The Chancellor, John Healey, delivered his first Budget on 28 October 2026. While the headline rates of tax remain unchanged, the Budget contains a number of measures that will affect individuals, families and businesses over the coming years.
In this update, we summarise the key announcements in a clear, easy-to-follow way, setting out who they affect and when they take effect. The full Budget documents are available on GOV.UK.
Tax rates and thresholds
The main rates of Income Tax, National Insurance, VAT, Corporation Tax, Capital Gains Tax, Dividend Tax and Inheritance Tax will remain at their current levels for 2027/28.
However, tax thresholds remain frozen until 2031, including the £12,570 Personal Allowance and the Inheritance Tax nil-rate bands. As earnings rise, more income will fall into higher tax bands, meaning many taxpayers will pay more despite no change in rates. The full table of rates and allowances is published on GOV.UK.
Self-employed individuals and sole traders
From 6 April 2027, the Trading Allowance will increase from £1,000 to £3,000, and the threshold for reporting trading income through Self Assessment will rise to £3,000. Individuals with modest income from a side business or occasional trading will be able to earn more before needing to report or pay tax on it.
From April 2029, Self Assessment taxpayers who make payments on account will move to smaller, more regular payments during the year, with eligible taxpayers able to pay through PAYE. From the same date, eligible self-employed fathers, partners and adopters will be entitled to parental pay for the first time.
For those joining Making Tax Digital for Income Tax in April 2027, HMRC will not issue penalty points for late quarterly updates during the 2027/28 tax year. All quarterly updates must still be submitted before the tax return can be filed, and late payment penalties continue to apply. Taxpayers who joined in April 2026 will be subject to the full penalty regime from April 2027. Further information is available on our Making Tax Digital page.
Full details of the tax measures announced are set out in HMRC’s overview of tax legislation and rates.
Limited companies and business owners
The lifetime limit for Business Asset Disposal Relief will be reduced from £1 million to £500,000 for qualifying disposals made on or after 6 April 2027. Business owners considering a sale or succession plan should review the timing of any disposal, and we would recommend discussing this with us at an early stage.
A new Founders’ Relief will offer a 10% Capital Gains Tax rate on qualifying share disposals from 6 April 2027, subject to a £10 million lifetime limit. The relief is aimed at founders and early investors in high-growth companies, and its detailed eligibility rules are currently subject to consultation.
The government also intends to reform the taxation of payments from companies to shareholders, with changes expected from April 2028. Draft legislation has not yet been published, but the changes may affect how directors extract profits from their companies. We will update clients as further detail becomes available.
From April 2027, the approved mileage rate for business miles above 10,000 will increase from 25p to 35p per mile, with the rate for the first 10,000 miles remaining at 55p. This applies to employees and to self-employed individuals using simplified mileage.
The National Minimum Wage and National Living Wage will both increase by 3.9% from April 2027, which employers should factor into payroll planning.
Landlords and savers
Income Tax on property income, and on savings interest above the Personal Savings Allowance, will increase by a further two percentage points. Combined with the increase announced in last year’s Budget, the planned rates from 6 April 2027 are:
- Basic rate: 24%
- Higher rate: 44%
- Additional rate: 49%
The Welsh Government has the power to set its own rates on property income, and its draft Budget is due to be published on 17 November 2026. We will confirm the position for Welsh landlords once it is known. In the meantime, landlords may wish to review how their property is held and ensure all available reliefs are being claimed.
The planned reduction of the Cash ISA limit to £12,000 will no longer go ahead, and the limit will remain at £20,000. A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029, while existing Lifetime ISA holders can continue to contribute under the current rules.
Pensions and retirement
The full new State Pension will increase by 3.9% from April 2027, to approximately £250.70 a week. This takes it above the Personal Allowance for the first time.
To address this, the government will introduce a Pension Tax Allowance, ensuring that pensioners whose total income does not exceed the full new State Pension will not pay Income Tax. The allowance applies from 6 April 2027 to 5 April 2030, and is gradually withdrawn for those with income slightly above that level.
As previously announced, most unused pension funds and death benefits will be brought within the scope of Inheritance Tax from 6 April 2027. Anyone relying on their pension as part of their estate planning should review their arrangements.
What applies in Wales
Several measures announced in the Budget apply only in England, including the increased Small Business Rates Relief, the Young Entrepreneurs Allowance pilot, the £100 Household Energy Payment and the Your First Home scheme. The Welsh Government will receive additional funding as a result, and we will share any relevant announcements.
Measures that do apply in Wales include the extension of the 0% VAT rate on household electricity and the 5p fuel duty cut, both until the end of June 2027.
HMRC compliance and debt collection
HMRC will be given new powers to recover lower-value tax debts in regular instalments directly from the bank accounts of individuals and businesses who can afford to pay but repeatedly fail to engage. The powers will be phased in from July 2029, beginning with VAT and PAYE debts and extending to Self Assessment from April 2030.
Speak to our team
The impact of the Budget will vary depending on your circumstances. If you would like to discuss how these changes affect you, your business or your family, our team across St Asaph, Ruthin, Mold, Beaumaris, Menai Bridge and Llangefni will be happy to help. Please contact your local office to arrange a conversation.
This article is for general information purposes only and does not constitute advice. It is based on the Budget announcements of 28 October 2026, and details may change as legislation is published. Please seek professional advice before acting on any of the information above.
