Autumn Budget 2026 – what are the key tax announcements?

Income tax

One of the biggest changes affects income from savings and property. From 6 April 2027, the tax rates on these types of income will increase by a further two percentage points, on top of increases announced in the 2025 Budget. The basic, higher and additional rates will therefore become 24%, 44% and 49% respectively. The property income rates will apply in England, Wales and Northern Ireland, while the savings income rates will apply throughout the UK. In more welcome news for those with small businesses or side hustles, the trading allowance will increase from £1,000 to £3,000 from April 2027. This will allow individuals to earn up to £3,000 of qualifying trading or miscellaneous income without paying income tax on it. The government has also confirmed that the £20,000 annual cash ISA allowance will be retained, abandoning the previously announced reduction. A new tax allowance will also be introduced from April 2027 to prevent pensioners whose total income does not exceed the full new State Pension from having to pay small amounts of income tax.

Capital gains tax

There is mixed news for business owners planning to sell their companies. The lifetime limit for Business Asset Disposal Relief will be reduced from £1 million to £500,000 for disposals from 6 April 2027. With the relief providing an 18% CGT rate on qualifying gains, this could significantly increase the tax bill for some business owners. However, a new Founders' Relief will be introduced from the same date. This will provide a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies. The detailed conditions are subject to further consultation.

Corporation tax and business investment

The main corporation tax rate remains at 25%, but the government is changing the capital allowances system. From April 2027, the main rate of writing down allowances will fall from 14% to 12%. To partially offset this, a new 50% first-year allowance will be available for qualifying expenditure incurred from 1 January 2027. There is also some welcome simplification for companies claiming research and development tax relief. The requirement to submit a Claim Notification Form will be removed from April 2027, while the Additional Information Form will be simplified later in the year.

 VAT

One significant change will affect businesses selling through online marketplaces. From October 2027, marketplaces will become responsible for collecting VAT on qualifying sales made by UK VAT-registered businesses, as well as other UK businesses with annual sales of at least £90,000 through a particular platform. Private sales, second-hand goods and business-to-business transactions will be excluded. Larger private hire vehicle operators will also become liable for VAT on the full value of passenger fares from January 2028. The government is consulting on the precise turnover threshold, with £50 million proposed. Looking further ahead, electronic invoicing will become mandatory for VAT purposes from April 2029, with invoices required to be issued in a specified digital format. There is also an extension to the temporary 0% VAT rate on domestic electricity, which will now continue until 1 July 2027.

Tax administration

The government has announced further changes to the way tax is collected. From April 2029, self-assessment taxpayers who make payments on account will be required to make smaller, more frequent payments throughout the year, rather than relying on the existing twice-yearly system. Mandatory direct debit arrangements will also be introduced for VAT and PAYE from April 2029, although businesses will still be able to pay by other methods before a specified cut-off date. For those joining Making Tax Digital for Income Tax in April 2027, there will be a first-year relaxation of quarterly filing penalties. No penalty points will arise for late submission of the first four quarterly updates.

The detailed documents also include further investment in HMRC compliance activity and new powers, from July 2029, to recover certain unpaid tax debts directly from taxpayers' bank accounts through instalments. Although many of the measures will not take effect until 2027 or later, there are some important planning implications, particularly for business owners considering a sale, landlords and individuals receiving substantial savings income. The detail will emerge as the Finance Bill and supporting guidance are published.