Autumn Budget 2026: What It Means for Small Businesses, Directors and Landlords

13 min read

The Budget on 28 October 2026 left the main rates of Income Tax, National Insurance, VAT, Corporation Tax and dividend tax exactly where they are, but from 6 April 2027 it raises tax on rental and savings income to 24%, 44% and 49%, triples the trading allowance to £3,000, halves the Business Asset Disposal Relief lifetime limit to £500,000 and lifts the tax-free mileage rate above 10,000 miles from 25p to 35p. Here is what actually changes for sole traders, limited company directors, landlords and employers, with the dates, and what we suggest you do about it.

Chancellor John Healey’s first Budget was built around energy bills and the cost of living, with a £100 Household Energy Payment, VAT kept at 0% on household electricity until 30 June 2027 and the 5p fuel duty cut extended to the same date. For business owners, the tax detail sits in the Finance Bill measures published alongside the speech. Everything below is taken from the Treasury’s Budget 2026 announcement and HMRC’s Overview of Tax Legislation and Rates, both published on 28 October 2026, and the official pages are linked at the end.

What did not change

Sometimes the most useful Budget news is what was left alone. Confirmed for 2027/28:

• Income Tax stays at 20%, 40% and 45%, with the Personal Allowance frozen at £12,570 and the higher rate threshold at £50,270 until April 2031. Frozen thresholds pull more of each pay rise into tax, so this is a quiet increase rather than one you will see on a payslip.
• Dividend tax stays at 10.75%, 35.75% and 39.35%, with the £500 dividend allowance. The rise in April 2026 was the last planned change and nothing new was announced.
• National Insurance is unchanged: employer NI at 15% above £5,000 a year per employee, the Employment Allowance at £10,500, employee NI at 8% and 2%, and Class 4 for the self-employed at 6% and 2%. The thresholds stay frozen until April 2031.
• Corporation Tax stays at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between, now confirmed for the year starting 1 April 2028 as well.
• VAT stays at 20%, and the registration threshold stays at £90,000 (deregistration £88,000).
• Capital Gains Tax rates stay at 18% and 24% with the £3,000 annual exempt amount, and the Inheritance Tax nil rate bands stay at £325,000 and £175,000.
• The cash ISA limit stays at £20,000 a year. The planned cut to £12,000 from April 2027 has been dropped.

The Treasury says 84% of taxpayers will see no increase in their tax bill from this Budget. Most of the other 16% have rental or savings income, which is where we start.

Landlords: property income taxed at 24%, 44% and 49% from April 2027

This is the measure that touches the most YF clients. From 6 April 2027, rental profits earned personally get their own set of Income Tax rates: 24% at the basic rate, 44% at the higher rate and 49% at the additional rate. Last year’s Budget had already set separate property rates of 22%, 42% and 47% for April 2027; this Budget adds two more percentage points before those rates have even started. The same 24%, 44% and 49% rates will apply to savings income such as bank interest above your Personal Savings Allowance.

In money terms, a higher rate taxpayer with £10,000 of taxable rental profit pays £4,000 today and £4,400 from April 2027. A basic rate landlord with the same profit goes from £2,000 to £2,400. The 20% tax credit for mortgage interest is tied to the property basic rate, so it is expected to rise to 24% at the same time, which softens the increase a little for landlords with a mortgage.

Three things follow. First, the rates apply to profit, not rent, so every allowable expense now saves you more; our guide to tax on rental income lists what you can claim. Second, if you own property with a spouse or partner, who holds what share changes the bill more than it used to, and a declaration of beneficial interests may be worth making before April 2027. Third, holding property through a limited company, where profits pay 19% to 25% Corporation Tax, will be worth revisiting for some portfolio landlords. It is never a decision to take on the headline rate alone, because mortgage costs, Stamp Duty and how you draw the money out all change the answer, so run both sets of numbers properly before you move anything.

Separately, Making Tax Digital for Income Tax reaches landlords and sole traders with more than £30,000 of gross income from 6 April 2027. The Budget’s one concession here is that HMRC will not apply late submission penalty points to quarterly updates for 2027/28 for that group, so the first year is a soft landing, although the updates still have to be sent before the tax return can be filed. Our MTD guide for landlords covers what you need in place.

Sole traders and side hustles: the trading allowance triples to £3,000

From 6 April 2027 the trading allowance rises from £1,000 to £3,000. If your self-employed or casual income is under £3,000 a year before expenses, you will pay no tax on it and will not need to report it, because the Self Assessment reporting threshold for trading income rises to £3,000 at the same time. HMRC’s own wording is that the allowance covers trading and miscellaneous income generally, so it is not limited to brand new ventures, whatever the speech implied. If you earn more than £3,000 you can still deduct the £3,000 allowance instead of your actual expenses, which helps low-cost businesses such as tutoring, consulting or online selling. Until April 2027 the £1,000 allowance still applies, and the rules in our side hustle guide stand for the 2025/26 return due on 31 January 2027.

