The Chancellor has delivered this year’s Budget, and it touches on everything from Self Assessment and wages to business rates and share schemes. Here is our summary of the announcements most likely to affect you, grouped by theme. Some proposals remain subject to consultation, as noted below.
Personal tax and Self Assessment
Self Assessment payments to be spread through the year. From April 2029, Self Assessment taxpayers, will make smaller, more regular contributions instead of the current Payments on Account due on 31 January and 31 July. The aim is to make budgeting easier and reduce problem tax debts and we understand that this will actually accelerate tax payments impacting on taxpayers cashflow
Property and savings income taxed more heavily. Tax on property and savings income will rise by a further 2% from April 2027, on top of the 2% already announced - a total of 4% above existing rates. For taxpayers other than Scottish taxpayers, the basic, higher and additional rates on property rental income will become 24%, 44% and 49%. These same rates will apply to savings income for all UK taxpayers.
Trading allowance triples. From 6 April 2027 the trading allowance rises from £1,000 to £3,000. If your self-employment income is below £3,000 a year, you will not need to register with HMRC or pay tax on it at all. Above that level you still register, but you then deduct either the £3,000 allowance or your actual business expenses and capital allowances - never both.
Higher mileage rates. The business mileage rate for the first 10,000 business miles per tax year rose from 45p to 55p from 6 April 2026, and that increase has now been made permanent. From 6 April 2027, the rate for business miles driven beyond 10,000 per tax year rises from 25p to 35p, applying to both employees and the self-employed.
Support for self-employed parents. Around 150,000 self-employed fathers, partners and adopters will qualify for state support for the first time from April 2029 - two weeks of parental allowance worth up to £194 a week. Until now only employees in those roles could claim it. The new rules cover Great Britain, but not Northern Ireland.
Fuel duty frozen. Fuel duty stays frozen until 1 July 2027, along with the temporary 5p cut that was introduced in 2022 and has been extended ever since.
Payroll & VAT
Pay rises for the lowest paid. Both the National Living Wage (for workers aged 21 and over) and the National Minimum Wage (for those aged 18 to 20) will increase by 3.9%. The Living Wage goes from £12.71 to £13.21 an hour, and the Minimum Wage from £10.85 to £11.27 — a slightly-above-inflation increase benefiting around 2.3 million people.
Direct Debit instructions will be required for VAT and PAYE. From April 2029, businesses with VAT or PAYE liabilities will have to hold a Direct Debit instruction in place. Paying by another method before the deadline is still fine — the instruction simply allows HMRC to collect any balance left unpaid.
Business taxes and investment
Bigger first-year allowances, smaller writing-down allowances. The first-year allowance increases from 40% to 50% for qualifying expenditure incurred on or after 1 January 2027. For the vast majority of our clients will have no impact as they already enjoy access to the Annual Investment Allowance, which gives 100% relief on most plant & machinery expenditure up to £1 million per year. In the opposite direction, the main pool writing-down allowance falls from 14% to 12% — effective from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.
Capital gains tax changes for owners and founders. Two measures take effect from 6 April 2027. First, a new Founders’ Relief will apply a reduced 10% CGT rate to up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies, though the eligibility criteria are still to be decided. Second, the lifetime limit for Business Asset Disposal Relief will be halved, from £1 million to £500,000.
Changes proposed for company profit withdrawals. Separately from the Budget, the government has published proposals to revise the tax treatment of distributions and repayments of capital, with implementation expected from April 2028. They aim to limit opportunities to withdraw accumulated company profits under CGT rules where dividend income tax would otherwise apply.
Individuals and Families
Eligible households in council tax bands A to D in England will receive a £100 energy payment from January 2027.
The VAT reduction on domestic electricity has been extended until July 2027, alongside changes to household energy charges.
The planned reduction in the annual cash ISA allowance has been abandoned, with the allowance remaining at £20,000.
The Government has announced a new first-time buyer ISA to replace the Lifetime ISA.
High street and business rates
Business rates support for the high street. Pubs, social clubs and most live music venues in England are due an extra 20% relief from 1 April 2027. The Prime Minister outlined that measure in July; the Budget adds further support for retail, hospitality and leisure businesses.
More businesses qualify for Small Business Rates Relief. In England, from April 2027 the threshold for 100% relief rises from £12,000 to £18,000 for qualifying retail, hospitality and leisure businesses, and the threshold for tapered relief rises from £15,000 to £21,000.
Rates bills frozen. Retail, hospitality and leisure businesses in England that do not qualify for Small Business Rates Relief will have their business rates bills frozen from April 2027 to April 2029. Vape shops and adult game shops are excluded from the freeze.
More rates money kept locally. The government intends local authorities to keep a growing share of business rates, with the ambition of 100% retained locally by 2030.
Employee share schemes
CSOP expanded and renamed EMI2. The Company Share Option Plan limit for individual employees doubles from £60,000 to £120,000 of options, and the exercise window extends from 10 to 15 years. CSOP will no longer interact with the Enterprise Management Incentives (EMI) option limit, so eligible employees can receive the full amount under both schemes. The scheme is being renamed EMI2, reflecting its intended use by growing companies that have moved beyond EMI or are not eligible for it.
HMRC enforcement
More compliance officers. HMRC will recruit an additional 670 compliance officers by 2029/30, on top of the previously announced commitment to recruit 5,500 more by the same date. The result should be a marked increase in HMRC’s capacity to pursue non-compliance and recover unpaid tax.
Disclaimer: The information contained in this newsletter is for general information purposes only and is based on our understanding of the Budget 2026 announcements at the time of publication. Tax legislation, rates and allowances may be subject to change, and the measures announced may require further legislation or clarification. The information should not be relied upon as a substitute for tailored professional advice. Please contact us to discuss how the Budget announcements may affect your individual circumstances or business.