What Does the Autumn Budget 2026 Mean for Your Business and Your Finances?
The Chancellor delivered the Autumn Budget on Wednesday 28 October 2026, confirming a wide range of tax changes affecting businesses, business owners and individuals. Many measures take effect from April 2027, giving time to plan, whilst a smaller number apply immediately.
This article summarises the changes most likely to affect our clients, across personal tax, employment taxes, capital gains tax, inheritance tax, pensions tax and business tax. It does not cover every announcement; for anything not addressed here, or for how these changes apply to your specific circumstances, please get in touch.
Personal tax: higher rates on savings and property income
From 6 April 2027, tax rates on savings income and property income will rise by a further two percentage points, taking the basic, higher and additional rates to 24%, 44% and 49% respectively. Combined with the increase already announced last year, this is a four percentage point rise from the rates that applied before. Dividend income rates are not changing.
For clients who hold investment property or significant savings income, this is a meaningful increase in the tax cost of that income from April 2027. It may be worth revisiting how income is structured between savings, property and dividends ahead of the change.
Alongside this, the trading allowance will triple from £1,000 to £3,000 from 6 April 2027, so individuals with modest trading or miscellaneous income below that threshold will not need to declare it or pay tax on it, a welcome simplification for anyone with a small side income.
From the same date, the order in which different types of income are taxed is also changing, with non- savings, non-property, non-dividend income taxed first, followed by property income, then savings income, then dividends.
Lower-income pensioners whose only income is the state pension have also been given some protection. A new, temporary pension tax allowance, worth up to £94 a year, will apply automatically for the tax years 2027-28 to 2029-30 for pensioners whose total income does not exceed the full new state pension (projected at £13,037 for 2027-28). The allowance tapers by £1 for every £3 of income above that level, so it is withdrawn gradually rather than all at once, and no claim is needed. ISA savers should also note that the Lifetime ISA is being phased out in favour of a new First-time Buyer ISA from April 2029. In the meantime, the withdrawal charge on a Lifetime ISA used to buy a
home costing more than £450,000 is being reduced from 25% to 20% (other non-exempt withdrawals remain subject to the 25% charge). The cash ISA allowance remains at £20,000 from April 2027, and a previously proposed £12,000 cap on cash contributions within that limit has been dropped.
Employment taxes: higher costs, with some welcome easements
The National Living Wage is rising 3.9% to £13.21 an hour from 1 April 2027, increasing payroll costs for any business employing staff at or near the minimum wage, particularly in retail, hospitality and care.
From 6 April 2027, the main NIC thresholds move to £6,916 a year for the Lower Earnings Limit, £7,355 a year for the Small Profits Threshold, £3.80 a week for Class 2 NICs and £19.05 a week for Class 3 NICs. Other NIC rates and thresholds remain frozen until 2030-31.
There is better news on mileage: the 55p-a-mile rate for the first 10,000 business miles is being made permanent, whilst the rate for miles above that threshold rises from 25p to 35p from 6 April 2027.
Passenger, motorcycle and pedal cycle rates are unchanged. This is worth flagging to construction and professional services clients whose staff travel regularly, where mileage claims add up quickly.
Benchmark subsistence rates, unchanged since 2019-20, are also being significantly increased: £20 for trips over five hours (up from £5), £60 for over ten hours (up from £10), and £75 for over 24 hours (replacing the previous £25 rate for trips over 15 hours). Businesses that rely on these scale rates to reimburse staff expenses without needing receipts will want to update their expense policies accordingly.
On share schemes, the CSOP individual limit is doubling to £120,000 from 6 April 2027, and the restriction preventing a company from operating both a CSOP and an EMI scheme is being removed, giving growing companies more flexibility in how they reward and retain key staff. The exercise period for CSOP options is being extended from 10 to 15 years, applying retrospectively to existing options, and the window to exercise EMI options following a disqualifying event is being extended from 90 to 180 days.
A few further points worth noting: the £2,500 threshold below which employees must register for self- assessment to claim expenses is being removed from April 2028; company car benefit percentages, including for zero-emission cars, are set to rise by a further percentage point in 2030-31; and businesses sponsoring staff from overseas will welcome the Immigration Skills Charge becoming exempt from income tax for employer payments, effective 28 October 2026.
Capital gains tax: a narrower relief, and a new one for founders
The lifetime limit for Business Asset Disposal Relief (BADR) is being cut from £1m to £500,000 for disposals made on or after 6 April 2027. For anyone considering selling or winding up a business, this materially increases the CGT exposure. There are transitional provisions for contracts already entered into, and for certain share reorganisations, that have not completed by 6 April 2027, so it is worth
talking to us if a sale is already in progress.
In its place, a new Founders Relief will offer a reduced 10% CGT rate on up to £10m of lifetime qualifying gains, aimed specifically at founders of high-growth, innovative UK companies. The qualifying conditions are demanding: a 25% shareholding held from the company's earliest trading activity, five years of ownership and UK residence, a company with at least £10m turnover and 15 full-time employees, and evidence of strong growth or significant R&D investment. The relief remains subject to technical consultation, closing 30 November 2026, so the final detail may change before it takes effect for disposals from 6 April 2027.
