On Wednesday 28 October 2026, the Chancellor, John Healey delivered his (and Andy Burnham’s) first budget. His opening statement was that ‘this is a budget for working people and businesses both large and small’ and there will no doubt be mixed opinions on whether he has achieved this.
There were smaller than usual National Minimum Wage increases which is no doubt a nod towards the growing number of young people not in work and struggling hospitality, leisure and care sectors.
Householders were helped by an extension to the cut in VAT on electricity bills, scrapping gas standing charges and a new £100 winter fuel payment for householders in properties in Council Tax bands A to D. This seems to be a popular announcement as the government’s council tax checker website has just crashed!
As expected there were no changes to the main tax rates or allowances although there’s been a further hike in self employed landlord tax and a cut in the £1m Business Asset Disposal Relief allowance to £500K which is a real kick in the teeth to founders.
There was a new Founders Relief announced which seems to reduce the Capital Gains Tax rate on the sale of trading company shares to 10% on up to £10m provided the proceeds are reinvested in a new startup which seems to be a positive step.
There is also help for the high street with an extension to small business rates relief (although this doesn’t extend to vape shops).
As ever the devil is in the detail and we’ll report our findings over the course of the next few days.
Increase to Business Mileage Rates
The earlier increase to the approved mileage rate, from 45p to 55p per mile for the first 10,000 business miles, has been made permanent. From 6 April 2027, the rate for miles over 10,000 will also rise from 25p to 35p.
If you pay mileage allowances or claim them as a sole trader, make sure your expense policy reflects the new rates.
Paid Paternity Leave for the Self-Employed
For the first time, self-employed fathers and partners will be able to claim two weeks of paid paternity leave, currently worth up to £194 a week. The government expects the change to support more than 150,000 extra parents each year.
Small Business Rate Relief Threshold Raised
The threshold for small business rate relief will rise from £12K to £18K, so eligible properties with a rateable value below £18K will pay no business rates. The Chancellor said this will take around 70,000 businesses in England, such as shops, pubs, cafés and gyms, out of paying business rates altogether.
National Living Wage Increase
From April 2027, the National Living Wage for workers aged 21 and over will rise by 3.9%, from £12.71 to £13.21 an hour, giving around 2.3 million workers a pay rise. The rates for younger workers and apprentices will also rise by 3.9%.
| Rate from | 21 and over | 18 to 20 | Under 18 | Apprentice |
|---|---|---|---|---|
| 1 April 2026 (current) | £12.71 | £10.85 | £8.00 | £8.00 |
| 1 April 2027 | £13.21 | £11.27 | £8.31 | £8.31 |
Source: GOV.UK National Minimum Wage and National Living Wage rates.
Remember, the apprentice rate only applies to apprentices under 19 or in the first year of their apprenticeship. After that, they’re entitled to the rate for their age.
For businesses, this means higher wage bills, so it’s worth budgeting for the increase now. Our payroll team can help make sure you’re paying the right rates from April and are calculating the impact on our payroll clients as we type.
Business Asset Disposal Relief Limit Halved
The lifetime limit for Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) will be cut from £1m to £500K. This means business owners selling their company will pay the full rate of Capital Gains Tax on gains above £500K.
New Founders Relief
A new Founders Relief will apply a 10% rate of Capital Gains Tax on up to £10m of gains. Full details are still to be confirmed, but it could replace Business Asset Disposal Relief.
Gambling: Machine Games Duty Increase
Machine Games Duty on higher-stake gaming machines will rise from 20% to 25%. This will mainly affect arcades and bingo halls.
Help with Household Energy Costs
To help households with the cost of energy, the 0% rate of VAT on household electricity bills, which was due to end in March 2027, will be extended until July. Gas standing charges will also be scrapped from 2027 (or as soon as possible after), although unit costs are expected to rise slightly to make up for some of this. Households in Council Tax bands A to D in England will also receive a £100 Household Energy Payment, paid directly into their bank accounts.
Temporary Increase to Bank Surcharge
The Bank Corporation Tax Surcharge will rise by an extra 3%, from 3% to 6%, for 15 months. The money raised will help pay for some of the measures announced in the Budget. It will start in January and end 15 months later.
Higher Tax on Property and Savings Income
From April 2027, landlords and savers face a further 2% rise in the tax they pay on rental and savings income. This comes on top of the 2% increase announced in last year’s Budget, which also takes effect from April 2027, so the total rise will be 4%. The attack on landlords continues.
Trading Allowance Tripled
To help small start-ups, the trading allowance will increase from £1K to £3K. This means individuals can earn up to £3K a year from self-employment or side businesses without paying tax on it.
Local Income Tax Share for Mayors
From 2028, mayors in England will receive a share of the income tax generated in their area for the first time. The Chancellor said the change means “communities directly benefit when their economy grows”.
More Regular Income Tax Payments
From 2029, the way Self Assessment income tax is paid will change, so that more people make smaller, more regular payments through the year, rather than facing larger bills that are harder to pay. We see this as an inevitable next step from Making Tax Digital (MTD), which already requires many sole traders and landlords to send HMRC quarterly updates.
First Time Buyer ISA to Replace Lifetime ISA
A new First Time Buyer ISA will replace the Lifetime ISA (LISA). There will also be help for existing LISA holders who don’t have enough saved to buy their first home.
Other Autumn Budget 2026 Highlights
- Capital allowances: Full expensing stays for companies, and the main first-year allowance for other assets will rise from 40% to 50%. The main writing down allowance will fall from 14% to 12%.
- Cash ISA allowance: The planned cut to £12K for under 65s has been scrapped, so the £20K ISA allowance stays for everyone.
- Fuel duty: The 5p cut to fuel duty and the reduced rate on red diesel have been extended until July.
- Business electricity bills: A new British Industrial Competitiveness Scheme will take 25% off electricity bills for 10,000 firms.
- HMRC powers: HMRC will get extra funding and stronger powers to collect overdue tax from people who can afford to pay but ignore repeated contact.
- Business rates for mayors: From next year, 20% of business rates revenue will go to mayors, with 100% kept locally by the end of the decade.
- Overnight visitor levy: From 2028, mayors and some local authorities will be able to introduce a tax on overnight stays.
- Supermarket tariffs: Tariffs on more than 100 supermarket products will be suspended to help keep prices down.
- State pension: From 2030, the triple lock will change so the state pension rises by inflation or 2.5%, whichever is higher.
- Young entrepreneurs: A new young entrepreneurs allowance will cover a year of living costs for young founders while they get their business off the ground.
- Your First Home scheme: From next spring, first-time buyers with a 2.5% deposit are expected to be able to get an equity loan worth 20% of the value of a new build home.
Whether you run a business, rent out property or are self-employed, this Budget brings changes worth planning for. Our team can help with everything from tax planning and payroll to Self Assessment, Making Tax Digital and exit planning. You can also find all of our Budget content in our Budget Hub.
For a free, no obligation initial meeting (either in person or online), please contact us on help@360accountants.co.uk or 01482 427360.
