The Chancellor delivered Budget 2026 on 28 October, promising families and businesses some “breathing space”. VAT, National Insurance and Income Tax rates on wages and trading profits all stay where they are.
The detail tells a busier story. The government’s own figures show its tax measures raising around £7 billion a year by 2031-32, and most of the changes start from April 2027.
If you run a small business, work for yourself or let property, here’s what you need to know.
If you’re self-employed
Making Tax Digital reaches more of you
From 6 April 2027, Making Tax Digital for Income Tax applies to sole traders and landlords whose gross trading and rental income was over £30,000 in 2025-26. You’ll need compatible software to keep digital records and send HMRC a quarterly summary, plus your year-end return.
There’s some good news for first-timers. If you join in April 2027, you won’t pick up penalty points for late quarterly updates, although they still need to be in before you can file your year-end return.
A bigger Trading Allowance
The Trading Allowance triples from £1,000 to £3,000 on 6 April 2027, and the Self Assessment reporting threshold moves with it. If you earn up to £3,000 from a side hustle, you won’t need to declare it or pay tax on it. Earn more, and you can deduct the £3,000 allowance in place of your actual expenses.
Frozen thresholds
Class 4 National Insurance stays at 6% on profits between £12,570 and £50,270, and 2% above that. Those thresholds, along with your £12,570 Personal Allowance, are frozen until 2030-31. So as your profits grow, more of them get taxed.
Mileage
If you use simplified mileage rates, you’ll get 55p a mile for the first 10,000 business miles. Above that, the rate rises from 25p to 35p from 6 April 2027.
Paying tax through the year
From April 2029, payments on account will be replaced by smaller, more regular payments collected automatically, for example by Direct Debit. 2029-30 will be a transition year, when you’ll pay the last of your 2028-29 bill while starting the new in-year payments. For many of you, that means paying tax sooner, so it’s one to plan for.
If you employ staff
Minimum wage rises 3.9%
All minimum wage rates go up on 1 April 2027. For a full-time worker on the National Living Wage, that’s around £910 a year in gross pay.
| Rate | Now | From 1 April 2027 |
| National Living Wage (21 and over) | £12.71 | £13.21 |
| 18 to 20 | £10.85 | £11.27 |
| 16 to 17 and eligible apprentices | £8.00 | £8.31 |
| Accommodation offset (per day) | £11.10 | £11.53 |
Getting minimum wage wrong, even by accident, can mean back pay, penalties and enforcement action. Now’s a good time to build the new rates into your budget.
Benefits go through payroll
From 6 April 2027, you’ll have to report and pay tax through payroll on company cars and vans, car and van fuel, and medical benefits. Most other benefits follow from 6 April 2028. If you provide any of these, April 2027 is only a few months away, so talk to us about getting your payroll ready.
Company car tax percentages also rise by 1 point for 2027-28, with steeper increases already set out to 2030-31. It’s worth checking if your company vehicles still make sense as a perk.
National Insurance and mileage
Employer and employee NIC rates and thresholds stay the same in 2027-28. The Lower Earnings Limit rises to £133 a week (£6,916 a year), so if you’re a director on a small salary, check it’s above that to keep 2027-28 counting towards your State Pension.
The tax-free mileage rate for employees using their own car or van is 55p for the first 10,000 business miles. Above that, it rises from 25p to 35p from 6 April 2027. You might want to review your mileage policy.
And a reminder from last year’s Budget: from 6 April 2029, salary sacrifice pension contributions over £2,000 a year will attract employee and employer NICs.
If you run a limited company
Corporation Tax holds steady
Rates stay at 19% for profits under £50,000 and 25% over £250,000, with a marginal rate of 26.5% in between. The government intends to keep them there until at least 31 March 2029.
HMRC is watching how you take money out
Plans for extra reporting on directors’ loans and payments to shareholders have been dropped. The existing rules still apply in full, though, and HMRC puts the small company tax gap at more than £17 billion for 2024-25.
Every pound you take out of your company needs to be properly recorded as salary, bonus, dividend, benefit or loan. From April 2028, more complex arrangements, such as using a new holding company to buy back shares, are also set to be taxed as income.
Selling your business costs more from April 2027
Business Asset Disposal Relief keeps its 18% rate, but the lifetime limit halves from £1 million to £500,000 for sales on or after 6 April 2027. For a higher rate taxpayer with a £1 million gain, that’s an extra £30,000 in tax.
