Tax
The Chancellor delivered the Budget on 28 October 2026. The good news first: there are no rises to the headline rates of income tax, National Insurance, VAT or corporation tax.
But if you own a limited company, this Budget still matters. The biggest changes hit how you take money out of your business, what you'll pay when you sell it, and how HMRC collects tax from you.
We've read the full detail so you don't have to. Here are the five things you need to know.
Below, we've grouped everything by topic so you can jump to what affects you.
Salary and dividends: no change. The tax rates on your salary and dividends stay the same.
The tax-free personal allowance and the tax bands stay frozen until 2031. As your income rises, more of it gets taxed at higher rates.
Interest and rent: a bigger tax bill. From 6 April 2027, tax on savings income and property income rises to 24% (basic rate), 44% (higher rate) and 49% (additional rate). That's two percentage points on top of the rise already announced last year.
This matters if you charge your company interest on money you've lent it, or charge it rent for a property you own personally. Both now cost you more tax than taking the same money as dividends. It's worth reviewing how you pay yourself before April.
Mileage: a small win. The tax-free rate for using your own car for business is now 55p a mile for the first 10,000 miles. From April 2027 it's 35p a mile after that. Your company can pay you this tax-free.
Salary planning. The lower earnings limit for National Insurance rises to £6,916 a year from April 2027. This is the minimum salary that keeps your State Pension record building, so we'll factor it into your salary planning.
This is the area with the biggest changes. If a sale, retirement or handover is on your radar in the next few years, read this section carefully.
The relief on selling your business is halved. Business Asset Disposal Relief (BADR) lets you pay 18% Capital Gains Tax on the profit you make when you sell your business, instead of 24%. Right now it covers the first £1m of profit across your lifetime.
From 6 April 2027 that drops to £500,000. On a £1m gain, that's £30,000 more tax. Any BADR you've already used counts towards the limit.
There are special rules for sales agreed before 6 April 2027 that complete after that date. The detail isn't published yet. If you're selling, aim to complete before 6 April 2027, not just sign the contract. Talk to us now, because deals take time.
A new 10% relief for big scale-ups. The government is introducing Founders' Relief from April 2027. It gives a 10% tax rate on up to £10m of gains when you sell.
The bar is high. You need to have owned at least 25% of the company from day one. The company needs turnover of at least £10m, 15 or more full-time staff, and a track record of fast growth or significant research and development. Most owner-managed businesses won't qualify. If you're on that trajectory, let's plan for it early.
Worth knowing: tighter rules on share buybacks. From April 2028, it gets harder to take money out of your company as a capital gain through a share buyback or a new holding company. Most owner-managed businesses never do this, so it's unlikely to affect you. If it's something you've considered, talk to us first.
Staff costs go up. From 1 April 2027:
For a full-time worker on the National Living Wage, that's about £910 more a year. Build it into your budget and pricing now.
There's help if you're hiring young people. Smaller employers in England can get a £2,000 payment for taking on a young apprentice, and a £3,000 grant is available for hiring eligible young people who are out of work.
Buying equipment and vehicles. Corporation tax stays at 25% for larger profits and 19% for smaller ones. Most businesses can still claim tax relief on the full cost of equipment in the year they buy it.
The rules change at the edges. A new 50% first-year allowance applies to qualifying spending from 1 January 2027. But relief on company cars that aren't fully electric slows down from April 2027. If you're choosing a company car, electric is still the clear winner.
Research and development (R&D) claims get simpler. From April 2027, you no longer need to tell HMRC in advance that you plan to claim R&D tax relief. That advance notice tripped up a lot of first-time claimants. If you develop new products, software or processes, it's worth a conversation.
Share options. If you already use the Enterprise Management Incentive (EMI) scheme for your team, there are some helpful tweaks from April 2027. One example: employees who leave get 180 days to exercise their options instead of 90.
Business rates relief, for some. From April 2027, retail, hospitality and leisure businesses in England get more help with business rates. That includes full relief for smaller premises with a rateable value up to £18,000. Pubs get 35% off. Other sectors see no change.
Non-compete clauses are being reformed. The government plans to limit non-compete clauses in employment contracts. Details come in early 2027. If you rely on these to protect your clients or team, keep an eye on this.
