The Autumn Budget 2026, delivered on 28 October 2026, introduced a series of tax and business changes that will affect companies, sole traders, landlords, employers, entrepreneurs and individual taxpayers over the coming years.
Some of the most important measures take effect from April 2027, including higher rates of Income Tax on property and savings income, an increase in the Trading Allowance, changes to capital allowances, a reduction in the Business Asset Disposal Relief lifetime limit and higher National Minimum Wage rates.
The useful question is therefore not simply what did the Chancellor announce? It is which measures affect you, when do they start and what should you consider before they take effect?
Autumn Budget 2026 in Brief
For most MCL clients, the practical impact of the Budget can be summarised in six points:
- Landlords: UK Government property income tax rates rise to 24%, 44% and 49% from 6 April 2027, subject to devolved arrangements for Scottish and Welsh taxpayers.
- Sole traders: the Trading Allowance rises from £1,000 to £3,000 from 6 April 2027.
- Business owners: the BADR lifetime limit falls from £1 million to £500,000 for qualifying disposals from 6 April 2027.
- Growing companies: a new Founders' Relief is intended to provide a 10% CGT rate on qualifying gains up to a £10 million lifetime limit.
- Employers: the National Living Wage rises to £13.21 per hour from 1 April 2027.
- Tax administration: MTD, VAT e-invoicing and more frequent tax payments continue the move towards more digital and more regular reporting to HMRC.
Autumn Budget 2026 at a Glance
The table below brings together the measures most likely to be relevant to small businesses, landlords, sole traders, employers and individual taxpayers.
| Measure | What is changing? | Effective date |
|---|---|---|
| Property income tax | UK Government rates become 24%, 44% and 49% | 6 April 2027 |
| Savings income tax | Savings rates become 24%, 44% and 49% | 6 April 2027 |
| Trading Allowance | Increases from £1,000 to £3,000 | 6 April 2027 |
| Business Asset Disposal Relief | Lifetime qualifying-gains limit falls from £1 million to £500,000 | 6 April 2027 |
| Founders' Relief | New 10% CGT rate on qualifying share gains, subject to a £10 million lifetime limit and detailed conditions | 6 April 2027 |
| First-Year Allowance | Main-rate FYA increases from 40% to 50% | 1 January 2027 |
| Writing-down allowance | Main rate falls from 14% to 12% | 1 April 2027 for Corporation Tax; 6 April 2027 for Income Tax |
| National Living Wage | Rate for workers aged 21+ rises to £13.21 per hour | 1 April 2027 |
| Business rates | Higher Small Business Rates Relief thresholds for qualifying retail, hospitality and leisure properties in England | 1 April 2027 |
| MTD for Income Tax | Penalty easement for the first four quarterly updates for taxpayers joining in April 2027 | 2027/28 tax year |
| R&D claims | Claim Notification Form removed for claims made from April 2027; Additional Information Form to be simplified | 1 April 2027 / autumn 2027 |
| VAT e-invoicing | VAT invoices must be issued and received in a specified electronic format, subject to final detailed rules and exemptions | 1 April 2029 |
What Does the Autumn Budget 2026 Mean for Small Businesses?
There was no increase to the headline Corporation Tax rates. For the financial year beginning in April 2027, the main Corporation Tax rate remains 25% and the small profits rate remains 19%. The £50,000 and £250,000 profit thresholds also remain in place, although those thresholds can be reduced where a company has associated companies or a short accounting period.
That does not mean the tax position for businesses is unchanged. The Budget alters the timing of tax relief on certain plant and machinery and also simplifies parts of the R&D claim process.
Capital allowances: 50% First-Year Allowance and 12% writing-down allowance
For qualifying expenditure incurred from 1 January 2027, the main-rate First-Year Allowance increases from 40% to 50%. The main writing-down allowance then falls from 14% to 12% from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.
The Annual Investment Allowance remains at £1 million and full expensing continues for qualifying company expenditure. The change is therefore most relevant where expenditure does not qualify for full expensing or where another allowance is unavailable or has already been used.
£100,000 of expenditure qualifying for the main-rate FYA
Assume a business incurs £100,000 of qualifying expenditure to which the main-rate First-Year Allowance applies.
