How will the changes affect you?
Introduction
The Chancellor of the Exchequer, Rachel Reeves, came to Parliament to deliver her second Budget and most talked about since Labour came to power. The Chancellor says her priorities are “cutting the cost of living”, “cutting NHS waiting lists” and “cutting the cost of debt”. It’s reported the Budget includes an additional £26 billion in taxes. Here are some of the main announcements from the 2025 UK Autumn Budget.
Personal Tax
The Chancellor announced an extension on the freeze to income limits and personal allowances until April 2031. Personal allowances will still be reduced by £1 for every £2 a person’s income exceeds £100,000. From April 2027 the tax rates for property income and savings income will increase by 2% (Basic 22%, Higher 42% and Additional 47%).
UK Income Tax Rates (except Scotland)
| Band | Taxable income | 2026/27 | 2025/26 |
| Allowance | £0 to £12,570 | 0% | 0% |
| Basic | £12,571 to £50,270 | 20% | 20% |
| Higher | £50,271 to £125,140 | 40% | 40% |
| Additional | Over £125,140 | 45% | 45% |
The Scottish Parliament has the power to vary the tax rates and thresholds of Non-
Savings, Non-Dividend income for Scottish taxpayers. The differential between Scotland and the rest of the UK in this respect has grown quite significantly. The Scottish Budget is set for 13th January 2026.The National Assembly of Wales has a similar power. However, to date they have continued to set income tax rates in line with those announced by the UK Government. The Welsh Government will publish their draft budget on 20th January 2026.
Scottish Tax Rate Bands
The Scottish Parliament have previously announced the tax rates and thresholds for Scottish Taxpayers for the tax year starting 6 April 2025.
Scottish tax rates 2025/26 for non-savings, non dividend income
| Band | Taxable income | 2025/26 |
| Allowance | £0 to £12,570 | 0% |
| Starter rate | £12,571 to £15,397 | 19% |
| Basic rate | £15,398 to £27,491 | 20% |
| Intermediate rate | £27,492 to £43,662 | 21% |
| Higher rate | £43,663 to £75,000 | 42% |
| Advanced rate | £75,001 to £125,140 | 45% |
| Top rate | Over £125,140 | 48% |
Tax tip
If you are a sole trader or property landlord and your turnover exceeded £50,000 during the 2024/25 tax year you may fall under Making Tax Digital for Income Tax rules from April 2026 which includes quarterly reporting. If you are both a sole trader and a property landlord then aggregate the two turnovers together when applying the £50,000 threshold. Are you ready for this? If not we can help.
You could consider deferring Making Tax Digital for Income Tax by creating a partnership or avoid altogether by incorporating the business.
National Insurance
The Chancellor retained the current rates of National Insurance paid by employees, as well as rates for the self-employed. The National Insurance thresholds have been frozen for a further 3 years until April 2031.
Tax tip
It is worth reviewing your NIC records at least every 5 years, whilst it is fresh in your memory, to ensure they are correct and up to date. National Insurance contributions protect your rights to certain state benefits and contribute towards your state pension. We are happy to carry out this review for you.
From April 2026 only voluntary Class 3 contributions will be allowed to be paid for periods abroad.
| National Insurance (NI) | 2026/27 | 2025/26 |
| Class 1 NI employees – earnings between £12,570 – £50,270 | 8% | 8% |
| Class 1 NI employees – earnings in excess of £50,270 | 2% | 2% |
| Class 1 NI employers – earnings in excess of £5,000 | 15% | 15% |
| Class 1A Benefits in kind | 15% | 15% |
| Class 1B NI PAYE settlement agreements | 15% | 15% |
| Class 4 NI self-employed – Profits between £12,570 – £50,270 | 6% | 6% |
| Class 4 NI self-employed earnings in excess of £50,270 | 2% | 2% |
| Class 2 voluntary weekly contribution | £3.50 | £3.50 |
| Class 3 voluntary weekly contribution | £17.80 | £17.75 |
Tax tip
If you have more than one employment you may pay too much employees national insurance. HM Revenue & Customs can request the second employer to operate a lower rate to ensure the correct amount is paid. Refunds may be possible if national insurance has been overpaid in earlier years.
Salary sacrifice
From April 2029 only the first £2,000 of employee pension contributions through salary sacrifice will be exempt from National Insurance. Contributions above this limit will be liable to both employees and employers National Insurance. All employee contributions will continue to be free of National Insurance.
