The UK Budget 2026, delivered on 28 October, introduced a range of tax measures affecting individuals, property owners, investors and businesses. While some changes offer new opportunities, others will require forward planning to manage future tax liabilities.
Personal Tax
From April 2027, income tax rates on savings and property income will increase to 24%, 44% and 49%, depending on the taxpayer’s income tax band. This will affect savers and landlords, making tax-efficient investment and property ownership structures increasingly important.
The trading allowance will rise from £1,000 to £3,000 from April 2027, benefiting individuals with smaller amounts of trading or miscellaneous income.
Corporation Tax and Capital Allowances
The main Corporation Tax rate remains at 25%, with the small profits rate maintained at 19%.
Businesses investing in qualifying plant and machinery will benefit from an increase in the main-rate first-year capital allowance to 50% from January 2027. However, the annual writing-down allowance will reduce to 12% from April 2027 for Corporation Tax purposes. Businesses should review the timing of planned capital expenditure.
Capital Gains Tax (CGT)
A new Founders’ Relief will introduce a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders and significant early investors in high-growth innovative companies from April 2027.
However, the lifetime limit for Business Asset Disposal Relief will fall from £1 million to £500,000 for qualifying disposals from the same date. Business owners considering a sale should review their exit plans and eligibility for relief.
Inheritance Tax (IHT)
The planned inclusion of most unused pension funds and pension death benefits within an individual’s estate for IHT purposes will take effect from April 2027. This reinforces the importance of reviewing wills, pension arrangements and succession plans.
R&D Tax Relief
From April 2027, the requirement to submit a separate R&D Claim Notification Form will be removed. The information required in the Additional Information Form is also due to be simplified from autumn 2027. Businesses should nevertheless maintain robust evidence supporting qualifying R&D expenditure and claims.
VAT
From October 2027, online marketplaces will become liable for VAT on sales by UK businesses with annual sales of at least £90,000 through the relevant platform. A zero VAT rate will also apply to land sold to registered social housing providers from April 2027.
