The Chancellor has delivered the 2026 Budget, with a mixture of changes affecting businesses, employers, the self-employed, landlords and individuals.
As ever with a Budget, there are plenty of headlines. But the important question is:
What does it actually mean for you?
Some changes take effect relatively soon. Others won’t arrive until 2028 or 2029. And some of the announcements are still subject to consultation and further detail.
We’ve worked through the main announcements and picked out the changes we think are most relevant to our clients.
Running a limited company? The main things to know
There were no further increases to the main rates of Corporation Tax.
The main Corporation Tax rate remains at 25%, with the 19% small profits rate and marginal relief continuing under the existing rules.
For many owner-managed companies, however, some of the more important announcements concern what happens when you invest in equipment or eventually sell your business.
Business Asset Disposal Relief is being reduced
This is potentially one of the most significant changes for business owners planning to sell their company.
From 6 April 2027, the lifetime limit for gains qualifying for Business Asset Disposal Relief (BADR) is due to reduce from:
£1 million to £500,000.
The BADR tax rate itself remains at 18%.
Previous BADR claims will count towards the new £500,000 lifetime limit.
To put that into context, an owner making a qualifying gain of £1 million who had not previously used BADR could potentially pay around £30,000 more Capital Gains Tax as a result of the reduced limit.
There are also anti-forestalling provisions, which means simply entering into a contract before April 2027 may not necessarily secure the existing £1 million limit.
Our view: If selling your business is something you’re seriously considering, even if it isn’t happening immediately, this is worth discussing sooner rather than later.
A new Founders’ Relief is proposed
The Government is proposing a new Founders’ Relief from 6 April 2027.
This could provide a 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains.
However, the proposed conditions are much more demanding than BADR, including requirements around ownership, business size, UK presence, growth and innovation.
The detailed rules are still subject to consultation.
For that reason, this shouldn’t be viewed as a straightforward replacement for BADR for the typical small owner-managed business.
Buying equipment? Capital allowances are changing
There are changes coming to the tax relief available when businesses invest in plant and machinery.
The main writing-down allowance is due to fall from 14% to 12% from April 2027.
At the same time, the main-rate first-year allowance will increase from 40% to 50% for qualifying expenditure from 1 January 2027.
For many smaller businesses, however, this may make relatively little difference in practice.
That’s because the £1 million Annual Investment Allowance remains available, allowing many businesses to claim the full cost of qualifying expenditure immediately.
Companies also continue to have access to full expensing where the conditions are met.
So don’t assume that a reduction in the writing-down allowance automatically means you’ll receive less tax relief when buying equipment. It depends on what you’re buying, how much you’re spending and which allowance applies.
Self-employed? There are some useful changes
Trading Allowance increases to £3,000
From 6 April 2027, the Trading Allowance and related Self Assessment reporting threshold will increase from:
£1,000 to £3,000.
This could reduce the tax and administration burden for people earning relatively small amounts from trading or miscellaneous activities.
There is an important distinction, though.
The £3,000 threshold relates to income received, not profit.
And you generally cannot claim both the Trading Allowance and your actual business expenses against the same income.
The separate £1,000 Property Allowance is not increasing.
Business mileage improves
There is some welcome news for people using their own car or van for business.
The approved mileage rate for the first 10,000 business miles remains at 55p per mile.
The rate above 10,000 miles will increase from:
25p to 35p per mile from 6 April 2027.
The rates also apply to simplified mileage deductions for qualifying self-employed taxpayers.
For example, someone travelling 15,000 qualifying business miles would have a mileage calculation of £7,250, compared with £6,750 under the current rates.
Remember: these are business miles. Normal commuting and private mileage don’t qualify.
Employ staff? Budget for another wage increase
The National Living Wage and National Minimum Wage will increase again from 1 April 2027.
For workers aged 21 and over, the National Living Wage will rise to:
£13.21 per hour.
The headline increase across the principal age groups is 3.9%.
For employers, however, the hourly wage isn’t the only cost to consider.
An increase in wages can also mean higher:
- Employer’s National Insurance
- Workplace pension contributions
- Holiday pay costs
- Pay for employees already earning slightly above minimum wage, where businesses want to maintain existing pay differentials
The general employer National Insurance rate remains 15% above the £5,000 secondary threshold, while Employment Allowance remains at £10,500 for qualifying employers.
If you employ staff close to minimum wage, it is worth building the April 2027 increase into your forecasts before it arrives.
Company cars and benefits are moving into payroll
The move towards mandatory payrolling of benefits in kind will begin from 6 April 2027.
Company cars and vans, fuel benefits and medical benefits will be among those brought into payroll first.
Most other benefits are expected to follow from April 2028, although employment-related loans and employer-provided living accommodation are excluded from that later stage.
This is more than an administrative change.
Employers will need to make sure their payroll systems are ready and may also need to consider the effect on the timing of tax and National Insurance payments.
We’ll be working with affected payroll clients ahead of the change.
Business Rates: extra help for some businesses
There is additional Business Rates support from 1 April 2027, but it is important to understand that it doesn’t apply to every small business.
For qualifying retail, hospitality and leisure premises in England, the rateable value threshold for full Small Business Rates Relief will increase from:
£12,000 to £18,000.