The later reduction in the writing-down allowance means relief on the remaining balance may be slower. HMRC also provides for a hybrid WDA rate where a chargeable period straddles the April 2027 change date.
Businesses considering significant expenditure on equipment or machinery should therefore review the timing of investment and the allowance that actually applies before committing to a purchase.
R&D tax relief administration is being simplified
Companies making R&D tax relief claims on or after 1 April 2027 will no longer need to submit the existing Claim Notification Form. HMRC also plans to simplify and rationalise the Additional Information Form from autumn 2027.
This reduces administration, but it does not remove the need to demonstrate that an R&D claim is valid. Companies should continue to retain appropriate evidence supporting the qualifying activities and expenditure.
What Does Budget 2026 Mean for Sole Traders and the Self-Employed?
Trading Allowance rises from £1,000 to £3,000
From 6 April 2027, the Trading Allowance will increase from £1,000 to £3,000. The Self Assessment reporting threshold for relevant trading income will also increase to £3,000.
The allowance is particularly relevant to people earning relatively small amounts from freelance work, occasional consultancy, online activity, tutoring, creative work or other small-scale trading activities.
Someone earning £2,400 from a side business
Suppose an individual receives £2,400 of qualifying gross trading income in a tax year. Under the current £1,000 allowance, that income exceeds the allowance. From 6 April 2027, £2,400 would fall below the new £3,000 Trading Allowance where the individual is eligible to use it.
This does not mean every person receiving less than £3,000 automatically has no tax or reporting obligations. Restrictions apply to the allowance and individual circumstances still matter.
Making Tax Digital continues to expand
Making Tax Digital for Income Tax is being introduced in stages for qualifying sole traders and landlords:
| Qualifying income | Relevant prior tax year | MTD start date |
|---|---|---|
| More than £50,000 | 2024/25 | 6 April 2026 |
| More than £30,000 | 2025/26 | 6 April 2027 |
| More than £20,000 | 2026/27 | 6 April 2028 |
Qualifying income is broadly gross income from self-employment and property before expenses. From April 2027, taxpayers entering MTD because their qualifying income exceeds £30,000 will receive a 12-month penalty easement: no late-submission penalty points will be issued for their first four quarterly updates for 2027/28.
The easement is not a delay to MTD itself. Digital records and quarterly updates are still required.
Autumn Budget 2026 Changes for Landlords
Landlords are among the groups most directly affected by the Budget because separate rates of Income Tax will apply to property income from 6 April 2027.
Property income tax rates rise to 24%, 44% and 49%
There is an important piece of context here. Budget 2025 had already introduced separate property rates of 22%, 42% and 47% from April 2027. Autumn Budget 2026 increases each of those planned rates by a further two percentage points.
| Band | 2026/27 | Previously planned for 2027/28 | From 6 April 2027 after Budget 2026 |
|---|---|---|---|
| Basic | 20% main rate | 22% property basic rate | 24%+2 points vs previous plan |
| Higher | 40% main rate | 42% property higher rate | 44%+2 points vs previous plan |
| Additional | 45% main rate | 47% property additional rate | 49%+2 points vs previous plan |
£20,000 of taxable property profit
Assume, for simplicity, that a landlord has £20,000 of taxable property profit and all of it falls within the basic-rate band.
The actual tax position depends on the landlord's other income, allowances, financing costs, ownership structure and wider circumstances.
What happens to residential mortgage finance-cost relief?
Individual residential landlords generally do not deduct qualifying mortgage interest and other finance costs directly from rental profits. Instead, qualifying costs can generate a tax reduction under the residential finance-cost rules.
Finance Act 2026 amended those rules so the calculation refers to the property basic rate rather than the ordinary basic rate. With the property basic rate now due to be 24% from April 2027, qualifying finance costs can therefore potentially receive relief by reference to the 24% property basic rate, subject to the existing statutory limits and the landlord's circumstances.
What should landlords review before April 2027?
- Expected rental income and taxable property profits.
- Whether legitimate property expenses are being recorded correctly.
- Mortgage and other qualifying finance costs.