If you’re thinking of selling or retiring in the next few years, talk to us now. Special rules cover contracts signed before 6 April 2027, so rushing to sign in March won’t automatically protect the £1 million limit.
A new 10% Founders’ Relief is also on the way, although it’s aimed at a narrow group of high-growth companies with turnover of £10 million or more.
Capital allowances
The £1 million Annual Investment Allowance and full expensing both continue. From 1 April 2027, the main rate Writing Down Allowance drops from 14% to 12% (6 April for unincorporated businesses), which slows relief on some assets.
The First Year Allowance rises from 40% to 50% for spending on or after 1 January 2027. And the 100% allowance on zero-emission cars looks set to end on 31 March 2027 for companies and 5 April 2027 for individuals, so timing matters if you’re planning to buy an electric car.
Directors carry more risk
For offences on or after 1 April 2027, a director convicted under HMRC’s tax security rules could be disqualified for up to 5 years. HMRC will also be able to publish more detail when it names deliberate defaulters, including notices making company officers personally liable for penalties.
VAT, business rates and running costs
VAT
The registration threshold stays frozen at £90,000. With no rise for inflation, more businesses cross it each year without any real growth. If you’re getting close, talk to us about timing and what it means for your prices.
From October 2027, online marketplaces such as eBay, Amazon and Vinted will collect the VAT on sales by UK businesses that are VAT registered, or that sell more than £90,000 a year on one platform. They’ll take the VAT out of your income before you’re paid, so plan for the cash flow change.
From 1 April 2029, VAT-registered businesses will need to send and receive invoices electronically in a structured format. It’s worth asking your software provider now whether it’ll be ready.
Business rates in England
From 1 April 2027, there’s extra help for the high street:
- Pubs, social clubs and most live music venues get a further 20 points of relief, taking them to 35%.
- For retail, hospitality and leisure properties, 100% Small Business Rates Relief now covers rateable values up to £18,000 (from £12,000), tapering up to £21,000.
- Qualifying retail, hospitality and leisure bills are frozen in real terms for 2027-28 and 2028-29.
- The £150 and £300 fees for Valuation Tribunal appeals are scrapped.
The government expects half of all retail, hospitality and leisure properties in England to pay no business rates at all.
Fuel
The 5p Fuel Duty cut is extended to 30 June 2027. On 1 July 2027, duty on petrol and diesel jumps 7.64p to 60.59p a litre, and red diesel rises from 6.48p to 11.65p. If fuel is a big cost for you, build that into next year’s budget now.
Dealing with HMRC
From April 2029, you’ll need a Direct Debit instruction in place for VAT and PAYE, which HMRC can use for anything unpaid by the deadline. And from 1 April 2028, you’ll be legally required to correct mistakes in tax returns once you spot them.
If you’re a landlord
Income Tax on rental profits is going up by 4 percentage points from 6 April 2027. Half of that rise was announced in last year’s Budget and the other half in this one.
| Band (England, Wales and NI) | 2026-27 | 2027-28 |
| Basic rate | 20% | 24% |
| Higher rate | 40% | 44% |
| Additional rate | 45% | 49% |
If you’re a Scottish taxpayer, your rates will be set in the Scottish Budget on 3 December 2026.
The £1,000 Property Allowance stays frozen, even though the equivalent Trading Allowance is tripling. And if your gross rental income was over £30,000 in 2025-26, Making Tax Digital applies to you from April 2027.
Selling a property? Capital Gains Tax rates stay at 18% and 24%. You’ll still need to report the sale of a UK residential property, other than your home, to HMRC within 60 days. From 28 October 2026, late filing penalties will stop building up once you’ve reported the sale on your Self Assessment return.
What to do before April 2027
Much of this still has to pass through Parliament, and some of it is out for consultation, so the details may change. The direction is clear, though, and you’ve got a few months to get ahead of it.
- Thinking of selling your business? Look at the Business Asset Disposal Relief change now, before the limit halves.
- Letting property or holding savings outside an ISA? Work out what the higher rates will cost you, and whether your plans need a rethink.
- Income over £30,000 from trading or property? Get your Making Tax Digital software sorted well before your first quarterly update.
- Employing people? Budget for the new minimum wage rates and check your payroll is ready for benefits from 6 April 2027.
Every situation is different, and the same measure can affect two people in very different ways. If you’d like to talk through what Budget 2026 means for you, your business or your property, give the team a call on 01472 357125.
