In short: The Autumn Budget 2026 keeps most income tax thresholds frozen, raises tax on rental and savings income from April 2027, cuts several business reliefs and makes VAT and Making Tax Digital (MTD) rules stricter. Some changes take effect in weeks, others not until 2029. The dates below matter most for planning.
What the Budget means for your business at a glance
| Change | Effective | Who it affects |
|---|---|---|
| Business asset disposal relief lifetime limit cut from £1m to £500k | 6 April 2027 | Owner-managers selling a business |
| Founders’ relief: 10% CGT on up to £10m of qualifying gains | 6 April 2027 | Founders and early investors (details subject to consultation) |
| Main-rate first-year allowance rises from 40% to 50% | 1 January 2027 | Companies and sole traders buying plant and machinery |
| Writing-down allowance falls from 14% to 12% | 1 April 2027 (companies); 6 April 2027 (unincorporated) | Businesses with existing plant pools |
| Trading allowance rises from £1,000 to £3,000 | 6 April 2027 | Sole traders with small self-employed income |
| Rental and savings income tax rates up 4 percentage points | 2027/28 tax year | Landlords and investors |
| MTD for Income Tax extended to qualifying income over £30,000 | 6 April 2027 | Sole traders and landlords |
| Reverse charge restricted to VAT-registered UK customers | April 2027 | Businesses buying services from overseas suppliers |
Frozen thresholds: the quiet tax rise
Income tax allowances, thresholds and main rates stay frozen. The personal allowance remains £12,570 and the basic rate band £37,700 until the end of 2030/31. As pay and profits rise with inflation, more owners will move into higher rates without any change to the rates themselves.
National Insurance is also unchanged for the main rates and thresholds, which are fixed to April 2031. The employer secondary threshold stays at £5,000 a year. Employer NICs are charged at 15%, and the Employment Allowance is £10,500 per qualifying business.
Rental and savings income: rates rise from April 2027
From the 2027/28 tax year, the basic, higher and additional rates on property and savings income each rise by four percentage points, to 24%, 44% and 49%. The Budget doubled the increase announced last year. Mortgage interest relief on residential lets is also fixed at 24%, up from 20%.
Dividend rates are unchanged at 10.75%, 35.75% and 39.35%, and the £500 dividend allowance stays the same. Dividends still count towards the higher-rate threshold. Directors who take a mix of salary and dividends should model their position before April 2027.
Capital gains: business sale reliefs tighten
Business asset disposal relief keeps its 18% rate, but the lifetime limit on qualifying gains falls from £1 million to £500,000 for disposals from 6 April 2027. For a higher or top-rate taxpayer with £1 million of qualifying gains, this increases CGT by around £30,000. Contracts signed before 6 April 2027 are covered by special rules if they have not completed by that date.
The new Founders’ relief gives a 10% rate on up to £10 million of qualifying gains for founders and early investors from 6 April 2027. The detail will be confirmed after further consultation, so do not rely on it for a specific transaction yet.
The annual CGT exempt amount stays at £3,000, and the main CGT rates are unchanged.
Corporation tax and capital allowances
The main corporation tax rate stays at 25% and the small profits rate at 19% for the financial year starting 1 April 2028. Banks’ surcharge rises from 3% to 6% for 15 months from 1 January 2027.
For plant and machinery, the main-rate first-year allowance rises from 40% to 50% from 1 January 2027. The main-rate writing-down allowance falls from 14% to 12% from April 2027. The dedicated 100% allowances for zero-emission cars and EV charge points end on 31 March 2027 for companies and 5 April 2027 for unincorporated businesses.
Timing matters. Equipment bought before the dates above can still get the more generous rates. Review any major purchase planned for early 2027.
Business rates: relief for retail, hospitality and leisure
From 1 April 2027, 100% Small Business Rate Relief in England applies to retail, hospitality and leisure (RHL) properties with a rateable value up to £18,000, up from £12,000. Relief for pubs, social clubs and most live music venues rises from 15% to 35%. Vape shops and adult gaming centres no longer qualify.
Higher-stakes machine games will pay Machine Games Duty at 25%, up from 20%, from April 2027. Operators of arcades and gaming sites should check their exposure.
VAT: stricter rules and new dates
- Registration threshold: stays at £90,000. No end date has been announced for the freeze.
- Reverse charge: from April 2027, it applies only where the UK customer is VAT-registered. Unregistered UK customers will need overseas suppliers to charge UK VAT.
- Locum doctors: from 1 May 2027, supplies to healthcare businesses and NHS Trusts that are not responsible for patient care will be taxable, reversing a recent court outcome.
- Online marketplaces: from October 2027, they will be liable for VAT on sales by UK businesses, including VAT-registered ones.
- Large taxi firms: from 2 January 2028, they are treated as principal and charge VAT on the whole fare, subject to consultation.
- Public EV charging: electricity at public charge points is charged at 20% VAT from 1 November 2026.
- E-invoicing: mandatory from April 2029. Roadmap published.
Making Tax Digital and expenses
MTD for Income Tax applies from 6 April 2026 to sole traders and landlords with qualifying income above £50,000. From 6 April 2027 it extends to those above £30,000, based on 2025/26 income. Anyone joining from April 2027 gets a penalty-free first year for their four quarterly updates in 2027/28. Those who joined in April 2026 face the normal late-submission regime.
Mileage allowance for business use of your own car rises from 25p to 35p per mile above 10,000 miles, from 6 April 2027. The 45p rate rose to 55p in April 2026. From 6 April 2028, employees can claim employment expenses above £2,500 through PAYE (form P87 or the PAYE Expenses service) instead of having to file a Self Assessment return.
Employees and share schemes
From 6 April 2027, the CSOP individual limit doubles to £120,000, the CSOP and EMI limits stop interacting, and the EMI exercise window after a disqualifying event extends to 180 days. Payrolling of benefits becomes mandatory for company cars, vans, fuel and medical benefits, with other benefits following from April 2028. Class 1A NICs on payrolled benefits will be paid each pay period from 2027/28.
Other points to note
- Cash ISA limit: the planned restriction for under-65s has been dropped. The £20,000 allowance stays.
- Pensions: the lump sum limit stays at £268,275. From April 2029, salary sacrifice above £2,000 a year will attract NICs.
- Inheritance tax: the nil-rate band stays at £325,000 until the end of 2030/31. Unused pension funds fall within the estate for deaths on or after 6 April 2027.
- Fuel duty: the freeze continues, and the 5p cut is kept. Inflation-linked increases resume on 1 July 2027.
- Scotland and Wales: the Scottish Budget on 3 December 2026 will set Scottish income tax rates for 2027/28.
What to do next
Most of these changes do not bite until 2027, but some planning decisions are needed sooner:
- Review any planned plant and machinery purchases against the 1 January and April 2027 dates.
- If you expect a business sale, model the BADR change against the new £500,000 limit.
- Landlords and savers should model the April 2027 rate rise.
- Check whether your income will cross the MTD thresholds in April 2027.
- Make sure your bookkeeping software is ready for quarterly updates.
Want to know how these changes affect your business? Our team can model the impact on your tax position and plan for the April 2027 changes. Contact Alpha Business Services on 01384 468320 or at admin@alphalimited.co.uk.
This article is general information only and is not advice on your personal or business circumstances. Several changes are subject to legislation, consultation or confirmation at the Scottish and Welsh Budgets. Figures are taken from the Autumn Budget 2026 as summarised in Alpha’s Budget Summary 2026. Please check the official Budget documents on gov.uk before acting.