- Making Tax Digital obligations and software readiness.
- Cash reserves for future Income Tax liabilities.
- Any planned acquisitions or disposals and their wider tax implications.
- How property is owned — but only after considering tax, legal, financing and commercial consequences.
Savings Income Tax Is Also Increasing
Budget 2025 had already planned separate savings rates of 22%, 42% and 47% from April 2027. Budget 2026 increases each of those planned rates by a further two percentage points.
| Savings rate | 2026/27 | Previously planned for 2027/28 | Budget 2026 rate for 2027/28 |
|---|---|---|---|
| Basic | 20% | 22% | 24% |
| Higher | 40% | 42% | 44% |
| Additional | 45% | 47% | 49% |
The savings rates apply across the UK. This does not mean every pound of savings interest will automatically be taxed at these rates. The Personal Savings Allowance, starting rate for savings and tax-free ISA arrangements can continue to shelter income depending on an individual's circumstances.
£5,000 of taxable savings income after applicable allowances
This simplified example assumes all £5,000 falls within the basic savings rate after any relevant allowances.
Capital Gains Tax Changes for Entrepreneurs and Business Owners
Business Asset Disposal Relief lifetime limit cut to £500,000
Business Asset Disposal Relief can reduce the Capital Gains Tax rate on qualifying business disposals where the relevant conditions are met. The Budget reduces the lifetime limit for qualifying gains from £1 million to £500,000 for disposals made on or after 6 April 2027.
The BADR rate remains 18% for 2027/28, but the reduced lifetime cap means a greater portion of larger qualifying disposals may fall outside BADR.
Business owner with an £800,000 qualifying gain
Assume an owner has an £800,000 qualifying gain and has made no previous BADR claims. Under the current £1 million lifetime limit, the whole £800,000 could potentially fall within BADR if all conditions are satisfied.
For a qualifying disposal from 6 April 2027, only £500,000 could fall within the new lifetime limit. The remaining £300,000 would potentially be taxed under the normal CGT rules.
New Founders' Relief from April 2027
The Budget also introduces a new relief targeted at qualifying founders and significant early investors in certain high-growth innovative companies. Founders' Relief is intended to provide a 10% Capital Gains Tax rate on qualifying share gains, subject to a lifetime limit of £10 million per individual, for qualifying disposals from 6 April 2027.
The eligibility conditions are significantly narrower and more detailed than BADR, and the government has launched a technical consultation alongside the Budget.
| Feature | Business Asset Disposal Relief | Founders' Relief |
|---|---|---|
| CGT rate from April 2027 | 18% | 10% |
| Lifetime qualifying-gains limit | £500,000 | £10 million |
| Target taxpayer | Owners disposing of qualifying businesses or business interests | Qualifying founders and significant early investors in eligible high-growth innovative companies |
| Key date | New lifetime limit for disposals from 6 April 2027 | Applies to qualifying disposals from 6 April 2027 |
What Does the Autumn Budget 2026 Mean for Employers?
Employers need to plan for higher statutory wage costs from 1 April 2027.
| Worker | April 2026 rate | From April 2027 |
|---|---|---|
| Age 21 and over | £12.71 | £13.21 |
| Age 18 to 20 | £10.85 | £11.27 |
| Under 18 | £8.00 | £8.31 |
| Apprentice rate | £8.00 | £8.31 |
37.5 paid hours per week at the National Living Wage
Assuming an employee aged 21 or over works 37.5 paid hours a week for 52 weeks, the 50p hourly increase adds approximately:
This is before considering associated employer National Insurance contributions, pension contributions or other employment costs.
Labour-intensive businesses should incorporate the April 2027 wage rates into payroll budgets, staffing plans, pricing and cash-flow forecasts in advance.
Business Rates Changes for Retail, Hospitality and Leisure
Budget 2026 contains targeted business-rates support for qualifying retail, hospitality and leisure properties in England.
| Relief threshold | Existing level | From 1 April 2027 |
|---|---|---|
| 100% relief | £12,000 rateable value | £18,000 |
| Tapered relief ends | £15,000 rateable value | £21,000 |
The government is also providing a two-year real-terms bill freeze for eligible retail, hospitality and leisure properties in 2027/28 and 2028/29, subject to the detailed rules. Additional relief for qualifying pubs, social clubs and all but the largest live music venues increases relevant relief to 35%.