Dividend Rate Bands
The dividend allowance will remain at £500 from 6th April 2026. The dividend ordinary and upper tax rates will each increase by 2% from April 2026. The additional dividend tax rate will remain the same.
| Band | 2026/27 | 2025/26 |
| Dividend ordinary rate | 10.75% | 8.75% |
| Dividend upper rate | 35.75% | 33.75% |
| Dividend additional rate | 39.35% | 39.35% |
Tax tip
With the dividend allowance threshold at only £500, is it worthwhile transferring some shares to a spouse/civil partner to maximise it. Do you have control over when a dividend can be paid out? If so consider paying dividends before 6 April 2026 to make use of the lower dividend rates.
Tax tip
There are a number of approved tax efficient share option schemes, as well as the non-tax advantages share scheme arrangements, which could be considered when looking at incentivising employees. There are different issues, benefits and problems for each type of incentive arrangement, both for the employer and the employee.
Tax tip
If you are an employer carry out a regular review to ensure that you are adhering to the National Minimum Wage Regulations. Failure to comply, can result in a penalty of up to 200% of the liability due and any underpayment of wages can go back up to 6 years using the current NMW rates. Please contact us if you require assistance.
National Minimum Wage
The National Minimum Wage (NMW) and the National Living Wage (NLW) rates will increase from 1 April 2026, 4.1% for workers over 21, 8.5% for workers aged 18-20 and 6% for those under 18 and apprentices under 19 or in first year of apprenticeship.
| from 1-4-26 | currently | |
| Worker 21 years+ | £12.71 | £12.21 |
| Worker 18 – 20 | £10.85 | £10.00 |
| Worker under 18 | £8.00 | £7.55 |
| Apprentice | £8.00 | £7.55 |
Pensions
The annual pension allowance, which impacts on how much individuals can contribute to their pension schemes will remain at £60,000 for 2026/27. The Tapered Annual Allowance will remain at £10,000 from 6 April 2026 for individuals whose income for the is £260,000 or more. The pension tax free lump sum percentage which can be withdrawn on retirement will remain at 25% of the pension value up to a maximum of £268,275.
From 6 April 2027 the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes.
State Pension
Under the triple lock, the State Pension will rise in line with the highest of average earnings, inflation or 2.5%. The Government have announced an increase to the State Pension of 4.8%. The full new State Pension increases from £230.25 to £241.30 per week from April 2026. The basic state pension will rise from £176.45 a week to £184.90 a week. The government are exploring the best way for taxing pensioners exceeding the personal allowance from April 2027.
Tax tip
If you are a member of a UK registered pension scheme and are thinking of leaving the UK, you may want to consider topping up your pension scheme in the tax year in which you leave the UK in order to maximise your UK tax relief and enhance your pension provision. This should be done in conjunction with your accountant and a suitably qualified IFA.
Tax tip
It is worth having an annual pension review, to ensure you maximise the use of all the pension allowances which may be available to you and to do so in the most tax efficient way. We are happy to carry out this review for you.
Tax tip
Consider making voluntary national insurance contributions to fill gap years in your state pension history for the prior 6 years. For the two previous tax years you pay the original voluntary Class 3 national insurance rate for those tax years. For the four years prior to that you pay the current Class 3 rate. Each additional year could result in an extra £358 state pension (based upon 2026/27 figures) on an annual basis.
Capital Gains Tax
Capital Gains Tax rates will remain the same for 2026/27. The rate of Capital Gains Tax which applies to Business Asset Disposal Relief and Investors Relief will increase from 14% for disposals on or after 6 April 2025 to 18%, from 6 April 2026.
| Gains for | From 6 Apr 26 | To 5 Apr 26 |
| Individuals up to basic rate limit | 18% | 18% |
| Individuals above basic rate | 24% | 24% |
| Trusts and personal representatives | 24% | 24% |
| Business Asset Disposal relief* | 18% | 14% |
| Investors relief* | 18% | 14% |
Tax tip
If you sell a UK residential property, which could result in a gain liable to Capital Gains Tax, to avoid penalties from arising, you may need to complete a Capital Gains Tax Return within 60 days of the sale completing and pay the tax over within the same time frame. Please talk to us as soon as possible if you are looking to sell.
There is no change to the Capital Gains Tax annual exempt amount available. This is the tax free allowance available against taxable gains.
