The Autumn 2026 Budget Breakdown

Chancellor John Healey delivered his first Budget on Wednesday 28 October 2026. The government says the Budget "rejects broad-based tax rises" and that 84% of taxpayers will see no increase in their tax bill. Practitioners will find the detail less simple than that. Income from savings and property is targeted again. The lifetime limit for Business Asset Disposal Relief (BADR) is halved. Alongside the headlines, HMRC has published a long list of consultation responses that will change how clients pay, file and correct their tax over the next three years.

Here's everything you need to know:

Income Tax and National Insurance

The main Income Tax rates, bands and the £12,570 Personal Allowance stay unchanged for 2027-28. Dividend rates also stay at 10.75%, 35.75% and 39.35%, and the Dividend Allowance remains £500. Employee and employer NICs rates don't change, and the Employment Allowance stays at £10,500.

The NICs limits that do move are uprated by the September CPI figure of 3.5%:

• The Lower Earnings Limit rises to £133 a week.
• The Class 2 Small Profits Threshold rises to £7,355.
• Voluntary Class 2 rises to £3.80 a week and Class 3 to £19.05 a week.

All other NICs limits and thresholds stay frozen at 2026-27 levels until 2030-31, so fiscal drag continues to do much of the work.

There's a new Pension Tax Allowance for 2027-28 to 2029-30. It's aimed at pensioners whose total income is no more than the full new State Pension. It's worth 20% of the gap between the State Pension and the Personal Allowance, and it's withdrawn at £1 for every £3 of income above that level. The amount is small, but it should take around 290,000 pensioners out of Income Tax altogether and stop Simple Assessment being used to collect trivial sums.

Savings and property income

From 6 April 2027, savings income will be taxed at 24%, 44% and 49%, two points higher than the rates legislated last year. Property income gets the same separate rates of 24%, 44% and 49% in England, Wales and Northern Ireland. Scotland and Wales will set their own property rates under their devolved powers. The £5,000 starting rate for savings and the Personal Savings Allowance of £1,000 and £500 don't change.

Practices that have already modelled landlord clients' 2027-28 position at last year's rates should re-run the numbers. For portfolio landlords, the gap between holding property personally and holding it through a company has widened again. Expect more incorporation questions, with all the SDLT, CGT and finance cost points that come with them.

Small businesses and the trading allowance

The trading allowance triples from £1,000 to £3,000 from 6 April 2027. The Self Assessment reporting threshold for trading income rises to match. This helps side hustlers and people just starting out, and it should keep some very small earners out of Self Assessment altogether.

Capital Gains Tax: Founders' Relief arrives, BADR shrinks

CGT rates stay at 18% and 24%, and the annual exempt amount remains £3,000.

BADR. The lifetime limit falls from £1 million to £500,000 for disposals on or after 6 April 2027. The BADR rate stays at 18%. Transitional rules cover uncompleted contracts and certain share reorganisations made before that date. The government says BADR "does not help business owners establish or grow their business". It estimates that about three-quarters of claimants will still get relief on their whole gain. Clients planning to sell in the next 18 months need to know about this change now.

Founders' Relief. This new relief gives a 10% CGT rate on up to £10 million of lifetime gains, for disposals on or after 6 April 2027. The bar is high. Under the technical consultation:

• The individual must have held at least 25% of the ordinary share capital when trading began.
• They must have held the shares for at least five years and been UK resident for five continuous tax years.
• The company needs turnover of at least £10 million and at least 15 qualifying full-time employees.
• The company must also pass two of three tests: 25% compound turnover growth, 25% compound headcount growth, or at least £1.5 million of R&D spend on which relief was claimed.
• Claims go through Self Assessment, and individuals get a statutory right to request supporting information from the company.
• The £10 million limit is reduced by any BADR or Investors' Relief claimed from 6 April 2027.

Most owner-managed businesses won't qualify. For the fast-growing few that do, the relief is valuable. The consultation closes on 30 November 2026.

Other CGT measures:

• UK property disposal returns. Late filing penalties will stop accruing once the disposal is reported on a Self Assessment return. This is a sensible fix that HMRC has long been asked for.
• Holdover relief. The restriction formula for gift holdover relief is modernised from April 2027.
• Surrender of rights. Capital sums received for giving up rights under a contract are brought expressly within CGT.

Companies and owner-managed businesses

The Corporation Tax main rate stays at 25% and the small profits rate at 19% for the financial year starting 1 April 2028. The Bank Surcharge temporarily doubles to 6% from 1 January 2027 to 31 March 2028.

