With another change to the leadership in government there has been much talk about the direction the government would go in and if there would be major changes in the 2026 budget. However, after all the speculation, although there have been a lot of changes they are all fairly small in impact.

Here is a summary of the main announcements which will affect businesses and business owners. I am sure many more details will come out over the next few days, weeks or even months.

Income tax
The new separate tax rates for property and savings income, due to take effect from April 2027, will increase by a further 2%. As a result, income from property and savings will be taxed at 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for
additional rate taxpayers. As these taxes are devolved, the Welsh and Scottish Governments will have the power to set their own rates should they choose to do so.

The dividend tax rates announced previously will remain unchanged. From 6 April 2026 the rates will be 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers and 39.35% for additional-rate taxpayers.

From April 2027 there will be a new pension tax allowance which will be calculated by applying the basic rate of income tax (20%) to the difference between the new state pension and the Personal Allowance. For individuals with total income above the State
Pension, the Pension tax allowance will be withdrawn at a rate of £1 for every £3 of income above the level.

For the Self -employed the trading allowance will increase from £1k to £3k from 6th April 2027, this is where an individual can deduct a set allowance from income rather than using their actual expenses.

The government will also be piloting a Young Entrepreneurs allowance scheme, there are few details on this currently, however the suggestion is that there would be an application process.

The National Insurance thresholds for the self-employed will increase by 3.5% for 2027- 28 in line with the CPI.

The government are bringing in more regular payments for self-assessment, meaning that taxpayers who make payments on account for tax will need to make more regular payments throughout the year from April 2029. For taxpayers who also receive PAYE
income, this could be through their tax code.

For MTD, the government will not apply late submission penalty points to quarterly updates for the 2027-28 tax year for Income Tax Self-Assessment taxpayers required to join MTD in April 2027. Customers will still need to send their quarterly updates before they are able to submit their tax return.

Employer costs and National Minimum Wage

The Minimum Wage will increase from 1st April 2027:

	Current rate	From 1st April 2027
Over 21s (National Living wage)	£12.71	£13.21
18 to 20 year olds	£10.85	£11.27
Apprentices and 16-17 year olds	£8.00	No change

Vehicles
For benefit-in-kind purposes, the government have announced an annual uprating of the Van Benefit Charge and Car and Van Fuel Benefit Charges for 2027-2028, meaning that they will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by
CPI from 6 April 2027.

The following new rates will come into effect from 6 April 2027:
• the van benefit charge will be £4,310 in tax year 2027 to 2028 (previously £4,170)
• the van fuel benefit charge will be £825 in tax year 2027 to 2028 (previously £798)
• the car fuel benefit charge multiplier will be £30,200 in tax year 2027 to 2028
(previously £29,200)

They have made permanent the Approved Mileage allowance payment increase to 55p per mile from 45p per mile, which was brought in from April 2026.
A further announcement has been made that the higher rate for mileage over 10,000 miles will increase to 35p per mile from 25p per mile, from April 2027.

Capital allowances
It seems that full expensing is to stay and there was no mention of the annual investment allowance.

They have announced an increase to 50% from 40% for first year allowances for main- rate assets, this will only be useful in very specific cases, firstly after a business has utilised their full £1m AIA and even then, only if full expensing isn’t available, so usually
just for partnerships and sole traders or used assets for leasing (it’s not available for
overseas leasing).
Also, on main pool assets the writing down allowance is reducing further from 14% to 12%, this is the allowances you get on anything in your main pool. This is from April 2027.

Capital Gains Tax
The government will introduce a new Capital gains tax Founders’ relief from 6th April 2027, meaning a reduced rate of 10% CGT will be payable on upto £10 million of lifetime gains. There is currently a consultation underway and the details of how this will work
and what the eligibility criteria have yet to be confirmed, however the proposed criteria appear to be quite restrictive.
The Business asset disposal relief (BADR) lifetime limit will reduce to £500k from £1m for disposals made after 6th April 2027.

Other items that have been announced
From April 2029 the government will require taxpayers to set up a Direct Debit instruction for VAT and PAYE liabilities. There will still be an option to pay via another method before a specified cut-off date, but the DD will collect any unpaid liabilities.

With HMRC involved what could possibly go wrong ......?

The threshold at which High Street shops start paying business rates in England will increase from £12,000 to £18,000

The ATED annual charges will rise by 3.5% from 1 April 2027 in line with the September 2026 Consumer Prices Index (CPI). This is for residential property held within a limited company worth over £500k. In practice exemptions often apply for example when the
property is rented out to a third party, a farmhouse, held as part of a property development business.