National Minimum Wage rates from 1 April
| Tax year | Individuals | Trustees |
| 2026/27 | £3,000 | £1,500 |
| 2025/26 | £3,000 | £1,500 |
Pensions
The annual pension allowance, which impacts on how much individuals can contribute to their pension schemes will remain at £60,000 for 2026/27. The Tapered Annual Allowance will remain at £10,000 from 6 April 2026 for individuals whose income for the is £260,000 or more. The pension tax free lump sum percentage which can be withdrawn on retirement will remain at 25% of the pension value up to a maximum of £268,275.
From 6 April 2027 the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes.
State Pension
Under the triple lock, the State Pension will rise in line with the highest of average earnings, inflation or 2.5%. The Government have announced an increase to the State Pension of 4.8%. The full new State Pension increases from £230.25 to £241.30 per week from April 2026. The basic state pension will rise from £176.45 a week to £184.90 a week. The government are exploring the best way for taxing pensioners exceeding the personal allowance from April 2027.
Tax tip
If you are a member of a UK registered pension scheme and are thinking of leaving the UK, you may want to consider topping up your pension scheme in the tax year in which you leave the UK in order to maximise your UK tax relief and enhance your pension provision. This should be done in conjunction with your accountant and a suitably qualified IFA.
Tax tip
It is worth having an annual pension review, to ensure you maximise the use of all the pension allowances which may be available to you and to do so in the most tax efficient way. We are happy to carry out this review for you.
Tax tip
Consider making voluntary national insurance contributions to fill gap years in your state pension history for the prior 6 years. For the two previous tax years you pay the original voluntary Class 3 national insurance rate for those tax years. For the four years prior to that you pay the current Class 3 rate. Each additional year could result in an extra £358 state pension (based upon 2026/27 figures) on an annual basis.
Capital Gains Tax
Capital Gains Tax rates will remain the same for 2026/27. The rate of Capital Gains Tax which applies to Business Asset Disposal Relief and Investors Relief will increase from 14% for disposals on or after 6 April 2025 to 18%, from 6 April 2026.
UK Capital Gains Tax rates
| Gains for | From 6 Apr 26 | To 5 Apr 26 |
| Individuals up to basic rate limit | 18% | 18% |
| Individuals above basic rate | 24% | 24% |
| Trusts and personal representatives | 24% | 24% |
| Business Asset Disposal relief* | 18% | 14% |
| Investors relief* | 18% | 14% |
* Business Asset Disposal relief or Investors relief lifetime limits are currently £1 million
Tax tip
If you sell a UK residential property, which could result in a gain liable to Capital Gains Tax, to avoid penalties from arising, you may need to complete a Capital Gains Tax Return within 60 days of the sale completing and pay the tax over within the same time frame. Please talk to us as soon as possible if you are looking to sell.
There is no change to the Capital Gains Tax annual exempt amount available. This is the tax free allowance available against taxable gains.
| Tax year | Individuals | Trustees |
| 2026/27 | £3,000 | £1,500 |
| 2025/26 | £3,000 | £1,500 |
Tax tip
Before you sell an asset, such as shares or property, please speak to us. There may be planning opportunities prior to the sale to reduce the potential Capital Gains Tax.
Other changes
From 26 November 2025 Capital Gains Tax relief will be restricted to 50% of the gain on transfers to Employee Ownership Trusts. The remaining 50% of the gain will be held over. From April 2026 incorporation relief will need to be claimed by the transferor in their Self- Assessment return for the tax year in which the transfer to a company took place. Share exchanges or reorganisations performed on or after 26 November 2025 where tax advantage is a motivation will not benefit from the reorganisation rules.
Inheritance Tax
The Chancellor has retained the £325,000 Nil Rate Band, the £175,000 Residence Nil Rate Band (RNRB) and the tapering limit for RNRB at £2 million until 5 April 2031. The tax rates for Inheritance Tax remain unchanged, with the main rate staying at 40%. From 6 April 2026, the 100% rates of Agricultural Property Relief and Business Property Relief will be restricted to the first £1 million of combined agricultural and business property, with the excess relieved at 50%. The £1 million limit is fixed until 5 April 2031.
Tax tip
Did the deceased gift an asset away within 7 years prior to death but the value of it was lower at the time of death? Normally the market value at the date of the gift comes back into the deceased’s estate for inheritance tax purposes. However if the value was less at the time of death you can make a loss relief claim and use that value instead to mitigate the inheritance tax burden..