Capital allowances change again:

• The main rate first-year allowance rises to 50% for expenditure on or after 1 January 2027.
• The main rate writing-down allowance falls to 12% from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.

Year-end planning around timing of expenditure now matters more.

Distributions framework. The government is going ahead with all seven proposals from its consultation, with changes to the design. They're intended to apply from April 2028, after a technical consultation on draft legislation in 2027. For owner-managed companies, the important points are:

• The purchase of own shares rules will replace the subjective "trade benefit" test with mechanical conditions. The government says family succession will still be supported, and the two-year employment requirement will be relaxed.
• The Transactions in Securities rules will be reformed and may be brought into self-assessment.
• New priority rules will decide whether amounts such as unlawful dividends fall under the loans to participators rules or the distributions rules.
• Repayments of capital on share reorganisations by unlisted companies will be limited to the capital originally subscribed.
• A new charge will apply to individuals who receive loans from non-UK resident companies that would be close companies if UK resident.

Participator reporting dropped. HMRC won't introduce new reporting requirements for transactions between close companies and their participators "at this time". It accepts that the smallest companies are already struggling with their existing obligations.

R&D. The Claim Notification Form requirement is removed for claims made on or after 1 April 2027, and the Additional Information Form will be simplified from autumn 2027.

Employment taxes and expenses

• Payrolling benefits in kind. Mandatory payrolling is now phased. Company cars, vans, fuel and medical benefits move into payroll from 6 April 2027. Most other benefits follow from 6 April 2028. Employment-related loans and living accommodation stay outside the rules for now. Employers and payroll bureaux should check their software's readiness for April 2027.
• Mileage rates. The Approved Mileage Allowance Payment rate and the simplified expenses rate for business miles above 10,000 rise from 25p to 35p a mile from 6 April 2027. The NICs disregard rises to match.
• Benchmark scale rates. From April 2028, domestic subsistence rates rise to £20 for journeys over 5 hours, £60 over 10 hours and £75 over 24 hours. That's well above the current £5, £10 and £25. Overseas rates are simplified into tiers.
• Expenses claims. The £2,500 Self Assessment threshold for employment expenses claims goes from April 2028, so more claims will go through PAYE with evidence checks.
• Share schemes. The CSOP individual option limit doubles to £120,000, and the interaction between the EMI and CSOP limits is removed. The CSOP exercise period extends to 15 years. From April 2027, the separate notification for EMI grants is replaced by reporting in the annual return.
• Image rights. The new employment income treatment of image rights payments is delayed to 6 April 2028.
• Company car tax. Appropriate percentages for 2030-31 onwards rise by one point a year, up to a 40% maximum.

Pensions, Inheritance Tax and Child Benefit

The IHT nil-rate band (£325,000) and residence nil-rate band (£175,000) don't change. From 28 October 2026, a new statutory rule limits deductions for liabilities in trust arrangements. There are also technical amendments to the inclusion of pensions in IHT from April 2027, including a route for personal representatives to direct pension scheme administrators to pay IHT.

On pensions:

• The "two-year rule" that could make death benefits taxable when paid late is removed for payments from 28 October 2026.
• Lump sums above the Lump Sum and Death Benefit Allowance will be taxed at each beneficiary's marginal rate, with retrospective effect to April 2024.
• Defined benefit schemes will be able to pay surplus directly to members from April 2027.

Child Benefit overpayments can now be offset against any High Income Child Benefit Charge paid on the same overpayment. This applies retrospectively to January 2013, which helps families who were caught out.

Savings products

• The £20,000 cash ISA limit is kept for savers aged 18 and over. The planned reduction won't go ahead.
• The Lifetime ISA withdrawal charge for purchases above the £450,000 property price cap falls from 25% to 20% from 29 October 2026.
• A new First Time Buyer ISA, with a 25% government bonus, will replace the Lifetime ISA for new savers from April 2029.

VAT

• Domestic electricity. The temporary zero rate is extended to 30 June 2027.
• Online marketplaces. From October 2027, marketplaces must account for VAT on sales by all UK VAT-registered sellers, and by unregistered UK sellers whose sales on a single platform exceed £90,000. Business-to-business sales, personal sales and second-hand goods are excluded. Clients who sell through marketplaces should expect changes to their returns and cash flow. HMRC guidance will follow, and how the Flat Rate Scheme fits in is still to be decided.
• Reverse charge on overseas services. From April 2027, the reverse charge will apply only where the UK customer is VAT registered. Overseas suppliers will charge UK VAT to unregistered businesses. Smaller clients that buy services from overseas should watch the detail on how this interacts with the registration threshold.
• Private hire operators. Larger operators must charge VAT on the full fare from January 2028. A £50 million fare turnover threshold is the lead option.
• Other changes. Supplies by medical deputies become standard-rated from 1 May 2027. Electricity from public EV charge points is standard-rated from 1 November 2026. Sales of land to housing associations get a new zero rate from April 2027.
• Thresholds. The registration threshold stays at £90,000 and the deregistration threshold at £88,000.

