The short version: if you earn interest on savings or receive rental income, you'll face higher tax rates from April 2027. If you run a business, there are some welcome opportunities to save tax on investment and simplify administration, but there are also changes you'll need to prepare for.
The Chancellor has delivered Budget 2026, and as always, the headlines only tell half the story. We’ve worked through the detail to identify the changes that are most likely to affect our clients.
Whether you’re saving for the future, managing a rental property or running your own business, here’s what’s changing, when it happens and what you should be thinking about now.
For individuals, savers and families
Your savings interest is about to cost you more
One of the biggest changes for individuals is a new, higher set of tax rates on savings income. From 6 April 2027, interest will be taxed at 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers. That’s four percentage points more than the corresponding rates of tax on other income.
These rates apply to taxable savings interest after any available allowances. If your savings are held within a cash ISA, the interest remains tax-free. The impact will therefore depend on how much interest you earn and how your savings are held.
What to do: The good news is that the cash ISA limit stays at £20,000 for all adults. If you hold sizeable cash savings outside an ISA, now is the time to make full use of your allowance and think about whether a spouse or partner could hold some savings instead.
Good news for side hustles
If you earn a bit extra from selling crafts, tutoring, dog walking or similar, this one’s for you. The Trading Allowance is tripling from £1,000 to £3,000 from April 2027. If your total qualifying trading income stays within that figure, you won’t need to declare it or pay tax on it.
Saving for a first home
The Lifetime ISA is being replaced for new savers by a new First Time Buyer ISA from April 2029. It will allow you to save up to £4,000 a year, with a 25% government bonus towards a first home worth up to £450,000. The total government bonus will be capped at £20,000.
If you already have a Lifetime ISA, you can continue using it under the existing rules. And from 29 October 2026, the penalty for using a Lifetime ISA towards a home above the property price cap falls from 25% to 20%.
Other changes worth knowing
- Business mileage: The 55p per mile rate for the first 10,000 business miles is being made permanent. From April 2027, the rate for every mile above 10,000 also increases from 25p to 35p. This is welcome news for employees and self-employed people who use their own vehicles for work.
- Claiming work expenses: From April 2028, you won’t need to file a tax return just to claim more than £2,500 of unreimbursed work expenses. You’ll be able to claim through PAYE instead.
- Pensions and inheritance tax: A reminder that from 6 April 2027, most unused pension funds will count towards your estate for inheritance tax. If you haven’t reviewed your estate plans, please talk to us.
- Homes worth £2 million or more: A new High Value Council Tax Surcharge will apply to owners of properties in England worth £2 million or more from April 2028.
- A little breathing room on bills: The 5p fuel duty cut and the 0% VAT rate on household electricity have both been extended to 30 June 2027.
For landlords
Rental profits will be taxed more heavily
This is the headline for landlords. From 6 April 2027, rental income will have its own tax rates: 24% for basic rate, 44% for higher rate and 49% for additional rate taxpayers in England, Wales and Northern Ireland. Scotland has different income tax arrangements, so landlords there should check the rates applicable to their circumstances.
To put that in context, a higher-rate landlord with £20,000 of rental profit could pay £800 more a year compared with the current 40% rate, assuming all the profit falls within the higher-rate band. This is also a further increase on the 42% property income rate that had already been scheduled for April 2027.
What to do: Now is a good time to review how your portfolio is held. Depending on your circumstances, it may be worth looking at ownership between spouses, your finance arrangements, or whether a company structure makes sense. Every situation is different, so please speak to us before making any changes.
A softer landing for Making Tax Digital
If you’re due to join Making Tax Digital for Income Tax in April 2027, it’s important to get your systems ready from the outset.
HMRC has confirmed that penalty points for late quarterly updates will not apply during the 2026-27 tax year. However, this concession does not automatically extend to people joining in 2027-28.
You’ll still need to maintain digital records and submit all four quarterly updates before filing your tax return, so it’s worth getting familiar with the system well before your start date.
Smaller changes that help
- No SDLT on rent under assured tenancies: Since 1 May 2026, Stamp Duty Land Tax no longer applies to rent payable under assured tenancies, and you no longer need to file a return simply because rent is payable.
- Fairer penalties on property sales: If you miss the deadline for reporting a residential property sale, penalties will now stop building up once you report the sale on your tax return.
Planning energy-efficiency upgrades? Act soon
VAT on energy-saving materials such as insulation, solar panels and heat pumps goes back up from 0% to 5% on 1 April 2027. If you’re planning upgrades to improve EPC ratings, bringing the work forward could save you money.
