28/10/2026
The Chancellor, John Healey, delivered the Autumn Budget today (28 October 2026), announcing a number of changes to taxation and tax administration.
Although the Government has maintained its commitment not to increase the headline rates of Income Tax, National Insurance or VAT, there are several announcements which will affect individuals, landlords and smaller businesses.
We have summarised the main announcements below, focusing on those most relevant to Members and their clients.
Income Tax on property and savings income:
The Government has announced a further increase in the rates of Income Tax applicable to property and savings income from 6 April 2027.
For property income, the new basic, higher and additional rates will be 24%, 44% and 49% respectively. These rates will apply in England, Wales and Northern Ireland.
The same rates will apply to savings income across the UK.
These increases are in addition to those announced in the 2025 Budget, meaning that the rates will be four percentage points higher than those applying before the earlier changes.
The changes will be particularly relevant to landlords and individuals receiving taxable interest on savings. The headline Income Tax rates applicable to employment and self-employment income remain unchanged.
Trading Allowance increased to £3,000:
From 6 April 2027, the Trading Allowance will increase from £1,000 to £3,000.
This will allow individuals to receive up to £3,000 of qualifying trading or miscellaneous income without paying Income Tax on that income.
The increase will be particularly relevant to individuals undertaking occasional work or operating very small businesses.
Members should note that the increase in the allowance does not necessarily remove other tax reporting or registration obligations.
Making Tax Digital for Income Tax:
The Government has confirmed a further penalty easement for taxpayers joining Making Tax Digital for Income Tax (MTD) in April 2027.
Taxpayers entering MTD from 6 April 2027 will not receive penalty points for late submission of their first four quarterly updates during the 2027/28 tax year.
The Government has also announced that the introduction of MTD for certain groups of taxpayers will be deferred until further notice.
The wider rollout remains scheduled to extend to those with qualifying income above £30,000 from April 2027 and £20,000 from April 2028, subject to the relevant exemptions and deferrals.
Changes to Self Assessment payments:
A potentially important change for the self-employed and landlords concerns the timing of Income Tax payments.
From April 2029, the Government intends to require taxpayers who currently make payments on account to make smaller, more regular payments towards their annual Income Tax liabilities.
The intention is to bring tax payments closer to the point at which income is earned, rather than relying on the existing twice-yearly payments on account.
The Government will consult further on the implementation of these changes. Members will need to consider the implications for clients' cash flow and tax payment arrangements.
VAT and tax administration:
From 1 April 2029, the Government intends to require VAT invoices to be issued in a specified electronic format. Further details of the requirements will be published by April 2028.
The Government has also confirmed that, from October 2027, VAT online marketplace liability rules will be extended to UK businesses. Online marketplaces will become responsible for collecting VAT on relevant sales by UK VAT-registered businesses and other UK businesses with annual sales of at least £90,000 per platform. Personal sales, second-hand goods and business-to-business transactions will be excluded.
From April 2029, businesses will also be required to establish Direct Debit arrangements for VAT and PAYE liabilities. Other payment methods will remain available, but HMRC will be able to collect outstanding amounts by Direct Debit where payment has not been made by the required cut-off date.
The Budget also announces further investment in HMRC compliance activity, including the recruitment of an additional 670 compliance officers by 2029/30.
New requirements for correcting inaccuracies identified in tax returns and other documents are expected to take effect from April 2028. HMRC is also consulting on the collection and use of third-party property income information.
Capital Gains Tax and business taxation:
The lifetime limit for Business Asset Disposal Relief will be reduced from £1 million to £500,000 for qualifying disposals made from 6 April 2027. The rate of relief remains at 18%.
A separate Founders' Relief will be introduced from April 2027, offering a 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains for founders of certain high-growth, innovative companies. The detailed eligibility requirements remain subject to consultation.
There are also changes to capital allowances. The main rate writing down allowance will fall to 12% from April 2027, while the main rate first-year allowance will increase from 40% to 50% for qualifying expenditure incurred from 1 January 2027.
Other announcements:
The Government has confirmed that the tax-free business mileage allowance of 55p per mile for the first 10,000 miles, introduced from April 2026, will become permanent. The rate for mileage exceeding 10,000 miles will increase from 25p to 35p from April 2027.
For qualifying retail, hospitality and leisure properties in England, the threshold for 100% Small Business Rate Relief will increase from a rateable value of £12,000 to £18,000 in April 2027. The upper threshold for tapered relief will increase to £21,000.
The National Living Wage will increase to £13.21 per hour from April 2027.
For individual taxpayers, the Government has confirmed that the annual cash ISA subscription limit will remain at £20,000. A new Pension Tax Allowance will also be introduced from April 2027, intended to prevent pensioners whose only income is at or below the full new State Pension from becoming liable to pay small amounts of Income Tax.
Further information:
The Budget contains a number of measures which will require further legislation, consultation or guidance before they take effect.