Making Tax Digital and tax administration

Much of the Budget's long-term impact on practices is in this section.

• MTD for Income Tax. Those joining in April 2027 won't get late submission penalty points on their 2027-28 quarterly updates. Updates are still required before the return is filed. Qualifying carers, non-resident entertainers and sportspeople, and expected non-residents are exempt until further notice.
• Timely payments in Self Assessment. From April 2029, everyone who makes payments on account will make more regular, automated in-year payments. The plan to force PAYE collection is dropped, and taxpayers with enough PAYE income can opt in to it instead. Payment frequency hasn't been decided, and HMRC will release estimating and voluntary payment tools from 2028.
• Direct Debit backstop. From April 2029, VAT and PAYE payers must have a Direct Debit mandate in place. They can still pay by other methods, but HMRC will collect anything unpaid at the due date. Exemptions haven't been decided yet.
• Recovering lower-value debts. HMRC will be able to recover debts directly from bank accounts by regular deductions where taxpayers persistently fail to engage. This applies to debts up to £5,000 for individuals and £10,000 for companies. There's a minimum 28-day notice period. Rollout starts with companies in 2029 and individuals in 2030.
• Correcting errors. From 1 April 2028, taxpayers will have a general obligation to correct inaccuracies once they identify them. HMRC can issue "Customer Correction Notices" where it suspects an error.
• Corporation Tax returns. Online filing of amended company tax returns becomes mandatory from 1 April 2028, a year later than proposed. Prescribed CT computations will follow on a longer timetable, with a consultation in early 2027. HMRC is also asking for views on modernising Corporation Tax administration more widely.
• E-invoicing. From 1 April 2029, VAT-registered businesses must issue VAT invoices as structured e-invoices over the Peppol network. PDFs won't count. Detailed requirements are due between October 2027 and April 2028.
• Compliance powers. HMRC's information powers are modernised and extended to cryptoasset service providers. Its powers to publish details of deliberate defaulters are expanded. A registration regime for software providers is being developed.

Property

• High Value Council Tax Surcharge. The surcharge on homes in England worth £2 million or more starts in 2028. The legal owner is liable. Lower-income households can defer payment until the property changes hands, and properties will be revalued every five years.
• Letting agent reporting. A new HMRC consultation proposes that letting agents and tenancy deposit schemes report landlord data monthly or quarterly, with no de minimis threshold. Practices should expect HMRC's data on landlord clients to improve sharply. It closes on 20 January 2027.
• Stamp Duty Land Tax. SDLT residential rates don't change.

Motoring

• Fuel duty. The 5p cut is extended to 30 June 2027, and the RPI increase is deferred to 1 July 2027.
• Electric Vehicle Excise Duty. This starts on 1 April 2028 at 3p a mile for battery electric vehicles and 1.5p for plug-in hybrids.
• Vehicle Excise Duty. Rates rise with RPI from April 2027.

Consultation and response deadlines

• 30 November 2026: Founders' Relief technical consultation closes.
• 20 January 2027:
  • Letting agent property income reporting consultation closes
  • Call for evidence on modernising Corporation Tax administration closes
  • E-invoicing digital reporting consultation closes
• 31 January 2027: Travel services (TOMS) call for evidence closes.
• 2027: Technical consultation on draft distributions legislation.

Final thoughts for practitioners

This Budget doesn't have one big headline for most clients. Instead it makes many smaller changes that together reshape the next three years. The immediate priorities are:

• BADR planning for clients considering a sale
• Revised 2027-28 projections for savers and landlords
• Payrolling readiness for April 2027

Beyond that, 2028 and 2029 bring:

• Distributions reform
• The obligation to correct errors
• Online filing of amended CT returns
• More regular Self Assessment payments
• The Direct Debit backstop
• E-invoicing

Practices that review engagement letters, fees and client communications now will be better placed than those that wait for the deadlines. Clients will increasingly expect their accountant to have told them already.

This analysis is based on Budget announcements made on 28 October 2026 and supporting HMRC and HM Treasury publications. Specific details may change as draft legislation progresses through Parliament. Accountants should check the primary sources before advising clients on technical matters.