Tapered relief will extend to properties with a rateable value of £21,000, rather than the current £15,000 limit.
Qualifying pubs, social clubs and smaller live music venues will also see relief increase from 15% to 35%.
These are targeted measures, so don’t assume that the £18,000 threshold applies to every commercial property.
Landlords face higher Income Tax rates
One of the more significant announcements for landlords concerns the tax rates applying to property income.
From 6 April 2027, the rates applying to property income in England, Wales and Northern Ireland are due to become:
24% basic rate
44% higher rate
49% additional rate
This makes the tax position of personally owned rental property increasingly important to understand.
It doesn’t automatically mean that incorporating a property business is the answer. There can be significant tax, mortgage, legal and practical consequences to transferring property into a company.
But for landlords with substantial rental income, it does make reviewing the structure and future plans increasingly worthwhile.
Savers will also see higher tax rates
The same 24%, 44% and 49% rates will apply to savings income from 6 April 2027.
The Personal Savings Allowance remains:
£1,000 for basic-rate taxpayers
£500 for higher-rate taxpayers
The ordinary Income Tax rates applying to earnings and pensions remain unchanged.
The Personal Allowance also remains at £12,570, with the basic-rate band remaining at £37,700.
Their existing freeze until April 2031 continues.
Making Tax Digital continues to expand
Making Tax Digital for Income Tax has already started for qualifying self-employed individuals and landlords with income above £50,000.
The rollout continues:
From April 2027: qualifying income above £30,000
From April 2028: qualifying income above £20,000
There is, however, some breathing room for people joining in April 2027.
Late-submission penalty points will not apply to their quarterly updates during 2027/28, although the requirement to submit the updates still applies.
If you’re approaching the £30,000 threshold and haven’t yet considered how you’ll keep your records digitally, now is the time to start preparing rather than waiting until April.
Self Assessment payments could look very different
A much bigger change is being considered for April 2029.
Self Assessment taxpayers who currently make payments on account are expected to move towards smaller, more regular automated tax payments during the year.
There may also be an option for some taxpayers to pay through PAYE.
The precise frequency and transitional arrangements haven’t yet been finalised.
So this isn’t an immediate change to the amount of tax you owe.
But it could significantly change when you pay it.
For sole traders, landlords and company owners accustomed to the January and July payment cycle, that could make a considerable difference to cash flow.
We’ll be watching this one closely as further details emerge.
VAT invoices are going digital
From 1 April 2029, mandatory electronic invoicing is planned for VAT invoices, subject to exemptions still to be confirmed.
And this doesn’t simply mean emailing somebody a PDF invoice.
The proposal is for invoices to be sent and received as structured electronic data, allowing accounting systems to exchange the information directly.
There is also a separate consultation looking at whether invoice information should be reported to HMRC.
2029 may sound a long way away, but this could eventually represent a significant change to how businesses raise, receive and process invoices.
Online sellers: VAT changes are coming
There are also changes proposed for businesses selling through online marketplaces.
From October 2027, online marketplaces are expected to become responsible for collecting VAT on certain qualifying sales by UK businesses.
The rules are potentially complex and won’t affect every online seller in the same way.
Existing VAT-registered sellers may be affected regardless of the proposed £90,000 per-platform threshold.
If you sell significant volumes through online platforms, this is an area we’ll be monitoring as the detailed rules develop.
Fuel duty: the 5p cut continues for now
The temporary 5p fuel duty cut will continue until 30 June 2027.
The current plan is then to reverse the cut and apply RPI uprating from 1 July 2027.
For trades, haulage businesses and others covering significant mileage, that means fuel costs remain something worth allowing for in future budgets.
Pensions and Inheritance Tax
The previously announced change bringing most unused pension funds and death benefits into estates for Inheritance Tax purposes is still due to take effect from April 2027.
The Budget includes some related administrative changes but doesn’t introduce another general change to Agricultural Property Relief or Business Property Relief.
These rules can be particularly important where pensions form a significant part of someone’s estate planning.
Support with household costs
Not everything in the Budget relates directly to business.
A £100 Household Energy Payment is planned from January 2027 for households in Council Tax bands A to D in England.
Domestic electricity will also temporarily benefit from a 0% VAT rate until 30 June 2027 in Great Britain.
The Government also intends to remove domestic gas standing charges in Great Britain by the end of 2027, or as soon as practicable afterwards, although the costs will instead be reflected in unit rates.
So, what does the Budget actually mean for you?
There isn’t one answer.
For an employer, the biggest concern might be the next minimum-wage increase.
For a landlord, it could be higher tax rates on rental income.
For someone hoping to sell their company, the reduction in Business Asset Disposal Relief could be considerably more important.
For the self-employed, Making Tax Digital, mileage rates and the proposed changes to tax payments may matter most.
And that’s why we don’t think a Budget should simply be reduced to a list of tax changes.
The important part is understanding which changes affect you — and what, if anything, you should do about them.
Some measures announced in the Budget are still subject to consultation, detailed legislation or further guidance, so we’ll continue to monitor developments as more information becomes available.
If you’re an AHBS client and you’re unsure whether any of these changes affect you, just ask.
And if you’re not currently a client but would like an accountant who takes the time to explain what the numbers and tax rules actually mean for your business:
LET’S TALK.
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