An Infected Blood Compensation payment which has been made in respect of an infected or affected person who has already died, will be IHT exempt on the death of the first living recipient of the compensation payment. Agricultural Property Relief (APR) is a relief from Inheritance Tax on the agricultural value of land and other property that is owned and occupied for the purposes of agriculture. Business Property Relief (BPR) is a relief from Inheritance Tax on the value of certain business assets.
Tax tip
As a result of the restriction of Business Property relief, one option for business owners to consider to protect their inheritance tax (IHT) position is to take out life policies to fund the IHT liabilities perhaps in conjunction with term policies to cover the risk of you dying within seven years of any lifetime gift. Qualified IFA advice should be taken in this instance.
Company Taxation
There were no new announcements for corporation tax. From 1st April 2026, the Corporation Tax main rate for non-ring fenced profits will remain at 25% for profits over £250,000.
| Profits | From 1-4-26 | From 1-4-25 | |
| Main rate | over £250,000 | 25% | 25% |
| Small profit rate | £50,000 or less | 19% | 19% |
| Marginal rate* | Between £50,000 & £250,000 | 26.5% | 26.5% |
Company tax rates for non-ring fenced profits
*Profits below £50K effectively taxed at small profits rate
Tax tip
Does your company have cash reserves which are not required for working capital? Consider paying your corporation tax early as the interest return on early payments is competitive.
Tax tip
If your company is carrying out innovative work, is it worthwhile applying for a patent? Bearing in mind the corporation tax rates, the benefit of having a patent or you exclusively licence the rights to those patents, could result in the associated profits tied to the patent attracting a much lower corporation tax rate of only 10%.
Quick tip
If you are an employer considering providing a one- off/exceptional payment to your lower paid employees to mitigate the impact of the cost of living crises, then it may be better to do so in the form of non-cash vouchers, as opposed to cash itself, as it will not impact upon their universal credit payments.
The small profits rate (SPR) will continue at 19% for companies with profits of £50,000
or less. The small profits rate will not apply to close investment-holding companies.
Companies with profits between £50,000 and £250,000 will pay tax at the main rate
reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate. If the total profits are below £250,000, the effective rate for profits between these limits is called ‘Marginal Rate’ and shown above. Companies who do not file returns at the required time for Corporation Tax will incur higher penalty charges. For filing dates from 1st April 2026, depending on when the return is filed and how often it is late, the penalties will range from £200 to £2,000.
Capital Allowances
The Chancellor announced a new 40% first year allowance with less conditions (FYA) allowing many more claims, including from sole traders and partnerships or in respect of assets bought to lease out and will be available for expenditure incurred from 1
January 2026. There is no change for companies looking to claim a 100% first year allowance (FYA) for main rate expenditure (known as Full Expensing) and 50% FYA for special rate expenditure. These allowances are only available to companies. The 100% Annual Investment Allowance deduction for expenditure incurred of up to £1 million in purchasing plant & machinery also remains in place. The main rate of Capital Allowances will fall from the current 18% to 14% from 1 April 2026 for companies and 6 April 2026 for sole traders and partnerships. The 100% FYA for qualifying expenditure on zero-emission cars and on plant or machinery for electric vehicle charge-points has been extended to 31st March 2027 for Corporation Tax purposes and to 5th April 2027 for Income Tax purposes.
Tax tip
The R&D criteria is quite wide, and many eligible companies are missing out on it. Since 1st April 2023, you only have 6 months from the end of the accounting period in which R&D activity has occurred to make a claim, unless you have made a similar claim in the previous 3 years. If in doubt, ask for a free R&D check to see if a legitimate claim can be made.
Research & Development
There are no changes to the R&D rules following the merger of the R&D tax relief scheme for small and medium-sized companies and the R&D expenditure credit (RDEC) used by large companies for accounting periods beginning on or after 1st April 2024.
Company car and fuel
Percentages for zero emission and electric vehicles are already set to increase by 2 percentage points per tax year in 2028/29 and 2029/30. Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including some hybrid vehicles, will rise to 18% in tax year 2028/29 and 19% in tax year 2029/30. Appropriate percentages for all other vehicle bands will increase by 1 percentage point per year in tax years 2028/29 and 2029/30. This will be to a maximum appropriate percentage of 38% for tax year 2028/29 and 39% for tax year 2029/30. However plug in hybrid electric vehicles (PHEV) which were first registered on or after 1 January 2025, and have a CO2 emissions figure of 51 or more are to enjoy a temporary reduction in benefit in kind tax liabilities from 1 January 2025, as they will be deemed to have a nominal value of 1 in respect of CO2 emissions. Vehicles provided through Employee Car Ownership Scheme (ECOS) will be deemed as taxable benefits from 6 April 2030. Transitional arrangements will apply for employees still in schemes established prior to that date. They will be able to use the previous treatment, until either the arrangement changes, is renewed, or until April 2032.