For business owners and employers
Stability on Corporation Tax
There are no surprises here. The main rate stays at 25% and the small profits rate at 19%, confirmed through to the year starting April 2028.
National Insurance thresholds also stay frozen until 2030-31, following the previous announcement. This means employers and employees will need to continue factoring the frozen thresholds into their financial planning.
A boost for investing in equipment
If you’re planning to buy machinery, vans, IT or other equipment, timing could matter. From 1 January 2027, a new 50% first-year allowance lets you deduct half the cost of qualifying main-rate purchases straight away. For the rest of your main pool, the annual writing-down allowance falls to 12% from April 2027.
The new allowance increases the immediate tax relief available on qualifying investment, although the rules and interaction with other capital allowances will determine which option is most beneficial.
What to do: If you’re planning significant purchases, it’s worth discussing the timing and tax treatment with us before committing to the expenditure.
Payroll is changing: benefits in kind go real-time
This is one for your payroll team to put in the diary. From 6 April 2027, employers must report company cars, vans, fuel and private medical cover through payroll each month, rather than on P11D forms after the year end. Most other benefits follow from April 2028.
What to do: Check that your payroll software and processes are ready, and give employees with benefits a heads-up, as their monthly take-home pay may change.
More generous share schemes
Share options remain a great way to reward and retain key staff. From April 2027, the CSOP limit per employee rises to £120,000 and will no longer count against EMI limits. The scheme is also being renamed EMI2.
Employees will also get 180 days, rather than 90, to exercise EMI options after a disqualifying event. These changes could make share schemes more attractive for businesses looking to recruit and retain talented employees.
VAT changes to watch
- Not VAT registered and buying from overseas? From April 2027, overseas suppliers of services (think software subscriptions and online advertising) will charge UK VAT directly to businesses that aren’t VAT registered. This could mean you have to pay UK VAT, normally at 20% where the standard rate applies, increasing some of your costs.
- Selling through online marketplaces? From October 2027, platforms like Amazon and eBay will start collecting VAT on sales by UK sellers who are VAT registered or above a sales threshold, proposed at £90,000 per platform. If you sell through online marketplaces, it’s worth keeping an eye on the final rules and how they might affect your business.
Thinking of selling your business? Read this
Business Asset Disposal Relief (BADR) lets business owners pay a reduced rate of Capital Gains Tax when they sell qualifying business assets or shares. From 6 April 2027, the lifetime limit is being cut in half, from £1 million to £500,000.
For an owner selling a business with a £1 million qualifying gain, that means only £500,000 of the gain will benefit from the reduced rate. The remaining £500,000 will be subject to the applicable standard Capital Gains Tax rate. That could mean a noticeably bigger tax bill.
What to do: If a sale or retirement is on the horizon in the next 18 months, talk to us now. Sales agreed under a contract before 6 April 2027 but not yet completed have special rules, so timing really matters.
There is a new relief on the way, too. Founders’ Relief will offer a reduced Capital Gains Tax rate of 10% on qualifying share disposals, up to a lifetime limit of £10 million in gains. It’s aimed at founders and significant early investors in high-growth, innovative UK companies. The detailed eligibility conditions are still being consulted on until 30 November 2026. We’ll update you once the rules are clearer.
Looking further ahead: how you pay HMRC is changing
Some of the biggest long-term changes aren’t about tax rates at all, but about how you report and pay. They’re a few years away, but worth knowing about now.
- From April 2028: Everyone will have a legal duty to correct mistakes on tax returns once they spot them. HMRC will also be able to send a notice asking you to check your affairs if it suspects an error.
- From April 2029: Self Assessment taxpayers who make payments on account will move to more regular payments during the year, with the option to pay through PAYE.
- From April 2029: Businesses will need a Direct Debit set up for VAT and PAYE. You can still pay another way before the deadline, but HMRC will collect any unpaid balance automatically.
- From April 2029: VAT invoices will need to be issued and received electronically in a set format.
Good record-keeping and up-to-date software will be more important than ever. If you’d like help getting your systems ready, we’re here.
How we can help
Budgets can feel like a lot to take in, but you don’t need to act on everything at once. The most important thing is to understand which changes affect you and to plan ahead, particularly with several significant changes taking effect from April 2027.
If you’d like to talk through how any of this applies to you, your property or your business, please get in touch. We’re always happy to help.
This article is a summary of announcements made in Budget 2026 on 28 October 2026. Some measures are still subject to consultation and legislation, and details may change. It is not a substitute for personal advice, so please speak to us before acting.