These measures may be particularly relevant to restaurants, cafés, pubs, shops, salons, leisure businesses and other qualifying high-street premises.
What Did Not Change in the Autumn Budget 2026?
Budget announcements often attract as much attention for what does not change as for what does. For 2027/28, the headline rates applying to several common taxes remain unchanged.
Main Income Tax rates
The main rates applying to employment, pension and other non-savings, non-dividend and non-property income in England, Wales and Northern Ireland remain 20%, 40% and 45%.
Corporation Tax
The main Corporation Tax rate remains 25%, with the small profits rate at 19%.
Dividend tax rates
The 2027/28 dividend ordinary, upper and additional rates remain 10.75%, 35.75% and 39.35% respectively, above the applicable Dividend Allowance.
Personal Allowance
The standard Personal Allowance remains £12,570 for 2027/28, subject to the existing reduction for adjusted net income above £100,000.
Pension Death Benefits: The Two-Year Tax Rule Is Being Removed
Budget 2026 removes the rule that could cause certain otherwise tax-free pension death benefits to become taxable simply because the scheme administrator did not make the payment within two years of learning of the member's death.
For relevant payments made on or after 28 October 2026, the two-year deadline is removed. Where the other conditions for tax-free treatment are satisfied — including the relevant lump sum and death benefit allowance conditions — a payment will no longer become taxable solely because administration takes more than two years.
The measure also applies to certain beneficiary income withdrawals and annuity payments from deceased members' drawdown funds.
The Bigger Picture: HMRC Is Moving Towards More Digital and Regular Tax Compliance
A broader theme running through Budget 2026 is the continued modernisation of tax administration. For businesses and individuals, that means more digital records, more structured data and, in some cases, payments moving closer to when income is earned.
VAT e-invoicing from April 2029
From 1 April 2029, VAT-registered persons will generally need to be able to issue and receive VAT invoices as structured e-invoices, subject to the final detailed rules and any exemptions.
More regular Payments on Account
From April 2029, taxpayers who already make Income Tax Self Assessment Payments on Account are expected to make smaller, more regular in-year contributions towards their final bill.
VAT and PAYE Direct Debit arrangements
The government plans to require Direct Debit instructions for VAT return liabilities from 1 April 2029 and PAYE return liabilities from 6 April 2029, while retaining the option to pay by another permitted method before a specified cut-off.
More HMRC compliance activity
The Budget provides for an additional 670 HMRC compliance officers by 2029/30, on top of earlier recruitment commitments, together with further investment in debt management.
The direction of travel is clear: accurate, current digital accounting records are becoming increasingly important. Businesses that leave bookkeeping until year-end will find it harder to adapt to a tax system built around more frequent digital interaction.
Key Autumn Budget 2026 Dates to Remember
| Date | Change |
|---|---|
| 28 October 2026 | Budget delivered; pension death-benefit two-year tax rule changes apply to relevant payments from this date. |
| 1 January 2027 | Main-rate First-Year Allowance increases from 40% to 50%. |
| 1 April 2027 | National Living Wage rises to £13.21; business-rates measures begin in England; R&D Claim Notification Form removed for claims made from this date; 12% WDA begins for Corporation Tax. |
| 6 April 2027 | Property and savings rates become 24%, 44% and 49%; Trading Allowance rises to £3,000; BADR lifetime limit falls to £500,000; Founders' Relief intended to begin; 12% WDA begins for Income Tax; MTD extends to qualifying income above £30,000. |
| Autumn 2027 | HMRC plans to simplify the R&D Additional Information Form. |
| 6 April 2028 | Current MTD timetable extends to qualifying income above £20,000. |
| 1 April 2029 | VAT e-invoicing requirements and VAT Direct Debit arrangements planned to begin. |
| 6 April 2029 | PAYE Direct Debit arrangements planned to begin. |
| April 2029 | More regular Self Assessment Payments on Account are expected to begin. |
What Should Businesses and Individuals Review Following the Budget?
