Chancellor John Healey delivered his first Budget on Wednesday 28 October 2026. There was no change to the headline rates of income tax, National Insurance, VAT or corporation tax, but there was a long list of smaller measures that affect almost every small business, sole trader and landlord.
Most changes start in April 2027 or later, so there is time to plan. This guide sets out what was announced, who it affects and what you should do next.
At a Glance: The Changes That Matter Most
| Change | Who it affects | When |
|---|---|---|
| Trading allowance rises from £1,000 to £3,000 | Side businesses and micro traders | 6 April 2027 |
| National Living Wage rises to £13.21 an hour | All employers | 1 April 2027 |
| No MTD late submission points for new joiners in 2027/28 | Sole traders and landlords over £30,000 | April 2027 |
| Property and savings income tax up a further 2 points | Landlords and savers | April 2027 |
| Most benefits in kind must be payrolled | Employers | 6 April 2027 and 6 April 2028 |
| Business Asset Disposal Relief limit halves to £500,000 | Owners selling a business | 6 April 2027 |
| First-year allowance rises to 50% | Businesses buying plant and machinery | 1 January 2027 |
| Marketplaces collect VAT for many UK sellers | Online sellers | October 2027 |
| VAT and PAYE paid by Direct Debit | VAT-registered businesses and employers | April 2029 |
| Mandatory e-invoicing roadmap published | VAT-registered businesses | 1 April 2029 |
What Did Not Change
It is just as useful to know what stayed the same:
- Income tax and National Insurance rates are unchanged, and income tax thresholds remain frozen until 2030/31 in England and Northern Ireland
- Corporation tax stays at 25% main rate and 19% small profits rate, with marginal relief between £50,000 and £250,000
- VAT stays at 20%, and the registration threshold remains £90,000
- Fuel duty is frozen again, with the 5p cut extended to 30 June 2027
Sole Traders and Side Businesses
Trading allowance tripled to £3,000
From 6 April 2027, the trading allowance will increase from £1,000 to £3,000, providing additional tax relief for individuals earning small amounts of trading or miscellaneous income.
If your gross qualifying trading income is within the allowance, you may not need to pay income tax on it or report it to HMRC, provided no other reporting requirements apply.
If your trading income exceeds £3,000, you can generally choose between deducting the trading allowance or your actual allowable business expenses, depending on which is more beneficial.
Class 2 National Insurance
The Small Profits Threshold rises to £7,355 for 2027/28, and the voluntary Class 2 rate becomes £3.80 a week. Self-employed people with profits below the threshold can still pay voluntarily to protect their State Pension record.
Paying tax on account will change in 2029
From April 2029, the way the self-employed pay income tax on account will change, with an option to pay more often, including through PAYE if you also have a job. Details will follow in future legislation.
If you file a tax return each year, our guide to Self Assessment deadlines for 2027 sets out the dates you need.
Making Tax Digital for Income Tax
The expansion of Making Tax Digital goes ahead as planned. From April 2027, sole traders and landlords with qualifying income over £30,000 must keep digital records and send quarterly updates to HMRC using compatible software.
The government has announced an extended soft landing for businesses and landlords joining Making Tax Digital for Income Tax in April 2027.
Qualifying taxpayers will not receive late submission penalty points for their 2027/28 quarterly updates. However, quarterly reporting requirements will still apply, and taxpayers must continue to meet their other tax obligations.
This transitional relief provides additional time to become familiar with digital record-keeping and quarterly reporting without removing the requirement to comply with MTD.
A small number of groups are exempt until further notice, including people eligible for qualifying care relief, non-UK resident entertainers and sportspeople, and expected non-residents.
If you are in the April 2027 group, now is the time to choose software and start keeping digital records. Our Making Tax Digital service can get you set up, and our earlier guide to Making Tax Digital for Income Tax explains how quarterly reporting works.
Employers and Payroll
Minimum wage rises from April 2027
The National Living Wage and National Minimum Wage rise by 3.9% from 1 April 2027:
| Rate | Now | From 1 April 2027 |
|---|---|---|
| National Living Wage (21 and over) | £12.71 | £13.21 |
| 18 to 20 | £10.85 | £11.27 |
| 16 to 17 | £8.00 | £8.31 |
| Apprentice rate | £8.00 | £8.31 |
Remember that a higher hourly rate also pushes up employer National Insurance, pension contributions, holiday pay and overtime. Watch for deductions, such as uniforms or unpaid training time, that could take pay below the legal minimum, as HMRC penalties can be steep.
Benefits in kind move into payroll
P11D forms are being phased out. Employers will have to report and tax most benefits through payroll instead. Company cars and vans, fuel and medical benefits move first from 6 April 2027, followed by almost all other benefits from 6 April 2028. If you provide benefits, check your payroll software and processes well before the deadline.
Other payroll updates
- The Lower Earnings Limit for Class 1 National Insurance rises to £6,916 a year (£133 a week) for 2027/28
- Mileage rates for employees using their own vehicles are now permanently 55p a mile for the first 10,000 miles, and rise from 25p to 35p for miles above that from 6 April 2027
- Company van and fuel benefit charges rise with inflation from 6 April 2027
- Benchmark meal rates for business travel rise to £20, £60 and £75 from 6 April 2028
- From April 2029, PAYE and VAT liabilities will need to be paid by Direct Debit
If payroll is taking more of your time with every change, our payroll service can handle pay runs, RTI submissions and the move to payrolled benefits for you.
VAT Changes
The VAT rate and threshold are unchanged, but there are three important developments:
- Online marketplaces: From October 2027, marketplaces will collect VAT on sales of goods in the UK by UK VAT-registered sellers, and by other UK sellers with £90,000 or more in annual sales on a single platform. Private sales, second-hand goods and business-to-business sales are excluded.