Other changes for the self-employed:

• Mileage. The government describes the higher tax-free mileage rates as permanent: 55p a mile for the first 10,000 business miles, and from 6 April 2027 the rate above 10,000 miles rises from 25p to 35p. The same figures apply to the simplified mileage method for sole traders and to what an employer can pay staff tax free.
• National Insurance. Class 2 and Class 4 are unchanged. The small profits threshold rises to £7,355 and the voluntary Class 2 rate to £3.80 a week from April 2027.
• Parental pay. Self-employed fathers and partners will become eligible for paid parental leave for the first time. The start date has not yet been set.
• Young founders. A Young Entrepreneurs Allowance to cover a year of living costs for young people starting a business was announced, with the detail still to come.
• Paying your tax. From April 2029, anyone who makes payments on account will move to more regular in-year payments towards their bill, collected automatically, with an option to pay through PAYE. That is a 2029 change, but it will alter how you budget for tax, and it is one more reason to get bookkeeping into a monthly rhythm now.

Limited company directors: dividends untouched, selling up gets dearer

If you pay yourself a small salary and dividends, nothing in this Budget changes the maths for 2026/27 or 2027/28, and our salary versus dividends guide still applies. The changes are around the edges, and one of them matters a great deal if you ever plan to sell or close the company.

• Business Asset Disposal Relief is halved. The lifetime limit falls from £1 million to £500,000 for disposals on or after 6 April 2027. The 18% rate is unchanged, so gains above £500,000 move from 18% to the normal 24%: on a £1 million qualifying gain that is £30,000 more tax. HMRC says special rules will cover contracts exchanged but not completed before 6 April 2027, so if a sale or a members’ voluntary liquidation is already in motion, the completion date matters. The government’s own estimate is that three in four claimants will see no change.
• A new Founders’ Relief will charge 10% on up to £10 million of lifetime gains on shares in high-growth, innovative companies, for disposals from 6 April 2027. The conditions are out for consultation until 30 November 2026 and are expected to be tight. It is aimed at scale-ups and their early investors rather than the typical owner-managed company.
• Taking money out as capital. The rules on company distributions and repayments of capital are being modernised to stop profits being extracted at Capital Gains Tax rates instead of dividend rates, with draft legislation in 2027 and effect from April 2028. If you are planning a share buyback, a capital reduction or a demerger, do it with advice.
• Directors’ loans. The proposed new reporting regime for company payments to shareholders has been dropped for now. The 35.75% Section 455 charge on an overdrawn loan account is unchanged, so our director’s loan account guide still applies.
• Buying equipment. The main rate first year allowance rises from 40% to 50% for spending from 1 January 2027, while the writing down allowance on the balance falls from 14% to 12% from April 2027. Full expensing and the £1 million Annual Investment Allowance stay, so most small company purchases are still written off in full in the year you buy them.
• Share schemes. From 6 April 2027 the Company Share Option Plan limit doubles to £120,000 per person and the EMI exercise window after a disqualifying event extends to 180 days.
• R&D claims. The separate claim notification form is scrapped for claims made from 1 April 2027 and the additional information form is being simplified from autumn 2027.
• Filing. Nothing changes for your accounts and Corporation Tax return; our guide to the limited company year end walks through what gets filed and when, and our accounts and Corporation Tax service covers closing a company as well as running one.

Employers: minimum wage to £13.21 and payrolled benefits from April 2027

• National Living Wage. Up 3.9% to £13.21 an hour from 1 April 2027, which is £910 a year more for a full-time worker. The 18 to 20 rate rises to £11.27, and the younger and apprentice rates rise by the same 3.9%.
• Employer NI. Unchanged at 15% above £5,000 per employee, with the £10,500 Employment Allowance, so the cost of a pay rise is the rise plus 15% plus pension contributions. Our payroll service prices this for you before you commit.
• Payrolling benefits in kind becomes mandatory from 6 April 2027 for company cars and vans, car and van fuel, and medical benefits, with all other benefits following from 6 April 2028. If you still complete P11Ds, the 2026/27 forms due by 6 July 2027 will be the last round for those benefits.
• Expenses. The tax-free flat rates for meals on business trips rise to £20, £60 and £75 for trips over 5, 10 and 24 hours from April 2028, and from the same date employees will no longer need a Self Assessment return just to claim work expenses over £2,500.
• Business rates. In England the Small Business Rate Relief threshold for shops, hospitality and leisure premises rises from £12,000 to £18,000 of rateable value from April 2027, taking around 70,000 more businesses out of rates altogether, and other retail, hospitality and leisure bills are frozen in real terms for two years.
• Paying PAYE. From April 2029 PAYE and VAT liabilities will have to be covered by a Direct Debit instruction, with other payment methods allowed only before a cut-off date.