Not every Budget announcement requires immediate action. However, several changes taking effect in 2027 make the coming months a sensible time to review tax and financial arrangements.
If you run a limited company
Review planned capital expenditure, available allowances, R&D claim procedures, Corporation Tax forecasts and cash-flow requirements.
If you are self-employed
Check the new Trading Allowance, your MTD start date, digital bookkeeping arrangements and expected tax liabilities.
If you are a landlord
Review the new property tax rates, finance-cost relief, MTD obligations, allowable expenses, cash reserves and any planned transactions.
If you employ staff
Update payroll budgets for April 2027 wage increases and consider the knock-on effect on employer NICs, pensions, pricing and staffing plans.
If you may sell a business
Review BADR eligibility, relief already used, the timing of any disposal and whether the proposed Founders' Relief conditions may be relevant.
If your records are still largely manual
Use the lead time before e-invoicing and wider HMRC digitalisation to improve bookkeeping systems, software integration and data quality.
Autumn Budget 2026 FAQs
When was the Autumn Budget 2026?
The Autumn Budget 2026 was delivered on 28 October 2026. HM Treasury published the Budget document and supporting tax material alongside it.
Did Income Tax increase in the Autumn Budget 2026?
The main rates applying to employment, pension and other non-savings, non-dividend and non-property income remain 20%, 40% and 45% for 2027/28. However, separate higher rates apply to property and savings income from 6 April 2027.
What are the new property income tax rates from April 2027?
The UK Government rates are 24% property basic rate, 44% property higher rate and 49% property additional rate from 6 April 2027. Devolved arrangements can affect Scottish and Welsh taxpayers.
What happens to mortgage interest relief for residential landlords?
Finance Act 2026 changed the residential finance-cost tax reduction so it is calculated by reference to the property basic rate rather than the ordinary basic rate. With the UK Government property basic rate set at 24% from April 2027, qualifying finance costs can potentially receive relief by reference to that 24% rate, subject to the existing statutory limits and the taxpayer's circumstances.
What is the Trading Allowance after Budget 2026?
The Trading Allowance increases from £1,000 to £3,000 from 6 April 2027. The Self Assessment reporting threshold for relevant trading income also increases to £3,000.
What is happening to Business Asset Disposal Relief?
The BADR lifetime limit for qualifying gains falls from £1 million to £500,000 for qualifying disposals made on or after 6 April 2027. The rate on gains qualifying for BADR remains 18% for 2027/28.
What is Founders' Relief?
Founders' Relief is a new CGT relief intended to provide a 10% rate on qualifying share disposals from 6 April 2027, subject to detailed eligibility conditions and a £10 million lifetime limit per individual. BADR and Investors' Relief claims made from 6 April 2027 reduce the remaining Founders' Relief lifetime limit.
What is the National Living Wage from April 2027?
The National Living Wage for workers aged 21 and over rises to £13.21 per hour from 1 April 2027.
Did Corporation Tax increase in Budget 2026?
No. The main Corporation Tax rate remains 25% and the small profits rate remains 19%. Businesses should still review the separate changes to capital allowances and R&D administration.
Does Budget 2026 change Making Tax Digital for Income Tax?
The existing rollout continues, including the £30,000 qualifying-income threshold for taxpayers entering MTD from 6 April 2027. Budget 2026 introduces a 12-month penalty easement so those new entrants do not receive late-submission penalty points for their first four quarterly updates for 2027/28.
Official Sources and Further Reading
This guide is based on primary UK Government and legislation sources available following the Budget. Key references include:
- HM Treasury — Budget 2026
- HMRC — Budget 2026: Overview of Tax Legislation and Rates
- HMRC — Changes to Property and Savings Income Tax Rates
- Finance Act 2026 — Residential Property Finance-Cost Relief Amendment
- HMRC — Capital Allowance Changes
- HMRC — New BADR Lifetime Limit
- HMRC — Founders' Relief
- HMRC — Making Tax Digital for Income Tax
- GOV.UK — National Minimum Wage and National Living Wage Rates
- HMRC & DBT — E-invoicing Implementation Roadmap