- Overseas services: From April 2027, if your business is not VAT registered and buys services from overseas suppliers, those suppliers will charge you UK VAT directly instead of the reverse charge applying.
- Direct Debit: From April 2029, businesses will need a Direct Debit in place to pay VAT return liabilities.
If you are close to the threshold or selling through a marketplace, it may be worth revisiting our guide on whether to register for VAT voluntarily. For help with returns, see our VAT return service.
E-Invoicing: The Roadmap Is Here
Alongside the Budget, HMRC published its roadmap for mandatory e-invoicing, with implementation planned from 1 April 2029.
VAT-registered businesses will need to prepare for structured electronic invoicing, subject to the final scope, exemptions and technical requirements.
Businesses should review their existing invoicing systems and accounting software to ensure they are ready for the transition. Further guidance is expected as the implementation date approaches.
We cover the details, including what is still to be decided, in our guide to the UK e-invoicing mandate 2029.
Business Rates
Retail, hospitality and leisure businesses in England were the main winners. From 1 April 2027, qualifying properties with a rateable value up to £18,000 will receive 100% Small Business Rates Relief, tapering to zero at £21,000. The previous thresholds were £12,000 and £15,000. Qualifying pubs, social clubs and most live music venues will also receive an extra 20 percentage points of relief, taking their total to 35%. The government expects 70,000 more businesses to pay no business rates at all.
It is worth checking your rateable value on the Valuation Office Agency website and challenging it if it looks wrong.
Capital allowances
Business Asset Disposal Relief halves
The lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000 for qualifying disposals on or after 6 April 2027, with transitional rules for contracts signed before that date. The Chancellor said three in four claimants will see no change, but if you are planning a sale with gains above £500,000, timing now matters.
New Founders’ Relief
A new Founders’ Relief will apply a 10% capital gains tax rate to qualifying share disposals from 6 April 2027, up to a lifetime limit of £10 million. It is aimed at founders of high-growth companies, with conditions including holding 25% of the shares when trading began and owning them for at least five years. Some details are still being finalised.
Capital allowances
The main rate first-year allowance increases from 40% to 50% for qualifying expenditure from 1 January 2027, while the main writing-down allowance reduces to 12% from April 2027.
Businesses planning to purchase plant, machinery or equipment should review the timing of their investments and the capital allowances available.
The tax benefits will depend on the type of asset purchased, the business structure and the applicable capital allowance rules. Businesses should seek professional advice before making significant investment decisions based on these changes.
Landlords
From April 2027, the government plans to increase the income tax rates applicable to property income by two percentage points, taking the relevant rates to 24%, 44% and 49%.
These changes may increase the tax liabilities of landlords, making it important to review rental profits, allowable expenses and future tax planning.
Landlords should also consider the Making Tax Digital requirements applying from April 2027 to those with qualifying income over £30,000.
Tax rules and devolved arrangements may differ across the UK, particularly in Scotland and Wales. Landlords should therefore review the rules applicable to their circumstances.
Our article on how rental income is taxed in the UK explains the basics, and we can help you plan for the higher rates.
What Should Small Businesses Do Now?
- Pick out the changes that apply to you from the table at the top and add the dates to your calendar.
- Update payroll plans for the April 2027 wage rise and the move to payrolled benefits.
- Get MTD-ready if your income is over £30,000, using the penalty-free first year to settle in rather than delay.
- Review any planned sale if gains could exceed £500,000 before 6 April 2027.
- Time equipment purchases to make the most of the 50% first-year allowance from January 2027.
- Check your software can handle MTD now and e-invoicing by 2029. Our accounting software implementation service can help.
- Talk to your accountant before the year-end rush.
How Legacy Accounting Can Help
At Legacy Accounting, we help businesses, sole traders and landlords across Oxfordshire and Berkshire make sense of every Budget and act on it. From tax returns and payroll to MTD and VAT, we can review your position and plan ahead for April 2027. See our pricing or book a free consultation.
Frequently Asked Questions
When was the Autumn Budget 2026?
The Autumn Budget 2026 was delivered by Chancellor John Healey on Wednesday 28 October 2026.
Did the Budget change income tax or VAT rates?
No. Headline rates of income tax, National Insurance, VAT and corporation tax were unchanged, and the VAT registration threshold stays at £90,000. However, tax on property and savings income will rise by two percentage points from April 2027.
What is the new trading allowance?
From 6 April 2027, the trading allowance increases from £1,000 to £3,000. This provides additional tax relief for individuals earning qualifying trading or miscellaneous income. The Self Assessment reporting threshold also increases, although individuals should check whether other reporting obligations apply.
What is the National Living Wage from April 2027?
The National Living Wage for workers aged 21 and over rises to £13.21 an hour from 1 April 2027.
Has Making Tax Digital been delayed?
No. MTD for Income Tax still extends to sole traders and landlords with qualifying income over £30,000 from April 2027. However, new joiners will not receive late submission penalty points for their 2027/28 quarterly updates.
What is changing with Business Asset Disposal Relief?
The lifetime limit halves from £1 million to £500,000 for qualifying disposals made on or after 6 April 2027.
When does mandatory e-invoicing start?
Mandatory e-invoicing is planned to begin on 1 April 2029 for VAT-registered businesses within the scope of the new requirements. Businesses should prepare their invoicing systems and monitor HMRC guidance for further details about implementation and exemptions.
Sources
- Sage: Autumn Budget 2026, what it means for your business
- Mortgage Solutions: Autumn Budget 2026 property income tax rise
- HMRC: Roadmap for e-invoicing implementation
This article is for general information only and is not tax advice. Speak to a qualified accountant about your own circumstances.