Following a difficult year for a lot of businesses, the Chancellor of the Exchequer, Rachel Reeves, came to Parliament to deliver her Autumn Budget, arguably the most talked about budget in years.
Stated below are some of the main announcements that have come out of this Budget, which has been reported to include an additional £26 billion in taxes.
Income Tax and Rate Bands
The Personal Tax Allowance currently set at £12,570, will remain at this level until April 2031, which will bring more people into paying tax than ever before. The Basic Rate Tax Band, presently set at £37,700 will also stay the same until April 2031. Personal allowances will be reduced by £1 for every £2 a person’s income exceeds £100,000.
Property and savings income
From April 2027 the tax rates for property income and savings income will increase by 2% (basic rate 22%, higher rate 42% and additional 47%).
Tax tip - if you are a sole trader or landlord and your turnover exceeded £50,000 during 2024/25 tax year you may fall under Making Tax Digital for Income Tax rules from April 2026. This means you will have to report your income quarterly instead of once a year via your self assessment return. Are you ready for this? If not then get in touch as we can help you prepare for April 2026.
Dividend income
From April 2026 the dividend basic and higher rates will each increase 2% (basic rate 10.75% and higher rate 35.75%). The additional tax rate remains the same at 39.35%. If you have control over voting dividends you may wish to consider whether to pay out some dividends before April 2026 to take advantage of the lower rates.
National Minimum Wage (NMW)
The NMW will increase from 1st April 2026 with workers over 21 years old being paid £12.71 (currently £12.21) and workers between 18-20 being paid £10.85 (currently £10). Workers under 18 and Apprentices will be paid £8 (currently £7.55).
Tip - if you are an employer make sure you are compliant with the NMW regulations, as failure to comply can result in a penalty of up to 200% of the liability due. This can catch out those employers who pay a salary rather than hourly wage, so double check the amount of hours your employees are actually working and make sure they are being paid correctly.
Capital Gains Tax (CGT)
CGT rates will remain the same for 2026/27 i.e. 18% for basic rate tax payers and 24% for individuals above basic rate. The rate of CGT which applies to Business Asset Disposal Relief will increase from 14% for disposals on or after 6th April 2025 to 18% from 6th April 2026.
There is no change to the annual exempt amount which is £3,000 for an individual.
Reminder - if you sell a UK residential property that is not your main home you may have to complete a Capital Gains Tax Return within 60 days of the sale completing and pay the tax within that same period. If you are looking to sell get in touch with us as soon as possible so we can help you declare this CGT and avoid paying late penalties.
High Income Child Benefit Charge (HICBC)
The individual’s High Income Child Benefit Charge (HICBC) adjusted net income threshold will remain at £60,000.
For individuals with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal one per cent for every £200 of income that is more than £60,000.
Pensions
The annual pension allowance will remain at £60,000 for 2026/27. The minimum Tapered Annual Allowance will remain at £10,000 for individuals who’s adjusted income for the year is £260,000 or more. The pension tax free lump sum percentage will remain at 25% of the pension value up to a maximum of £268,275.
From 6th April 2027 the government will bring unused pension funds and death benefits payable from a pension into a person's estate for Inheritance Tax purposes.
The state pension will rise from £176.45 to £184.90 per week. Consider making voluntary NI contributions to fill gaps in your state pension history if you have any.
Corporation tax & capital allowances
The rates of corporation tax remained the same, with the main rate being 25% (19% for profits under £50,000).
A new 40% first year allowance was introduced for assets bought to lease out and will be available for expenditure incurred from 1st January 2026.
The main rate of Capital Allowances will fall from the current 18% to 14% from 1st April 2026 for companies and 6th April for sole traders and partnerships.
The 100% FYA for qualifying expenditure on zero-emission cars has been extended to 31st March 2027 for corporation tax purposes and 5th April 2027 for income tax purposes. There will be an electric vehicle road tax charge of 3p per mile for fully electric cars and 1.5p per mile for plug-in hybrid cars.
Individual Savings Account (ISA)
The £20,000 cash ISA contribution limit will continue to apply for people aged 65 or over. For anyone under 65 the cash ISA limit will fall to £12,000 from April 2027. Stocks and shares ISA limit remains at £20,000.
Inheritance Tax
The £325,000 Nil Rate Band (NRB) and the £175,000 Residence Nil Rate Band (RNRB) and the tapering limit for the RNRB at £2million has been retained until April 2031.
From April 2026 the 100% rate of Agricultural Property Relief and Business Property Relief will be restricted to the first £1 million of combined agricultural and business property, with the excess relieved at 50%. The £1 million limit is fixed until 5th April 2031.
How to get further help
If you are unsure as to whether you are affected by any of the changes that the Autumn Budget has brought in, or would like further information please do let our team know.
We offer a specific review of what the measures mean for you and any actions you might want to take. If you'd like to take this up please get in touch and we'll confirm the cost of the review for you.
You can call us on 01937 584188 or send us a call back request.
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