Autumn Budget 2026 summary: Key tax changes and announcements

Corporation tax

Budget 2026 announcements 

• From April 2026, the main rate of writing-down allowances has been reduced by 4% to 14%. This will now be reduced by a further 2% to 12%. From 1 January 2026, there was a new first-year allowance of 40% for main‑rate assets, which the Chancellor has today announced will increase to 50% (this allowance is of main benefit to unincorporated businesses and some leasing businesses)

• Reforms to company distributions framework from 6 April 2028 are likely to have a significant impact on standard business restructuring, such as capital reductions, company purchase of own shares and demergers
• R&D red tape is to be cut. The R&D claim notification form will be removed from 1 April 2027. The additional information form will then be simplified from autumn 2027

Key changes previously announced 

• Corporation Tax capped at 25% for the duration of parliament

• International tax changes – For periods starting on or after 1 January 2027, a new requirement for companies to file an “International Controlled Transactions Summary” is expected to be implemented, and the foreign permanent establishment exemption will become mandatory

Employment taxes

Budget 2026 announcements 

• National Living Wage to increase from £12.71 per hour rising to £13.21 from 1 April 2027 (3.9% rise)​

• National Minimum Wage to increase from £10.85 per hour to £11.27 from 1 April 2027 (18–20-year-olds) (3.9% rise)​. Workers aged between 18 and 20 years old will also see their pay rise by 3.9%

• The Chancellor is locking in the 55p-per-mile rate for the first 10,000 business miles and increasing the rate above 10,000 miles from 25p to 35p per mile
• Enhancements to the UK’s tax-advantaged share option regimes have been announced, including increasing the CSOP (now branded “EMI2”) individual option limit from £60,000 to £120,000, extending the exercise period to 15 years, removing the interaction between EMI and CSOP limits, extending EMI relief for companies transitioning to employee ownership, and lengthening the EMI post-disqualifying event exercise window to 180 days, with most changes taking effect from 6 April 2027

Key changes previously announced 

• Salary sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance from April 2029

• Payrolling of benefits in kind becomes mandatory from April 2027 for company cars, car fuel, vans, van fuel and employer-provided medical benefits, including private medical insurance and similar medical cover​

• Electric vehicle drivers face a 3p-per-mile Electric Vehicle Excise Duty (eVED) from 2028/29

VAT and duties

Budget 2026 announcements 

• Temporary VAT removal on domestic electricity bills from 1 November 2026 through to 31 March 2027, extended to 1 July 2027 (previously 5% VAT rate)

• Making online marketplaces responsible for collecting and paying VAT on online consumer sales by UK sellers. This is a targeted anti-avoidance measure and could collect significant additional revenue

• Customs duty to be removed on more than 100 products, including imported Kerosene and fertiliser. Baked beans, chocolate and gherkins are also included and are grabbing headlines, but the changes to imported kerosene and fertiliser are likely to deliver the biggest savings
• New zero VAT rating for social housing land sales – this is designed to remove one of the hurdles for landowners selling to Housing Associations​
• Freeze on fuel duty extended to July 2027 and 5p fuel duty cut extended by a further 6 months
• Machine Gaming Duty to increase from 20% to 25% from 1 April 2027
• No changes to VAT thresholds
• £10m alcohol duty relief package has been announced, targeted at small British brewers and cider makers

• A new starter ISA allowance for first-time buyers has been announced to replace the lifetime ISA – with the price cap adjusted so that investors at least get their money back, even if the purchase price is over the threshold

• Carers’ allowance cliff edge to be removed. A taper will be introduced instead

• An enhanced trading allowance has been announced, raising the amount people can earn from a  small trade or side income activities from £1,000 to £3,000
• US LLC reform – The UK does not currently recognise LLCs, leading to double taxation.​ Credit relief is to be introduced for foreign tax on earnings against UK tax on distributions for individuals​

Key changes previously announced 

• Tax thresholds frozen until 2031, continuing fiscal drag

• The basic and higher rates of dividends tax rose by 2% to 10.75% and 35.75% respectively from April 2026

• Making Tax Digital for Income Tax started in April 2026 via a 3-year phased introduction (turnover >£50k from April 2026​, turnover >£30k from April 2027, turnover >£20k from April 2028
• People receiving only the basic or new state pension will not be subject to small tax bills where their pension just exceeds the personal allowance (referred to as ‘Pension Tax Allowance’ in the Budget). This will be effective from 6 April 2027 to 5 April 2030

Capital gains tax

• The chancellor has proposed replacing the state pension triple lock with a double lock starting in April 2030, subject to winning the next general election. The state pension would continue to rise every year by inflation or by the 2.5% figure
• Standing charges are to be scrapped from household gas bills ‘as soon as possible’ in 2027, but with costs added to the unit cost instead. Expected to save 60% of households an average of £45 a year, but some households could pay more. Reformation of electricity standing charges will come next year​
• New young entrepreneurs’ allowance that will cover a year’s living costs for young founders who turn their ideas into businesses. The chancellor also announced a new scale-up programme for female founders
• Surcharge on banks to temporarily increase from 3% to 6% for 15 months from 1 January 2027
• Self-employed fathers and partners to now receive paternity leave
• Legislation will be introduced in Finance Bill 2026/27 for a new securities transfer tax in late 2027 to replace Stamp Duty on shares and Stamp Duty Reserve Tax
• HMRC to get £70m of additional funding to tackle tax evasion, including new powers to issue a Customer Correction Notice where it has reason to suspect an inaccuracy from 1 April 2028
• Changes have been announced to the UK’s sovereign immunity tax regime, restricting the exemption so that from January 2029 certain UK source income received by sovereign investors will be subject to UK taxation

Spending

• Extra £100 Energy Payment for households in Council tax bands A-D through the winter has been announced
• Billions of pounds of new defence spending have been announced earlier than expected, targeting 3% of GDP by 2030 and looking onwards to the NATO target of 3.5% of GDP by 2035.  All to be funded by long-term borrowing rather than spending cuts
• Increased spending on the two major government investment funds – National Wealth Fund (pivot from net zero investments to defence) and British Business Bank (tied into the above)
• Government to ‘seize opportunities on AI and guard against risks’ and sets out a new deal for data centres in the UK
• More funding to HMRC to improve compliance and stronger powers to collect overdue tax from those who can afford to pay and ignore repeated contact
• £1.5bn of funding announced for new social and affordable housing
• £10bn funding for additional support to Ukraine this winter
• A raft of funding for specific projects across the country was announced – all designed to make a difference in set localities