Electric and Plug-in Hybrid
An electric Vehicle Excise Duty (eVED) will come into effect from April 2028 for electric and plug-in hybrid cars, which will take effect from April 2028. The rate of tax will be 3 pence per mile for fully electric cars and 1.5p per mile for plug- in hybrid cars. Car drivers will pay for the miles they drive alongside paying their usual road tax (VED). The intention is that motorists will estimate their mileage for the year ahead, pay an upfront charge based on their estimate or spread their payment across the year, and then submit their actual mileage at the end of the year to trigger a reconciliation. Motorists will have their mileage checked annually, typically during their MOT as is already the case, or for new cars, around their first and second registration anniversary. £2bn support for the electric vehicle (EV) transition and 10 year 100% business rates relief for eligible change points and EV-only forecourts.
Tax tip
Before considering whether to buy or lease a car through the company or do so personally, why not have a review of the tax and national insurance impact on both you and the company before reaching a decision.
VAT
The taxable turnover threshold for determining whether a business must register for VAT remains at £90,000 and the point at which a business can apply to deregister will also remain at £88,000. A new VAT relief will come in from 1st April 2026 to remove the requirement for businesses to account for VAT on eligible goods that are donated for onward donation or for use in the charity’s non-business charitable activities.
Tax tip
When first registering for VAT, you may be able to claim input VAT on goods purchased in the 4 year period before registration where those goods have been used in the business and are still owned on the first date of registration. This includes both stock and assets. When first registering for VAT, you may be able to claim input VAT on services purchased in the previous 6 months for business purposes, unless already recharged to a customer prior to registration. If the supplies you make are outside the scope of UK VAT (e.g. a provision of services to an overseas customer), but they would be taxable VAT supplies if they were made in the UK, then VAT input tax on expenditure incurred in relation.
Tax tip
Businesses that regularly receive VAT repayments from HMRC should consider filing VAT returns monthly instead of quarterly as this will help with their cashflow.
Customs Import Duty
Currently, low value imports (LVIs) – goods with a value of £135 or less being imported into the UK – can claim a customs duty relief. The Chancellor announced the removal of the relief from March 2029 at the latest. A consultation which will run until 6th March 2026 to cover how the tariff should be applied, whether to apply an additional fee on LVIs to fund administration, and potential changes to VAT collection to reflect the new arrangements.
Tax tip
If you are a partially exempt business for VAT purpose, you normally cannot claim the VAT input tax on costs attributable to any VAT exempt supplies that you make. However, if the total value of your exempt input tax is not more than £625 per month on average and it represents no more than 50% of your total VAT input tax then this can be recovered.
Annual Tax on Enveloped Dwellings (ATED)
The ATED charge for those property companies liable to pay it, has been frozen for the 2026/27 year.
| Property value | 2026/27 | 2025/26 |
| £500,001 to £1M | £4,450 | £4,450 |
| £1,000,001 to £2M | £9,150
|
£9,150 |
| £2,000,001 to £5M | £31,050 | £31,050 |
| £5,000,001 to £10M | £72,700 | £72,700 |
| £10,000,001 to £20M | £145,950 | £145,950 |
| Over £20M | £292,350 | £292,350 |
Tax tip
Don’t forget that if you have incurred the 5% SDLT Surcharge (England and Northern Ireland) or theWelsh 5% Land Transaction Tax Higher Rate charge or the Scottish 8% Additional Dwellings Supplement, upon acquiring a new main residence but before having disposed of your previous one, then you may be able to claim a refund if you sell your old property within 36 months of purchasing the new one. If you are buying 6 or more residential properties in a single transaction, you could apply the commercial rate of land taxes against the purchase price, rather than the residential rate. This may avoid the additional higher rate residential land
Stamp Duty Land Tax (SDLT)
A non-UK resident person will continue to pay an additional 2% SDLT on a UK property purchase. The SDLT surcharge on acquiring an interest, in excess of £40,000, in a second residential property remains at 5%.d ta
Tax tip
Don’t forget that if you have incurred the 5% SDLT Surcharge (England and Northern Ireland) or the Welsh 5% Land Transaction Tax Higher Rate charge or the Scottish 8% Additional Dwellings Supplement, upon acquiring a new main residence but before having disposed of your previous one, then you may be able to claim a refund if you sell your old property within 36 months of purchasing the new one. If you are buying 6 or more residential properties in a single transaction, you could apply the commercial rate of land taxes against the purchase price, rather than the residential rate. This may avoid the additional higher rate residential land taxes.
