Tax changes
Tax on wages stays the same, but tax on income from assets goes up and some reliefs for business owners are cut back.
For individuals
- Income tax and National Insurance rates on earnings: no change.
- Savings interest: from 6 April 2027, savings income above your Personal Savings Allowance is taxed at 24% (basic), 44% (higher) and 49% (additional). This applies across the whole UK. Money in ISAs is not affected.
- Pension Tax Allowance (new): from 6 April 2027 to 5 April 2030, pensioners whose total income is no more than the full new State Pension will not pay income tax. The benefit tapers away for those just above that level.
- Mileage rates: the tax-free rate for using your own car or van for work rises permanently to 55p (from previous 45p) per mile for the first 10,000 miles and 35p (from previous 25p) per mile after that.
- Employment expenses: from 6 April 2028, the £2,500 limit that forces employees into self assessment to claim expenses is removed. More claims can go through PAYE, but HMRC will ask for evidence first.
- Pension death benefits: from 28 October 2026, beneficiaries are no longer taxed just because a pension lump sum is paid more than two years after the member died.
- Inheritance Tax and trusts: from 28 October 2026, new rules limit when debts linked to trust property can reduce the value for Inheritance Tax.
- High Income Child Benefit Charge: HMRC will automatically set off Child Benefit overpayments against the charge.
For business owners and companies
- Corporation tax: main rate stays at 25%.
- Capital allowances: a new 50% first year allowance on main pool spending from 1 January 2027. The main writing down allowance drops from 18% to 12% from 1 April 2027 (companies) and 6 April 2027 (sole traders and partnerships).
- Business Asset Disposal Relief (BADR): the lifetime limit for the 18% rate falls from £1 million to £500,000 for disposals from 6 April 2027.
- Founders’ Relief (new): a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for founders of qualifying high growth, innovative companies, from 6 April 2027. Detailed rules are still under consultation. (details to follow)
- Trading Allowance: rises from £1,000 to £3,000 from 6 April 2027. Small side income up to this amount is tax free.
- Employee share schemes: the CSOP limit doubles to £120,000 per employee and the scheme is renamed EMI2. EMI grant notifications are scrapped from 6 April 2027 (report in the year end return instead).
- R&D tax relief: the Claim Notification Form is removed from 1 April 2027.
- National Living Wage: rises 3.9% to £13.21 an hour from 1 April 2027. The rate for 18 to 20 year olds rises to £11.27 (NMW).
- Company cars: benefit in kind rates for 2030-31 go up by 1 point. Electric cars move from 9% to 10%.
VAT changes
- Cross border services: from April 2027, the reverse charge only applies where the UK customer is VAT registered. Overseas suppliers selling to non-registered UK businesses must charge UK VAT.
- Online marketplaces: from 1 October 2027, platforms must collect VAT on sales by UK VAT registered sellers and UK businesses selling over £90,000 a year on that platform.
- Public EV charging: confirmed at 20% VAT from 1 November 2026.
- Domestic electricity: the 0% VAT rate is extended to 1 July 2027.
- Large minicab operators: VAT on the full fare from 2 January 2028 (proposed threshold £50 million turnover).
VAT & Payroll Compliances
1. Mandatory Direct Debit for PAYE and VAT
- VAT from 1 April 2029 and PAYE from 6 April 2029.
- HMRC can automatically collect qualifying unpaid liabilities where payment has not been made by the specified cut-off date.
2. Increased HMRC Tax Enquiries
- Recruitment of 670 additional compliance officers by 2029/30.
- Greater scrutiny of tax returns, business records and potential tax underpayments.
3. International Property Information Sharing
- From 2029/30, planned automatic exchange of property ownership information between participating countries.
- Greater visibility of overseas properties, rental income and capital gains.
Property
Landlords are the group hit hardest by this Budget. From 6 April 2027, tax on rental profits rises by 4 points at every band compared with today.