Inheritance tax: pensions brought into the estate
From April 2027, most unused pension funds and pension death benefits will be included within the value of an estate for inheritance tax purposes. This is a significant change for anyone who has been using their pension as a tax-efficient way to pass wealth to the next generation, and it means pension and estate planning now need to be considered together rather than separately. Personal
representatives will be able to choose whether pension property is treated as part of the general estate or as a separate component when calculating the reduced rate of inheritance tax that applies where part of an estate is left to charity.
Separately, legislation taking effect from 28 October 2026 puts the valuation of settled property for inheritance tax purposes on a clearer statutory footing, setting out how liabilities properly incurred by trustees should be taken into account.
Pensions tax: simpler rules around death benefits
There is some welcome simplification for executors and beneficiaries: the rule that increased the tax charge on certain pension lump sum death benefits paid more than two years after the scheme administrator became aware of a member's death is being abolished. This removes a trap that could otherwise penalise beneficiaries for delays outside their control, and applies to payments made on or
after Budget Day, 28 October 2026.
Evidence requirements for serious ill-health lump sums are also being relaxed, so that evidence from a foreign-registered medical practitioner will be accepted where a member is living overseas, once the next Finance Bill receives Royal Assent.
Defined benefit pension schemes will also gain a new route to pay surplus funds directly to members, rather than only to the sponsoring employer, for payments made after 5 April 2027. Such payments will be taxed as income in the member's hands, rather than facing the significantly higher unauthorised payment charge that would otherwise apply.
Business tax: allowances down, reliefs recalibrated
Corporation tax rates are held at 25% (main) and 19% (small profits), continuing the rate cap set out in the Corporation Tax Roadmap. However, the main rate writing-down allowance is being cut from 14% to 12% from April 2027, which will increase the tax cost of capital expenditure that does not qualify for full expensing. Partly offsetting this, the main-rate first-year allowance is increasing from
40% to 50% for qualifying expenditure incurred on or after 1 January 2027.
Businesses considering buying an electric company car should be aware that the 100% first-year allowance for new zero-emission cars has not been extended, and is due to end on 31 March 2027 for corporation tax and 5 April 2027 for income tax. After that, EV purchases will only attract the main rate of 12%. Anyone planning a fleet purchase may wish to bring it forward.
The banking surcharge is temporarily doubling from 3% to 6% for a 15-month period, from 1 January 2027 to 31 March 2028, relevant mainly to clients in financial services.
On the positive side, business rates relief for retail, hospitality and leisure properties in England is being extended, with around 70,000 more businesses expected to fall out of business rates altogether as the small business rates relief threshold rises, and a two-year real-terms freeze applying across all retail, hospitality and leisure properties.
R&D claimants will welcome the removal of the requirement to notify HMRC in advance of a claim, from 1 April 2027, alongside a wider HMRC consultation on simplifying the R&D relief regime.
At DSK Partners, we work with SMEs and private clients across professional services, construction and healthcare to understand exactly how changes like these affect their business and personal finances, well before they take effect. Many of these measures do not apply until April 2027, which gives valuable time to plan around them, whether that means reviewing how profits are extracted, bringing forward a business sale, updating expense policies, or reconsidering pension and estate planning.
If you would like to discuss how the Autumn Budget 2026 affects you or your business, please get in touch with your usual DSK Partners contact.
Get in touch with DSK Partners today to understand what the Autumn Budget 2026 means for you.
Frequently asked questions about the Autumn Budget 2026
When do most of these changes take effect?
Most of the changes outlined above take effect from 6 April 2027, giving businesses and individuals time to plan. A smaller number of measures, such as the abolition of the two-year rule for pension death benefits and some capital gains tax changes, apply immediately from Budget Day, 28 October 2026.
Will my dividend income be taxed more from April 2027?
No. Only the tax rates on savings income and property income are increasing; the rates of tax on dividend income are unchanged.
Should I bring forward a business sale to use the current Business Asset Disposal Relief limit?
This depends on individual circumstances, including how close a sale already is and whether the new Founders' Relief might apply instead. It is worth discussing timing with us if a sale is being considered.
Do I need to do anything to claim the new pension tax allowance?
No. HMRC will apply it automatically from 6 April 2027 for eligible pensioners; there is no claim to make.
Is now a good time to buy an electric company car?
If a business is already planning to purchase an electric vehicle, doing so before the 100% first-year allowance ends on 31 March 2027 (corporation tax) or 5 April 2027 (income tax) will secure the more generous relief.
How does the pension change affect my estate planning?
From April 2027, most unused pension funds will count towards the value of an estate for inheritance tax purposes. Anyone currently relying on their pension to pass on wealth tax-efficiently should review their wider estate plan with us.