| Property/Lease premium/
Transfer value |
from
1-4-26 |
from
1-4-25 |
| Up to £125,000 | Zero | Zero |
| £125,001 to £250,000 | 2% | 2% |
| £250,001 to £925,000 | 5% | 5% |
| £925,001 to £1,500,000 | 10% | 10% |
| Above £1,500,000 | 12% | 12% |
Corporate bodies purchasing residential property valued at more than £500,000 will
continue to be charged SDLT at 17%, unless an applicable relief applies.
Tax tip
If you have incurred the 5% SDLT Surcharge, (England and Northern Ireland) or the Welsh 4% Land Transaction Tax Higher Rate charge upon acquiring a new main residence but before having disposed of your previous one, then you may be able to claim a refund if you sell your old property within 36 months of purchasing the new one.
Tax tip
If you have incurred the Scottish 8% Additional Dwellings Supplement upon acquiring a new main residence before having disposed of your previous one, then you may be able to claim a refund if you sell your old property within 36 months of purchasing the new one.
The Devolved Parliaments of Scotland and Wales will set their own land transaction tax rates on 13 January 2026 and 20 January 2026 respectively. The current rates are;
| Property purchase Value | LBTT rate |
| Up to £145,000* | Zero |
| £145,001 to £250,000 | 2% |
| £250,001 to £325,000 | 5% |
| £325,001 to £750,000 | 10% |
| Above £750,000 | 12% |
*For first time buyers the zero rate band increases to £175,000
Wales residential Land Transaction Tax (LTT) rates
| Property (freehold/leasehold) value | LTT rate
|
| Up to £225,000 | Zero |
| £225,001 to £400,000 | 6% |
| £400,001 to £750,000 | 7.5% |
| £750,001 to £1,500,000 | 10% |
| Above £1,500,000 | 12% |
High Value Council Tax Surcharge
(HVCTS)
The HVCTS is a new charge on owners of residential property in England worth £2 million or more in 2026, taking effect in April 2028. A public consultation on details relating to the surcharge will be held in early 2026. Homeowners, rather than occupiers, will be liable to the surcharge and will continue to pay their existing Council Tax alongside the surcharge. The Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million and therefore in scope. Revaluations will be conducted every five years. The HVCTS will be administered alongside existing Council Tax by Local authorities, who will collect this revenue on behalf of central government.
Tax tip
If you are coming to the UK or you are an ex-pat returning to the UK and have been non-UK resident for at least 10 consecutive tax years, you may be able to benefit from full UK tax relief on foreign income and gains that arise during your first 4 tax years in the country under the FIG regime which came into force from April 2025 onwards.
Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT)
From 6th April 2026 the gross assets requirement that a company must not exceed for the EIS and VCT will be increased to £30 million (from £15 million) immediately before the issue of the shares or securities, and £35 million (from £16 million) immediately after the issue. The annual investment limit that companies can raise will increase to £10 million (from £5 million) and for knowledge-intensive companies to £20 million (from £10 million). The company’s lifetime investment limit will increase to £24 million (from £12 million) and for knowledge-intensive companies to £40 million (from £20 million). The Income Tax relief that can be claimed by an individual investing in VCT is to be reduced to 20% from the current rate of 30%.
High Income Child Benefit Charge (HICBC)
The individual’s High Income Child Benefit Charge (HICBC) adjusted net income threshold will remain at £60,000.
Tax tip
If you are a single parent or divorced or widowed and a new partner subsequently moves in with you, depending upon their level of income, you may find that they may get hit for the high income child benefit charge. You may want to forewarn them about that. For individuals with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal one percent for every £200 of income that is more than £60,000.
Tax tip
If you have a child under the age of 12 and register for child benefit you will automatically receive a parent’s state pension credit for each year. If you have a family member who helps you with childcare support whilst you are at work and has a gap in their own national insurance records, you may be able to elect to transfer your state pension credit to them.
