Autumn Budget 2026: What Are the Key Tax Announcements?
The Chancellor delivered the Autumn Budget on 28 October 2026, unveiling a package of tax measures that will affect business owners, landlords, investors and individual taxpayers over the coming years.
While the government has resisted increasing the headline rates of Income Tax, National Insurance and VAT, a number of significant changes have been announced that could substantially alter the tax landscape from 2027 onwards.
Many of the measures are aimed at increasing tax revenues, improving compliance and modernising tax administration. Others provide targeted support for entrepreneurs, innovation and smaller businesses. Here's a detailed breakdown of the key announcements and what they could mean for you.
Income Tax Changes: Higher Taxes on Savings and Property Income
One of the most significant Budget announcements relates to savings and property income.
Increased Tax Rates from April 2027
From 6 April 2027, tax rates on savings and property income will rise by a further two percentage points, in addition to increases announced previously.
The new rates will be:
Basic Rate: 24%
Higher Rate: 44%
Additional Rate: 49%
For landlords, this means rental profits will face higher tax charges. Individuals who rely on interest income from savings accounts, fixed-term deposits or investment bonds could also see larger tax bills.
For many property investors, this may further reduce net returns and could encourage a review of ownership structures and long-term investment strategies.
Good News for Side Hustles and Small Businesses
In a welcome move, the Trading Allowance will increase from £1,000 to £3,000 from April 2027.
This means individuals can earn up to £3,000 from:
Freelancing
Online selling
Consultancy work
Content creation
Other miscellaneous income
without paying income tax on that income. This measure is likely to benefit thousands of people operating side businesses alongside traditional employment.
Cash ISA Allowance Retained
The government has confirmed that the £20,000 annual Cash ISA allowance will remain unchanged.
Many savers had been concerned that the allowance could be reduced, limiting tax-free savings opportunities. The confirmation will come as positive news for those building long-term savings.
New Pensioner Tax Allowance
A new allowance will be introduced from April 2027 to ensure pensioners whose total income does not exceed the full New State Pension do not have to pay small amounts of income tax.
This simplifies matters for many pensioners and removes the administrative burden of dealing with minor tax liabilities.
Capital Gains Tax: Changes for Business Owners
Business owners considering a future sale should pay close attention to the Capital Gains Tax announcements.
Business Asset Disposal Relief Reduced
Currently, Business Asset Disposal Relief (BADR) allows qualifying gains up to £1 million to be taxed at a reduced rate.
From 6 April 2027:
Lifetime BADR limit falls from £1 million to £500,000
Qualifying gains continue to be taxed at 18%
For entrepreneurs planning to sell their businesses, this could significantly increase the amount of tax payable on a disposal.
Example
A business owner selling a company with a £1 million qualifying gain currently benefits from the full BADR limit.
Under the new rules:
Only the first £500,000 would qualify for relief.
The remaining gain could be taxed at substantially higher CGT rates.
For business owners considering an exit in the coming years, advance planning may now become increasingly important.
New Founders' Relief
To offset some of the BADR restrictions, the Chancellor announced a new Founders' Relief.
From April 2027:
10% CGT rate
Available on up to £10 million of lifetime gains
Designed for founders of innovative, high-growth businesses
While detailed qualification criteria are still under consultation, this could become an extremely valuable relief for technology and growth-focused entrepreneurs.
Corporation Tax Rate Frozen
The main Corporation Tax rate remains unchanged at 25%.
This provides some certainty for incorporated businesses that had been concerned about further increases.
Changes to Capital Allowances
The government has announced significant amendments to investment reliefs.
Writing Down Allowances Reduced
From April 2027:
Main Writing Down Allowance falls from 14% to 12%
This means businesses will obtain tax relief more slowly on qualifying expenditure.
New First-Year Allowance
To encourage investment, a new 50% First-Year Allowance will be introduced from 1 January 2027.
This will allow businesses to claim accelerated tax relief on qualifying expenditure incurred during the year of purchase. For companies planning major capital investments, timing could become particularly important.
