £15,000 to £21,000. These are property rateable value thresholds, not cash grants or turnover limits; they do not apply to every small business.
Relief for qualifying pubs, social clubs and live music venues in England increases from 15% to 35% from 1st April 2027. The increased rate excludes the largest live music venues with a rateable value of £1 million or more.
Planning point: Check your property’s rateable value, qualifying use and council bill rather than assuming relief is automatic. Build the expected rates position into cash-flow forecasts, alongside higher wage costs.
R&D tax relief administration
The requirement for the R&D Claim Notification Form will be removed from 1st April 2027 and the Additional Information Form simplified from autumn 2027. This reduces administration; it does not remove the need to establish that expenditure qualifies or keep supporting evidence.
Planning point: Innovative SMEs should review claim processes with us before assuming a form is no longer required.
Changes to VAT reverse charge
The government is closing a loophole that currently allows overseas businesses to supply services to some UK businesses without accounting for UK VAT. The change is intended to ensure that overseas firms are subject to the same VAT treatment as UK businesses.
Planning point: UK businesses that are not VAT-registered should review their use of overseas service providers, as VAT charged on affected services may increase their costs where it cannot be recovered. Compare the total cost of overseas and UK providers, and check which services are affected and when the changes take effect before making purchasing decisions.
Personal tax and other announcements
Dividend, property and savings income — Additional increase in tax rates
The Chancellor announced from 6th April 2027, property and savings income tax rates will rise by a further two percentage points on top of the two-point increase already announced in 2025 Autumn Budget. This further rise is not an increase in the dividend rates.
This means from 6th April 2027, the property income basic, higher and additional rates will be 24%, 44% and 49% respectively. Savings income rates will also be 24%, 44% and 49%, applying across the UK.
Previously announced dividend changes are already in force from 6th April 2026: the basic dividend rate is 10.75%, the higher rate 35.75% and the additional rate 39.35%.
The Budget retains the £20,000 cash ISA limit, rather than reducing it to £12,000 as previously proposed.
Planning point: Review rental profit and taxable interest forecasts for 2027-28, including the impact on tax and payments on account.
Planning point: Review legitimate ownership and income arrangements across the family, but do not assume that redirecting a payment changes who is taxed. Any share transfer, property ownership change or arrangement involving children requires advice on the relevant tax, legal and anti-avoidance rules.
Planning point: Consider ISA use as part of your wider savings plan, taking account of investment suitability and the tax consequences of moving assets.
Capital Gains Tax (CGT) – Changes to Business Asset Disposal Relief
The lifetime limit for gains qualifying for Business Asset Disposal Relief (BADR) reduces from £1 million to £500,000 for disposals made from 6th April 2027. The qualifying BADR rate remains 18%, the rate applying from 6th April 2026. This is a lifetime gains limit, not an annual allowance or a limit on sale proceeds.
Planning point: Business owners considering a sale, succession or cessation should review eligibility and previous BADR claims before 6th April 2027. Special provisions are expected for contracts entered into before that date but not completed, and certain incomplete share reorganisations and securities exchanges. Signing a contract before April does not automatically secure the old £1 million limit. Obtain advice on the detailed provisions before accelerating or restructuring a disposal.
New Founders’ Relief — detailed eligibility under consultation
From 6th April 2027, Founders’ Relief is intended to provide a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders and early investors who have made a significant long-term contribution to the creation and development of high-growth, innovative UK companies. The technical consultation closes on 30th November 2026, with legislation to follow through amendments to the Finance Bill 2026-27. At the time of writing, the proposed eligibility criteria may require the company to have generated turnover of £10 million in the accounting period preceding the disposal.
Planning point: The prospectus describes encouraging founders to scale and reinvest, but does not establish a mandatory reinvestment condition. Founders and early investors should monitor the consultation process and obtain advice before assuming relief applies to their sale.
Pension Tax Allowance from April 2027
From 6th April 2027 until 5th April 2030, the Pension Tax Allowance is intended to remove the burden of small Income Tax bills for eligible pensioners with total income at or below the full new State Pension.
Its value is calculated at 20% of the difference between the full new State Pension and the Personal Allowance, and it is withdrawn by £1 for every £3 of income above the full new State Pension level. Eligibility should be assessed using total income, not just State Pension receipts.
Planning point: Retired clients should check total pension, savings and other income before assuming that no tax is due. We can help review how the allowance interacts with their wider tax position once implementation details are available.
Inheritance Tax – No major changes
There were no major changes to Inheritance Tax measures already introduced. The Finance Act 2026 already confirmed that most unused pension assets will come within IHT from 6th April 2027.
The Treasury announced changes to deductions for liabilities in trust arrangements, effective for deaths and other chargeable events from 28th October 2026; affected trustees should take specialist advice.
Planning point: Review pension nominations, wills and retirement cash-flow needs before April 2027, ensuring personal representatives can locate all pension schemes. Do not automatically withdraw a pension or give away a lump sum to reduce IHT: consider Income Tax, investment suitability, access to funds and your own financial security.
Self-Assessment payments on account — more frequent payments from April 2029
The Chancellor announced from April 2029, Income Tax Self-Assessment taxpayers who make payments on account will make more regular in-year payments towards their final tax bill, instead of the current two payments on account due by 31st January and 31st July.
This is particularly relevant to sole traders, partners and other clients within the payments on account system. Detailed payment frequency, calculations, eligibility for the PAYE option and transition arrangements remain to be developed with taxpayers and stakeholders.
Planning point: Maintain timely records, update profit and tax forecasts during the year, and set aside funds regularly. Continue to meet existing payment deadlines until the replacement rules take effect.
HMRC compliance, debt collection and bank recovery powers
HMRC will recruit an additional 670 compliance officers by 2029-30, building on earlier commitments for 5,500 additional officers. A further £70 million over five years will be invested in existing partnerships with private sector debt collection agencies. Businesses should expect continued emphasis on accurate returns and timely payment.
From July 2029, as specified in the Budget report, a new power is planned to allow HMRC to recover lower-value tax debts in regular instalments directly from the bank accounts of individuals and companies who can afford to pay but repeatedly fail to do so.
Implementation expected in 2029-30 following legislation in a future Finance Bill. It is not an immediate blanket power to remove funds from every taxpayer’s account.
Planning point: Do not ignore HMRC correspondence. If a liability is disputed or you cannot pay, contact us promptly so the tax position and available payment arrangements can be considered.
Planning point: You can protect yourself and your business from the cost of defending yourself from HMRC enquiries by subscribing to our tax investigation service. The cost for businesses starts at just £215 + VAT per annum. Please get in touch with your usual contact at CRM if you would like to find out more about this service.