Individual Savings Account (ISA)
The £20,000 cash ISA contribution limit will continue to apply for people aged 65 or over. Aged under 65 cash ISA limit will fall to £12,000 from April 2027. Stocks and shares ISA limit will remain at £20,000. Junior ISAs will remain unchanged at £9,000
until April 2030. Lifetime ISAs will remain unchanged at £4,000 until April 2030. Child Trust Funds will remain unchanged at £9,000 until April 2030.
Help To Save Scheme
The scheme is a type of savings account for people on low income. Presently you can open an account if you are receiving Universal Credit and you had take- home pay of £1 or more in your last monthly assessment period. You can earn 2 tax-free bonuses over 4 years from the Government of up to £1,200 in total. This scheme was due to come to an end in April 2027 but is now to be made permanent. The government is expanding the Help to Save scheme to Universal Credit claimants who receive either the caring element or the child element.
Soft Drinks Levy
This levy, often referred to as the Sugar Tax, will be extended to cover more products. The charge will apply to prepackaged milk based and milk alternative drinks with added sugar such as milk shakes, flavoured milk and ready to drink coffees. The threshold is being lowered from 5g to 4.5g of sugar per 100ml. The change will come into play from 1st January 2028.
Gambling Duty
From April 2026 Remote Gaming Duty will increase from 21% to 40%. From April 2027 a new Remote Betting Rate within General Betting Duty set at 25% will be introduced. Remote UK horse racing bets will not be subject to the new rate and will remain taxed at 15%. Bingo Duty will be abolished from April 2026. There will be no further changes to any other gambling duties.
Visitor Levy (England)
Mayors across England will be able to introduce a tourist tax in their area. This will be a charge on visitors staying overnight in hotels, B&Bs, guest houses and holiday lets. A public consultation on the specific details will run until 18th February 2026. The visitor levy will bring England in line with Scotland and Wales who are already introducing a tourist tax.
Business Rates (England)
Permanent lower business rates tax rates for over 750,000 retail, hospitality and leisure properties from April 2026. A £4.3 billion business rates support package will cap business rates bill increases for sectors hit hardest by revaluations from April 2026.
Tax Avoidance
With affect from the date of Royal Assent new powers will introduce a ban on promoting avoidance arrangements that have no realistic prospect of success. Instead of applying to the courts, HMRC will be able to issue disclosure of tax avoidance scheme penalties. HMRC will also be able to issue promoter action notices which require businesses providing goods and services to promoters to stop. HMRC will be able to issue anti-avoidance information notices which allow them to effectively investigate promoter organisations and identify the responsible individuals, with penalties and criminal offences for those who are non-compliant. HMRC will be able to publish details of legal professionals promoting schemes in more circumstances.
Further Announcements
To help support aims to reduce waiting times, there will be an additional £1.5 billion capital investment into new surgical hubs and scanners, alongside £70 million for new radiotherapy machines. By 2035, every local area in England will have a one stop shop that will bring together GPs, nurses, pharmacists, diagnostic tests and hospital specialists. Around 250 will be needed, with some existing health clinics repurposed using public money. Where brand new clinics are needed, contracts could be signed with the private sector to build, run and manage them. Rail fares in England will be frozen for the first time in 30 years. The freeze will apply to all regulated fares, including season tickets, peak returns for commuters and off-peak returns between major cities. Prescription charges will remain frozen for 2026/27. A single prescription will continue to cost £9.90. Young people who have been out of a job or education for 18 months will be offered a guaranteed paid work placement.
Those who do not to take up the offer could face being stripped of their benefits. Household gas and electricity costs will be lowered through cuts to green levies on energy bills. From 6th April 2026 employees will no longer be able to claim tax relief on non-reimbursed home working expenses from HMRC. Alcohol Duty rates will increase by Retail Price Index inflation across all alcoholic product categories from 1st February 2026.
From April 2027 pre-consumer waste as a source of recycled content will be removed for the purposes of the Plastic Packaging Tax (PPT). A mass balance approach (MBA) to account for chemically recycled plastic used to make plastic packaging for the purposes of the PPT will come in from 1 April 2027. From 6th April 2026 the reimbursement by employers of costs for eye tests, home working equipment and flu vaccinations will be tax and NI exempt. The Chancellor will extend the 5 pence cut in the rates of Fuel Duty until 1 September 2026, and then start removing it in stages before April 2027 when the duty will increase by the Retail Prices Index.
