Please note that we will update this blog with further measures in the next few days if more details emerge that might affect you.
Taxes
Corporation Tax
There are no changes to the corporation tax rates.
Property, Interest and Dividends
The income tax on earnings from renting out your property, earning interest on savings, or taking dividends will rise 2 percentage points.
Property -
- From 20%, 40% or 45% currently, it goes up to 22%, 42% or 47% from April 2027.
Savings Interest -
- From 20%, 40% or 45% currently, it goes up to 22%, 42% or 47% from April 2027. Because savings in ISA’s are exempt from this tax, you may want to review your savings accounts to ensure that your savings are in an ISA (but more on that later).
Dividends -
- From 8.25% to 10.25% for those paying the basic rate of tax and 33.75% to 35.75% for those paying the higher rate of tax. However, this comes in from April 2026 instead. In light of this, you should talk to your accountant or tax advisor about the right mix of salary vs dividends for you going forward.
On the other hand, the government are launching a call for evidence seeking views from Enterpreneur’s on how they can better support them and their businesses through the tax system.
Income tax
While there has been no rise in the rates of income tax, the chancellor has frozen the thresholds at which you start paying the rates of tax.
This is a stealthy way to get more tax as people’s wages rise and so more people are pulled into paying the higher tax rates. This will continue until 2031.
Cars and Fuel
The chancellor postponed the planned 5p increase in fuel duty rates till September 2026 which will help keep personal and business fuel costs down until then.
But for Electric vehicles, she introduced Vehicle Excise duty (i.e. road tax). This will mean paying a fee to the government for how far you drive. It will be 3p per mile for electric vehicles and 1.5p per mile for hybrid vehicles from April 2028. While there are still lots of tax advantages to choosing an electric vehicle, this does reduce incentives to choose one.
Rail fares will be frozen in 2026.
Employment, Wages and Apprenticeships
The minimum wage will be increasing as usual. The new rates will be:
Over 21 years old - £12.71 per hour
18-20 year olds - £10.85 per hour
16-17 year olds/ Apprentices - £8 per hour
This will mean wage costs will go up, although for over 21’s, it is broadly in line with inflation.
Helping to offset costs, the chancellor announced that the training costs of apprentices under the age of 25 will be made completely free for small and medium businesses which means you won’t have to pay the apprenticeship training portion if you want to employ apprentices.
If you or your employees have a student loan under plan 2 (if you went to university after 2012) then the threshold at which you start paying back the loan will be frozen for 3 years from April 2027, meaning you will pay more than you would have if the thresholds had risen with inflation.
Homeworking - where a company didn’t reimburse employees for working from home, the employees can claim a tax deduction but this will be abolished from April 2026.
On the other hand, employees will now be able to get reimbursed for eye tests, home working equipment and flu vaccinations from April 2026.
Capital Allowances
If you invest in your business and buy new equipment, machinery and so on, you can claim allowances for this against taxes.
The full expensing of most of these in the year you buy them will be made permanent, meaning you can put through the full costs of these as expenses.
However, some things you buy don’t qualify for this and you can only claim part of the cost each year. The government are making changes for these items -
- The first year you can claim 40% relief but in subsequent years you will only be able to claim 14% relief (instead of the previous 18%)
For zero emissions cars paid for by the business, the allowance to claim the full cost in the first year of purchase (instead of splitting it out over time) will continue till April 2027.
Previously announced, but worth knowing is that the government now offer an electric car grant to help with the cost, and the funding for this is now extended to 2029-30.
Pension Salary Sacrifice
There will now be a limit of how much you can sacrifice salary in order to put money into a pension tax-free. The new limit will be £2000 meaning that you will pay extra tax if you go above this amount.
ISA’s
In addition to the changes to tax thresholds on savings mentioned above, the Chancellor announced that instead of having an allowance of £20,000 a year in which you can choose whether this is cash, shares of a mix of both, you will now only be able to save £12,000 as cash into an ISA and the other £8000 would have to be put into a Stocks and Shares ISA. For over 65’s they can still save the full £20,000 in cash.
Using an ISA is usually worth looking at, especially if you have savings which generate more than £500 interest a year.
Further Measures
Selling Your Business
The chancellor is reducing the tax relief you get on capital gains if you sell your business to your employees using an employee ownership trust, from 100% to only 50% immediately.
Council Tax
If your house is worth over £2 million then there will be higher council tax charges to pay from April 2028.
Imports
Currently there is no customs duties to pay on small imports of items worth less than £135, but from March 2029, small imports will have to start paying them, which means costs for businesses who import goods from abroad will increase.
Business Rates
For businesses in the retail, hospitality and leisure sectors, they will have a lower rate permanently from 2026, but for businesses with large premises the rates will increase.
VAT
There was no change to the VAT thresholds announced, but there is a new VAT relief available for any goods donated to charities by businesses.
Tourist Tax
Mayors in England will be given the right to impose a “tourist tax” levy in their areas on visitors who use overnight accommodation. This already exists in Scotland and Wales.
Rogue Directors
The government are increasing funding for more staff to disqualify “rogue directors” and will changes the law to increase the circumstances in which they can be disqualified as directors.
Self Assessment
If you have to do self-assessments and also have employment, the government will be changing the rules to increase the amount of your self-assessment taxes paid through PAYE from April 2029. They will also be looking at ways to ensure timelier payment of self-assessment taxes.
PAYE/VAT Payments
The government will be consulting on ways to ensure timely payments of these, including requiring payment by direct debit.
Transferring a business from Sole Trader/ Partnership to a Company
You will have to actively apply for incorporation relief when doing this rather than being able to just assume you have the relief.
For the official papers on the budget, please see here.