Tax on rental income (England, Wales and Northern Ireland)
| Taxpayer band | 2026-27 (now) | From 6 April 2027 |
|---|---|---|
| Basic rate | 20% | 24% |
| Higher rate | 40% | 44% |
| Additional rate | 45% | 49% |
This is 2 points more than the rise already announced in Budget 2025. Scottish taxpayers should check Scottish rates separately. Property held in a limited company pays corporation tax, so it is not affected by these rates.
Other changes for landlords and investors
- Stamp Duty on rent under assured tenancies: removed in England, backdated to 1 May 2026, following the Renters’ Rights Act 2025.
- ATED (properties held in companies): annual charges rise 3.5% for 2027-28.
- High Value Council Tax Surcharge (England): confirmed, with a deferral scheme, some discounts and exemptions, and a 100% premium on homes left empty for 12 months or more. (details to follow)
- SDLT group relief: relief will be clawed back as intended when a buyer leaves a group, even if the seller company has been wound up. Applies from 29 October 2026. (details to follow)
- HMRC data on landlords: HMRC is consulting on getting more property income data from third parties. The UK will also share real estate data with other countries from 2029-30. Expect more checks on undeclared rental income.
- Capital allowances: the lower 12% writing down allowance from April 2027 also applies to plant and machinery claims by property businesses.
For buyers and first time buyers
- Your First Home scheme (England):
20% government equity loan, deposit from 2.5%, and no interest on the loan for the first five years.
- Household income caps: £110,000 outside London and £140,000 in London.
- Price caps set locally, with £650,000 in inner London and £500,000 in outer London.
- Pre-registration opens by the end of December 2026, applications from February 2027, first loans from April 2027.
- Lifetime ISA: from 29 October 2026, the penalty for using a LISA on a first home above £450,000 drops from 25% to 20%.
- First Time Buyer ISA (new): replaces the Lifetime ISA for new savers from April 2029. Save up to £4,000 a year with a 25% bonus (maximum £20,000) towards a first home up to £450,000. No upper age limit.
For developers and commercial property
- Biodiversity Net Gain: small residential brownfield sites up to 1.5 hectares in England will be exempt. Start date to be confirmed.
- Land sold to housing associations: 0% VAT from 1 April 2027.
- Building regulations: no major changes for the rest of this Parliament, other than building safety.
- Business rates for retail, hospitality and leisure (England, from 1 April 2027):
- Small Business Rate Relief at 100% up to £18,000 rateable value, tapering to £21,000.
- Pubs, social clubs and most live music venues get 35% relief (up from 15%).
- Other bills capped at CPI inflation for 2027-28 and 2028-29.
- Valuation Tribunal appeal fees scrapped, with refunds for fees already paid on the 2026 list.
- Vape shops and adult gaming centres lose these reliefs.
Investment
ISAs & Shares
- Cash ISA limit: stays at £20,000 a year. The planned cut has been reversed.
- Stocks and shares ISA: the government will design a new incentive for first time investors with the industry.
- Shares: Stamp Duty and Stamp Duty Reserve Tax on shares will be replaced by a single Securities Transfer Tax from late 2027.
Pensions
- Pension Tax Allowance: pensioners with income no higher than the full new State Pension pay no income tax from April 2027 to April 2030.
- Death benefits: the two year rule that could make lump sums taxable is removed from 28 October 2026.
- Terminal illness: easier access to pension savings, and overseas doctors can provide evidence.
- New pension options: rules will allow Guided Retirement and retirement only Collective Defined Contribution schemes.
Business finance and support
- British Business Bank: £5 billion more capacity, including a new venture debt product and more support for community lenders.
- Export finance for SMEs: wider access to UK Export Finance guarantees and a new small loans scheme in 2027.
- Investment schemes: EIS, SEIS and VCT rules made easier to use.
- Young Entrepreneurs Allowance: a pilot in England to help with living costs in the first year of a new business.
- Energy costs: around 10,000 energy intensive manufacturers get a 20% to 25% electricity discount from April 2027.
- Fuel duty: the 5p cut and freeze continue to 1 July 2027.
Household support
- Household Energy Payment: £100 for homes in council tax bands A to D in England, paid via local councils from January 2027.
- Gas standing charges: to be abolished from 2027 onward, with details to follow.
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