Chancellor John Healey delivered his first Budget on 28 October 2026. At first glance it was a quiet one: no rises to the headline rates of income tax, National Insurance, VAT or corporation tax. But look past the headlines and there are significant changes for business owners planning an exit, landlords, savers and employers. Most take effect from April 2027, which gives a valuable but limited window to plan.
Here is our summary of what was announced, based on the Budget and HMRC’s Overview of Tax Legislation and Rates.
The economic backdrop
The Office for Budget Responsibility has nudged UK growth up to 1.2% for 2026, with 1.0% forecast for 2027 and 1.6% for 2028. However, higher debt interest costs have reduced the Chancellor’s headroom against his fiscal rules from £23.6bn to £15bn in 2029-30.
That is a thin cushion. We would not assume this Budget is the last word on tax for this Parliament.
Personal tax
Income tax and National Insurance. Rates are unchanged and thresholds remain frozen, with National Insurance thresholds held until 2030-31. Dividend tax rates are also unchanged.
Savings and property income. From 6 April 2027, the rates on savings income will be 24%, 44% and 49% for basic, higher and additional rate taxpayers. That is two points higher than the rates already legislated. The same rates will apply to property income in England, Wales and Northern Ireland. For landlords and those with significant savings, this is the most important change in the Budget.
Trading allowance. The trading allowance triples from £1,000 to £3,000 from 6 April 2027, and the Self Assessment reporting threshold for trading income rises to match. This is good news for people with small side businesses.
ISAs. The cash ISA limit stays at £20,000 for all adults. A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029.
Mileage. The approved mileage rate for business miles above 10,000 a year rises from 25p to 35p from 6 April 2027.
For business owners
Business Asset Disposal Relief. The lifetime limit halves from £1m to £500,000 for disposals on or after 6 April 2027. There are special rules for contracts entered into before that date. If you are planning to sell all or part of your business, the timing of the disposal now deserves careful thought.
Founders’ Relief. A new relief will give qualifying founders of high-growth, innovative companies a lower rate of capital gains tax on disposals from 6 April 2027. The Chancellor announced a 10% rate on up to £10m of lifetime gains. HMRC’s consultation on the detail closes on 30 November 2026, and the qualifying conditions will be key.
Capital gains tax. The main rates are unchanged at 18% and 24%.
Share options. The Company Share Option Plan (CSOP) is being relaunched as “EMI2” from 28 October 2026, though it keeps its CSOP name in legislation. From 6 April 2027, the EMI2 limit per employee doubles from £60,000 to £120,000, and options can be exercised with tax advantages for up to 15 years (currently 10). The EMI exercise window following a disqualifying event is also extended to 180 days. For companies that have outgrown EMI, this makes tax-advantaged share options far more useful.
Corporation tax. The 25% main rate and 19% small profits rate are maintained, including for the year beginning 1 April 2028.
Capital allowances. The main-rate first-year allowance rises from 40% to 50% for expenditure from 1 January 2027. At the same time, the main-rate writing-down allowance falls to 12% from April 2027. Businesses planning significant capital expenditure should consider timing carefully.
Bank surcharge. The surcharge on bank profits rises from 3% to 6% between 1 January 2027 and 31 March 2028. Lenders may become more selective, so businesses planning to borrow may wish to arrange facilities early.
For employers
Payrolling benefits in kind. Payrolling becomes mandatory from 6 April 2027 for company cars, vans, fuel and medical benefits, and for most other benefits from April 2028. Employers should check that their payroll software and processes are ready.
Sponsored workers. Employer-paid Immigration Skills Charges and Certificate of Sponsorship fees are exempt from tax from 28 October 2026.
National Minimum Wage. The National Living Wage and National Minimum Wage rise by 3.9% from April 2027.
VAT, business rates and duties
Business rates. In England, the Small Business Rate Relief threshold for retail, hospitality and leisure rises from £12,000 to £18,000 from April 2027. Around 70,000 businesses will pay no business rates at all.
Private hire. Larger private hire operators will charge VAT on their full fares from 2 January 2028. The turnover threshold will be consulted on, with £50m the lead option.
Social housing. Sales of land to registered housing associations will be zero-rated for VAT from 1 April 2027.
Energy and fuel. The 0% VAT rate on household electricity and the 5p cut in fuel duty both continue until 30 June 2027. Fuel duty then returns to pre-2022 levels, uprated by RPI from 1 July 2027.
Making Tax Digital. Those joining MTD for Income Tax in April 2027 will not receive late-submission penalty points for quarterly updates in 2027-28.
Looking further ahead
Some changes announced will take longer to arrive but are worth knowing about now. From April 2029, Self Assessment taxpayers who make payments on account will move to more regular in-year payments, Direct Debit will become mandatory for VAT and PAYE, and e-invoicing changes will take effect.
What you should do now
- Planning a sale? Consider whether completing before 6 April 2027 would preserve the £1m BADR limit.
- Running a growing company? Keep an eye on the Founders’ Relief conditions once they are confirmed.
- A landlord or saver? Review how your property and savings are held before April 2027.
- Rewarding key staff? Compare EMI with the enlarged EMI2 (CSOP) limit.
- Buying equipment? Plan the timing of capital expenditure around the 50% first-year allowance.
- An employer? Prepare your payroll for mandatory payrolling of benefits.
Talk to us
Every situation is different, and the detail of many of these measures will be confirmed in the Finance Bill. We are sharing our full Budget briefing with our clients, and we will post further updates here as more detail is published.
To discuss how the Budget affects you, contact your usual LMJ Group adviser, call 0330 390 5959, or get in touch through our website.
Frequently asked questions
What happens to Business Asset Disposal Relief after Budget 2026?
The lifetime limit halves from £1 million to £500,000 for disposals on or after 6 April 2027. The 18% rate is unchanged. There are special rules for contracts entered into before that date.
What are the new tax rates on property and savings income?
From 6 April 2027, property income in England, Wales and Northern Ireland, and savings income across the UK, will be taxed at 24% (basic rate), 44% (higher rate) and 49% (additional rate) — two points higher than the rates previously legislated.
What is Founders’ Relief?
A new capital gains tax relief for qualifying founders of high-growth, innovative companies, with a 10% rate on up to £10 million of lifetime gains for disposals from 6 April 2027. HMRC’s consultation on the detail closes on 30 November 2026.
What is EMI2?
EMI2 is the new name for the Company Share Option Plan (CSOP) from 28 October 2026. From 6 April 2027 the limit per employee doubles to £120,000, and options can be exercised with tax advantages for up to 15 years.
When does payrolling benefits in kind become mandatory?
From 6 April 2027 for company cars, vans, fuel and medical benefits, and from April 2028 for most other benefits.
This article is based on announcements made in Budget 2026 and HMRC’s Overview of Tax Legislation and Rates published on 28 October 2026. It is for general information only and does not constitute advice. Legislation may change during the Finance Bill’s passage through Parliament.