Selling on Amazon, eBay or similar marketplaces. From 1 October 2027, online marketplaces will collect the VAT on your sales to consumers and pay it to HMRC for you. This applies to every VAT-registered seller, and to unregistered sellers with more than £90,000 of sales on a single platform.
You'll receive your payouts with the VAT already taken off. That changes your cash flow and how your VAT return works, so let's plan for it.
Not VAT-registered? Overseas services will cost more. From April 2027, overseas companies selling services to UK businesses that aren't VAT-registered must charge UK VAT. That covers things like software subscriptions and online advertising. If you're not VAT-registered, you can't claim that VAT back, so these costs rise by up to 20%.
Digital invoices are coming. From April 2029, VAT-registered businesses must send and receive invoices in a set digital format. If you already use cloud accounting software, you're in a good position. We'll help you get ready well before the deadline.
The theme here is simple. HMRC wants tax paid sooner, and it's getting more tools to chase it.
Self Assessment payments move to regular, automatic collection. Today, most directors pay their personal tax in two lump sums each January and July. From April 2029, that changes to smaller, more frequent automatic payments during the year. If you also have a salary, you'll be able to pay through your tax code instead. Expect a tighter year for your personal cash flow when the switch happens.
Direct debits become compulsory for VAT and PAYE. From April 2029, you'll need a direct debit set up for your VAT and payroll tax. You can still pay another way before the deadline, but HMRC will collect anything unpaid automatically.
HMRC can take money straight from your bank. From July 2029, HMRC can recover smaller tax debts directly from the bank accounts of people and companies who can pay but repeatedly don't. That covers debts up to £5,000 for individuals and £10,000 for companies.
You'll have to correct errors when you find them. From April 2028, there's a new legal duty to correct mistakes in your tax returns. HMRC can also send a notice asking you to check your figures and fix them, or explain why they're right.
More HMRC compliance officers. HMRC is recruiting another 670 compliance officers, on top of the 5,500 already announced.
One piece of good news. HMRC had proposed that every company owned by a small group of people report each payment and loan to its shareholders in detail. That plan has been dropped for now. Your director's loan account still needs to be clean, but the extra paperwork isn't coming.
Cash ISAs stay at £20,000. A planned cut to £12,000 for under-65s has been scrapped. With tax on savings interest rising, using your ISA allowance each year is worth more than ever.
If you own rental property. Alongside the higher tax rates on rental income, the tax relief on mortgage interest rises to 24%. Private landlords in England also face a new £65 annual fee per property to register on a government database, starting from 15 December 2026.
Homes worth £2m or more. The new High Value Council Tax Surcharge starts in April 2028 for homes in England valued at £2m or more. Deferral options, discounts and exemptions have now been confirmed.
Side income. The tax-free trading allowance triples from £1,000 to £3,000 a year from April 2027. It covers small amounts of income from things like a side hustle, but not money from your own company.
|
When |
What changes |
|---|---|
|
15 December 2026 |
£65 per-property registration fee for landlords in England |
|
1 January 2027 |
50% first-year allowance on qualifying equipment |
|
1 April 2027 |
National Living Wage rises to £13.21; R&D advance notice scrapped; business rates help for retail, hospitality and leisure; overseas services VAT change |
|
6 April 2027 |
Business Asset Disposal Relief limit halves to £500,000; Founders' Relief starts; higher tax on savings and rental income; 35p mileage rate above 10,000 miles |
|
1 October 2027 |
Online marketplaces collect VAT on UK sellers' sales |
|
April 2028 |
New duty to correct errors; £2m home surcharge starts |
|
April 2029 |
Digital invoices for VAT; compulsory direct debits; automatic Self Assessment payments |
|
July 2029 |
HMRC can recover smaller debts directly from bank accounts |
On the surface, this is a calm Budget for business owners. There's no rise in the main tax rates, and your salary and dividends are taxed the same as before.
Underneath, it's a clear squeeze on owner-managed companies. Selling your business costs more. Interest and rent from your company cost more in tax. HMRC is collecting faster and chasing harder.
The good news is that most of these changes don't land until April 2027 or later. That gives you a window to plan, and planning is where the real savings are.
If any of these apply to you, let's talk now rather than next spring:
Get in touch or book a chat with our team. We'll look at what these changes mean for you and help you get ahead of them.
We'll share more detail as the government publishes the final rules.
