Budget 2026: what it means for business owners, landlords and savers

Budget 2026 at a glance

The Budget was delivered on 28 October 2026. The headline rates of income tax, National Insurance and VAT are unchanged. Corporation tax stays at 25% (19% small profits rate). The extra tax falls on income from assets: savings and rental profits are taxed at higher rates from April 2027.

Most changes start on 6 April 2027, the first day of the 2027/28 tax year. Nothing below changes what you owe for 2025/26 (due 31 January 2027) or the current 2026/27 tax year, unless we say otherwise.

Landlords: higher tax on rental profits

Budget 2025 had already raised the rates on property income by two percentage points from April 2027. This Budget adds a further two points from the same date. From 6 April 2027, rental profits in England, Wales and Northern Ireland are taxed at 24% (basic rate), 44% (higher rate) and 49% (additional rate). Scotland and Wales can set their own property rates.

Relief for mortgage interest under Section 24 is given at the property basic rate, so the credit rises to 24% too. A basic rate landlord with mortgage interest is roughly no worse off on that part. A higher rate landlord pays 44% on the profit and still only gets 24% back on the interest.

What to do now: if you hold property personally and pay higher rate tax, the gap between personal ownership and a company has widened. Moving property into a company has its own costs (stamp duty and capital gains tax on the transfer), so get the numbers run before you act. The 2026/27 tax year is still at the old rates.

Savers: interest taxed at 24%, 44% and 49%

The same rise applies to savings income across the UK from 6 April 2027. Interest inside an ISA stays tax-free, and the cash ISA limit stays at £20,000 for savers over 18 from April 2027. If you hold cash outside an ISA or a pension, now is a good time to use this year's allowance.

Company directors and business owners

Corporation tax. The main rate stays at 25% and the small profits rate at 19%, with both confirmed for the financial year starting 1 April 2028. Full expensing for companies stays.

Capital allowances. The first-year allowance on new main rate plant and machinery rises from 40% to 50% for spending on or after 1 January 2027. This mainly helps unincorporated businesses and leasing, where full expensing is not available. Second-hand assets and cars are excluded. The writing-down allowance on the main pool drops from 14% to 12%, and that cut applies to existing pool balances too. If you plan to buy equipment, timing it after 1 January 2027 could give you a bigger first-year deduction.

How you take money out of your company. The government will reform how distributions to shareholders are taxed, so similar transactions are taxed the same way. Draft legislation comes in 2027 and the changes take effect from April 2028. Genuine changes of ownership, including passing a business to family, are meant to keep capital treatment. Dividend rates were not changed at this Budget. If you are planning a share buyback or a reorganisation before 2028, take advice early.

Share options. The Company Share Option Plan is renamed EMI2 and its individual limit doubles from £60,000 to £120,000 from 6 April 2027. The EMI exercise window after a disqualifying event extends from 90 to 180 days.

Mileage. The approved rate for business miles above 10,000 in a tax year rises from 25p to 35p from 6 April 2027. The first 10,000 miles stay at 45p.

Selling your business: BADR halved, Founders' Relief arrives

The lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000 for disposals on or after 6 April 2027. There are transitional rules for some contracts and share reorganisations. If a sale is already in progress, the date of the disposal matters a great deal.

A new Founders' Relief starts on 6 April 2027. It gives a 10% capital gains tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies. Who qualifies is not settled yet. A technical consultation is open until 30 November 2026 and the final rules will follow in Finance Bill 2026-27. Do not plan a sale around it until the conditions are published.

Sole traders and side income

The Trading Allowance triples from £1,000 to £3,000 from 6 April 2027. You can receive up to £3,000 a year of trading and miscellaneous income tax-free, and the Self Assessment reporting threshold for trading income rises to £3,000 to match. This is a real help for people with a small side business or occasional freelance work.

For Making Tax Digital for Income Tax, people joining in April 2027 will not get late submission penalty points for their first four quarterly updates in 2027/28. The roll-out is also deferred for some groups, including people using qualifying care relief, until further notice. The April 2026 and April 2027 start dates for everyone else are unchanged.

Employers

• National Living Wage rises 3.9% to £13.21 an hour on 1 April 2027. The 18 to 20 rate rises to £11.27.
• Payrolling benefits becomes mandatory for company cars and vans, fuel and medical benefits from 6 April 2027, and for most other benefits from 6 April 2028.
• The £2,500 Self Assessment threshold for employment expense claims is removed from April 2028.
• From April 2029, VAT and PAYE must be paid by Direct Debit, with some exceptions.

Shops, pubs and other high street businesses

For retail, hospitality and leisure properties in England, Small Business Rates Relief widens from 1 April 2027. 100% relief applies up to a rateable value of £18,000 (up from £12,000) and tapered relief up to £21,000 (up from £15,000). Bills for qualifying properties are frozen in real terms for 2027/28 and 2028/29.

From October 2027, online marketplaces will collect VAT on sales by UK businesses selling through them, where sales on that platform are at least £90,000 a year.

Pensions and inheritance tax

As already legislated, unused pension pots come into your estate for inheritance tax from 6 April 2027. The Budget also removes the two-year rule for pension death benefits from 28 October 2026, and changes how trust liabilities are treated for deaths and chargeable events from the same date.

A new Pension Tax Allowance runs from 6 April 2027 to 5 April 2030. Pensioners whose total income is no more than the full new State Pension will not pay income tax. Above that, the allowance tapers away at £1 for every £3 of extra income.

What has not changed

• Income tax, National Insurance and VAT headline rates. Income tax on salary and self-employed profit stays at 20%, 40% and 45%.
• The £12,570 personal allowance and the other income tax thresholds. See our 2026/27 tax thresholds reference.
• Corporation tax at 25% and 19%, and full expensing.
• Dividend tax rates.

What to do before April 2027

1. Landlords paying higher rate tax: model your 2027/28 position at 44% and review how your properties are held.
2. Owners thinking about selling: check whether a disposal before 6 April 2027 keeps the £1 million BADR limit, and watch the Founders' Relief rules.
3. Businesses buying equipment: plan purchases around the 1 January 2027 first-year allowance change.
4. Savers: use ISA and pension allowances to shelter interest.
5. Directors: review any share buyback or restructure planned for 2028 or later against the distributions reform.

These measures still have to pass through Finance Bill 2026-27, and some details may change. We will update this page as the legislation is published.

Frequently asked questions

When was Budget 2026?

The Budget was delivered on 28 October 2026. Most measures start on 6 April 2027.

Did income tax go up in Budget 2026?

Not on earnings. The rates on salary and self-employed profit are unchanged. The rates on savings income and property income rise to 24%, 44% and 49% from 6 April 2027.

What does Budget 2026 mean for landlords?

Rental profits are taxed at 24%, 44% or 49% from 6 April 2027, up from 20%, 40% and 45%. Section 24 mortgage interest relief is given at 24%. Higher and additional rate landlords pay the most extra.

What is Founders' Relief?

A new capital gains tax relief from 6 April 2027 giving a 10% rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies. The qualifying conditions are under consultation until 30 November 2026.

What happens to Business Asset Disposal Relief?

The lifetime limit falls from £1 million to £500,000 for disposals on or after 6 April 2027.