It’s the day after Chancellor John Healey addressed Parliament. Here is our analysis of the Budget 2026 and what it means for you.
Our tax team has spent the time since reviewing the detail, and our full Budget 2026 Report sets out what the announcements mean for business owners, directors, employers, landlords, savers and families.
The headline rates of Income Tax on earnings, National Insurance and VAT are unchanged. Behind those headlines, however, sit frozen thresholds, narrower reliefs and a series of phased reforms that the government expects to raise around £7 billion a year by 2031–32. Most take effect from April 2027, which leaves a short window to plan.
Economic Impact: A Cautious Approach
The wider economic reaction highlights the delicate balance the Chancellor sought to strike. The BBC Political Editor Chris Mason observed that the “Budget felt cautious despite its range of small measures,” reflecting an administration seeking fiscal stability without imposing broad, immediate shocks across the wider economy.
Rather than deploying sweeping tax rate hikes from day one, the fiscal package relies heavily on frozen allowances, phased compliance mandates, and targeted tax rises scheduled to take effect over the coming years.
What the 2026 Budget Means for You: Key Tax Changes at a Glance
- Savings and rental income: Income Tax on savings interest and on rental profits rises by four percentage points from 6 April 2027, to 24%, 44% and 49% (property rates apply in England, Wales and Northern Ireland). Dividend tax rates are unchanged, and the £20,000 cash ISA limit has been kept.
- Selling your business: The Business Asset Disposal Relief lifetime limit halves from £1 million to £500,000 for disposals on or after 6 April 2027. For a higher rate taxpayer with a £1 million gain, that is £30,000 of extra Capital Gains Tax. A new 10% Founders’ Relief is proposed, but for a narrow group of high-growth companies.
- Taking profits from your company: Arrangements that turn income into capital, such as holding company share buybacks, are expected to be taxed as income from April 2028. HMRC has also made clear that directors’ loan accounts and payments to shareholders remain a compliance priority.
- Employers and payroll: Company cars, vans, fuel and medical benefits must be taxed through payroll from 6 April 2027. Company car percentages rise by one point a year, NIC thresholds stay frozen and the National Living Wage rises to £13.21 an hour.
- Investing in your business: The main rate of writing down allowance falls from 14% to 12% from April 2027, while the First Year Allowance rises from 40% to 50% from 1 January 2027. The 100% allowance for new zero-emission cars ends on 31 March 2027 for companies (5 April 2027 for individuals), so the timing of purchases matters.
- Pensions and Inheritance Tax: From 6 April 2027, most unused pensions and pension death benefits will fall within your estate for Inheritance Tax. This may also cost some estates their residence nil rate band. The nil rate bands remain frozen.
- HMRC compliance: Making Tax Digital for Income Tax extends to sole traders and landlords with income over £30,000 from April 2027. A new legal duty to correct inaccurate returns follows in April 2028, and HMRC is giving more attention to individuals with income over £200,000 or assets over £2 million.
Three Planning Points Before April 2027
Much of what was announced is not yet law and some is still under consultation, but the direction is clear. Based on the report, these are the areas where acting early is most likely to make a difference:
- If You are Planning to Sell your Business in the Next Few Years: Review your Business Asset Disposal Relief position now. A contract rushed through in March will not automatically protect the current £1 million limit.
- If You Hold Savings Outside an ISA or Let Property Personally: Work out what the higher rates will cost you and whether your savings, property ownership or income structure should change.
- If You Employ Staff: Make sure your payroll is ready to process company car, van, fuel and medical benefits from 6 April 2027.
The View from our CEO: Rakesh Dua
“The government has described this Budget as giving families and businesses breathing space, and there is welcome relief – from unchanged headline rates to a more generous Trading Allowance and further business rates support.
“From a tax perspective, though, that breathing space is temporary. Higher tax on savings and rental income, a halved Business Asset Disposal Relief limit, pensions coming into the Inheritance Tax net and payrolled benefits all arrive in April 2027. For many of our clients, the decisions made over the next five months will shape their tax position for years to come.
“As Chartered Accountants, our role is to help clients see which changes apply to them, plan with confidence and stay compliant, as HMRC becomes more digital and more data-driven. Our team is ready to help.”
Access the Full Report
Speak to Your Portfolio Manager
Every tax position is different, and the same measure can affect two people in very different ways. If you would like to talk through what the Budget means for you, your family or your business, please contact your usual Portfolio Manager or contact our office.
This summary is based on Budget announcements as at 28th October 2026, many of which are subject to legislation and consultation. It is not a substitute for personalised advice.