Research and Development Relief Simplified
The government is also reducing administrative burdens for innovative businesses.
From April 2027:
The R&D Claim Notification Form requirement will be removed.
The Additional Information Form will be simplified later in the year.
These changes should reduce compliance costs and make claiming R&D relief less time-consuming.
VAT: Major Changes Ahead
Several VAT announcements could significantly impact both online businesses and larger transport operators.
Online Marketplaces to Collect VAT
From October 2027, online marketplaces will become responsible for collecting VAT on qualifying sales made through their platforms.
The new rules will apply to:
UK VAT-registered businesses.
UK businesses with annual sales exceeding £90,000 through a particular platform.
The following will be excluded:
Private sales.
Second-hand goods.
Business-to-business transactions.
While this may simplify VAT administration for some sellers, marketplace operators face significant compliance obligations.
VAT on Private Hire Passenger Fares
From January 2028, larger private hire vehicle operators will become liable for VAT on the full value of passenger fares.
The government is currently consulting on the qualifying threshold, with £50 million annual turnover proposed.
This could have pricing implications across parts of the private hire industry.
Mandatory E-Invoicing
The move towards tax digitisation continues.
From April 2029:
Electronic invoicing for VAT purposes becomes mandatory.
Invoices must be issued in an approved digital format.
Businesses that still rely heavily on manual or paper-based invoicing systems should begin thinking about future software and process changes.
0% VAT on Domestic Electricity Extended
The temporary zero rate of VAT on domestic electricity will continue until 1 July 2027.
This extension provides ongoing support for households facing energy costs.
Tax Administration Changes
The Budget also introduces major reforms to how tax is paid and collected.
Payments on Account to Become More Frequent
From April 2029, individuals within Self Assessment who make Payments on Account will be required to make smaller, more frequent payments throughout the year.
The aim is to bring tax payments closer to the point income is earned and reduce year-end surprises.
For many sole traders and landlords, this could have significant cash flow implications.
Mandatory Direct Debits
From April 2029:
VAT liabilities will move to mandatory Direct Debit arrangements.
PAYE liabilities will also be subject to Direct Debit requirements.
Alternative payment methods will remain available before specified deadlines.
MTD Penalty Relaxation
For taxpayers entering Making Tax Digital for Income Tax from April 2027, the government has announced a transitional easement. No penalty points will apply for the first four quarterly submissions submitted late during the first year. This provides some breathing space as taxpayers adapt to the new reporting requirements.
Increased HMRC Compliance Powers
The government has also announced further investment in HMRC compliance activity.
Included within the proposals are:
Increased compliance investigations.
Expanded data gathering powers.
Greater use of technology to identify non-compliance.
New powers from July 2029 allowing HMRC to recover certain unpaid tax debts directly from bank accounts through instalment arrangements.
These measures demonstrate the government's intention to increase tax collection while reducing the tax gap.
What Should Business Owners and Taxpayers Do Now?
Although many measures will not take effect until 2027 or later, early planning could make a significant difference.
Particular attention should be paid by:
Business owners considering selling their company.
Landlords with substantial rental income.
Higher-rate taxpayers receiving significant savings income.
Companies planning major capital investment.
Individuals who will be affected by Making Tax Digital.
Online sellers using marketplace platforms.
Understanding how these changes will affect your finances now provides valuable time to review structures, investment plans and tax strategies before the new rules take effect.
Final Thoughts
The Autumn Budget 2026 introduces a mixture of tax increases, targeted reliefs and sweeping administrative reforms. While some measures provide welcome support for entrepreneurs, pensioners and small-scale traders, others will increase tax liabilities for landlords, investors and business owners planning an exit.
With many changes scheduled for implementation between 2027 and 2029, now is the ideal time to review your tax position and begin planning ahead. Seeking professional advice early could help identify opportunities, avoid surprises and ensure you're prepared for the changing tax landscape.
Need help understanding how the Autumn Budget 2026 affects you or your business? Contact Bean Counters today for tailored tax planning advice and practical support.
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