Budget 2026
Income tax
From April 2027, tax rates on savings and property income will rise by a further two percentage points across all bands.
| Tax Band | Property Income Rate | Savings Income Rate |
| Basic Rate | 24% | 24% |
| Higher Rate | 44% | 44% |
| Additional Rate | 49% | 49% |
| Trust Rate | 49% | 49% |
From 6 April 2027, the Government is tripling the trading allowance from £1,000 to £3,000 to support people starting a business.
The Government will retain the cash ISA limit at £20,000 for all savers over 18 years old from April 2027.
With immediate effect the lifetime ISA withdrawal charge will be reduced to 20% so that first-time buyers purchasing a home above the existing £450,000 property price cap will not be penalised
From April 2029, a new First Time Buyer will replace the Lifetime ISA for new savers. It will provide a 25% bonus on the final account balance up to a maximum of £20,000, paid on withdrawal, towards a purchase of a first home worth up to £450,000. Existing Lifetime ISA holders will be able to continue contributing to and using their accounts under the current rules
Employment taxes
–On 1 April 2027, the National Living Wage will increase by 3.9% to £13.21 per hour.
Pensions tax
From April 2027, people above state pension age with total income up to and including the value of the new state pension will not pay income tax owing to a new pension tax allowance for tax years 2027–28 to 2029–30.
Business tax
Small Business Rates Relief thresholds for Retail, Hospitality and Leisure businesses will increase from 1 April 2027. 100% relief will increase to a rateable value of £18,000, and the threshold for tapered relief will increase to a rateable value of £21,000.
The Government has stated that vape shops and adult gaming centres will no longer benefit from certain business rates reliefs.
The main rate of writing down allowances on capital expenditure is reducing by 2%, taking the rate to 12% from April 2027. At the same time, the Government is raising the main rate First Year Allowance (FYA) from 40% to 50%.
Capital gains tax
A reduction in the lifetime limit for capital gains eligible for business asset disposal relief (BADR) from £1m to £500,000 from April 2027.
A new ‘Founders’ Relief’, offering eligible founders of high-growth, innovative companies a reduced 10% rate of capital gains tax on up to £10m of lifetime gains. However the very strict criteria for this mean it will not be available to most businesses.
Value added tax
The temporary VAT cut on electricity bills will be extended until 1 July 2027.
From October 2027, online marketplaces will take responsibility for collecting VAT on qualifying sales by UK businesses using their platforms.
Larger private hire operators will be required to account for VAT consistently on the full passenger fare, while smaller and local taxi and minicab firms are protected.
Excise duties
The rate of machine games duty will increase from 20% to 25% on machine games with stakes over £1 from April 2027.
The 5p cut to fuel duty will be extended for a further six months to 1 July 2027.
Research & Development (R&D) claims
From 1 April 2027 the R&D Claim Notification Form (CNF) requirement will be removed for claims made on or after that date. This removes the challenging requirement for a business to make a pre-notification to HMRC that it intends to make an R&D tax relief claim.
Approved Mileage rates
The government is permanently increasing tax-free mileage rates for employees and self-employed people who use their own car or van for work. The tax-free, per mile rate will be 55p for the first 10,000 miles (from April 2026) and 35p per mile (from April 2027) for mileage above 10,000 miles.
More timely payment for self-assessment
From April 2029, the government will require Income Tax Self Assessment (ITSA) taxpayers who are liable to make Payments on Account to pay more of their tax payments in year, through direct debit by default. Those who also have PAYE income may be able to elect for payments to be settled via PAYE.
Payment of VAT and PAYE liabilities by direct debit
From April 2029, businesses will be required to set up a Direct Debit instruction for HMRC VAT and PAYE return payments unless exempt. However, HMRC have stated that the DD mandate will only be used as a safeguard to collect any return liability which remains unpaid at the due date; businesses will retain the flexibility in how they pay before the due date.
Cost of living help
Households in council tax bands A to D are to receive a £100 energy payment directly into their bank accounts
Standing charges on gas bills are to be scrapped in 2027
Link to full government notes