VAT: threshold held, online marketplaces to collect VAT from October 2027

• Threshold. Registration stays at £90,000 of taxable turnover over any rolling 12 months. If you are getting close, read our guide to approaching the £90,000 VAT threshold.
• Online marketplaces. From October 2027 platforms such as Amazon, eBay and Etsy will collect and pay the VAT on sales by UK VAT-registered sellers, and by any UK seller with £90,000 or more of annual sales on that platform. Personal sales, second-hand goods and business-to-business sales are excluded. The exact threshold and start date will be set in regulations next year.
• Overseas services. From April 2027 an overseas supplier of services to a UK business that is not VAT registered will have to charge UK VAT, instead of the reverse charge applying. If you are unregistered and buy software, advertising or subscriptions from abroad, expect 20% on the invoice that you cannot reclaim.
• E-invoicing. HMRC is taking the power to require electronic VAT invoices from April 2029 and has published a roadmap. Cloud bookkeeping software will handle this; a spreadsheet will not.
• Household bills. The 0% VAT rate on household electricity runs to 30 June 2027, and the 5p fuel duty cut runs to the same date before an inflation rise from 1 July 2027.

Personal finances: ISAs, pensions and Child Benefit

• ISAs. The £20,000 cash ISA limit is kept. The Lifetime ISA withdrawal charge drops from 25% to 20% from 29 October 2026 where the home costs more than the £450,000 cap, and a new First Time Buyer ISA with a 25% government bonus will replace the Lifetime ISA for new savers from April 2029. Existing Lifetime ISA holders carry on under the current rules.
• Pensioners. From April 2027 a new Pension Tax Allowance means anyone whose total income is no more than the full new State Pension pays no Income Tax on it, tapering away above that level.
• Pensions. The £60,000 annual allowance and £10,000 money purchase annual allowance are unchanged. Unused pension funds enter the Inheritance Tax estate from 6 April 2027, as already legislated, so estate planning for directors with large pension pots is still on the to-do list.
• Child Benefit. Overpaid Child Benefit will be offset against High Income Child Benefit Charge paid on the same money, which fixes a long-standing unfairness. Our guide to the £60,000 Child Benefit trap explains how the charge works.
• Energy. A £100 Household Energy Payment goes to households in council tax bands A to D in England in 2027, and the government has asked Ofgem to abolish gas standing charges.

What to do before April 2027

1. Landlords: get your 2026/27 expense records complete, decide whether ownership shares between you and a partner should change, and ask whether a company structure stacks up on your real figures rather than the headline rate.
2. Selling or closing a company: if a disposal is likely in the next 18 months, model the Business Asset Disposal Relief change now. Completing before 6 April 2027 keeps the £1 million limit; gains under £500,000 are unaffected either way.
3. Savers: use the £20,000 ISA allowance before 5 April 2027 and again after it. From April 2027 interest outside an ISA is taxed at 24% or 44% once you pass the Personal Savings Allowance.
4. Employers: budget for £13.21 an hour from 1 April 2027 and move company cars, fuel and medical benefits onto payroll ready for 6 April 2027.
5. Everyone on Self Assessment: the 31 January 2027 deadline for 2025/26 is unchanged, and quarterly MTD updates start in April 2027 if your self-employed and rental income is over £30,000. Our 2026/27 tax calendar has every date.

Where YF Accounting fits in

A Budget is only useful if someone turns it into a plan for your numbers. That is what our fixed-fee service is for: sole traders from £35 a month, limited companies from £50 a month and growing businesses from £200 a month, with full details on our pricing page. Landlords and higher earners are covered by the Self Assessment and personal tax service, and companies by the accounts and Corporation Tax service.

You deal with one person (me, Yoni), support is unlimited rather than billed by the hour, and we flag changes like these before they bite rather than after. If you want to know what this Budget means for you specifically, Book a free call or ring 0161 531 0959 and we will go through it on your own figures.

Frequently asked questions

Sources: HM Treasury, Budget 2026 (28 October 2026); HMRC, Budget 2026: Overview of Tax Legislation and Rates and its Annex A rates tables. Figures checked on 28 October 2026. Some measures still need legislation and may change before they take effect.

Written by Yoni Finke FCCA

Founder of YF Accounting, a fixed-fee, fully digital accountancy practice in Manchester serving SMEs, sole traders and landlords across the UK. One point of contact, unlimited support, no surprise bills.

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Savings Tax Rise From April 2027: Interest Taxed at 24%, 44% and 49%9 min read →Landlord Tax Rise From April 2027: Rental Profits Taxed at 24%, 44% and 49%9 min read →What Triggers an HMRC Enquiry, and How Not to Be a Target9 min read →

This article is part of our Limited Company Tax guide. See the full topic for related reads.