The Treasury has published the Budget 2026 Red Book following the Chancellor’s statement on Wednesday 28 October. Here are the main measures affecting small businesses, sole traders and company directors.
The measures below are taken from the published Budget document; many will take effect in later tax years.
We have added the principal dates from the Red Book and will update the article as supporting tax guidance is published.
Budget 2026 – confirmed measures
- Business Asset Disposal Relief: Lifetime limit cut from £1 million to £500,000 from 6 April 2027.
- Dividend tax: No further increase in the headline dividend tax rates announced; changes to the tax treatment of company distributions are planned for April 2028.
- Trading allowance: Increased from £1,000 to £3,000 from 6 April 2027.
- Business mileage: The 55p rate for the first 10,000 business miles is permanent from 6 April 2026; the rate above 10,000 miles rises from 25p to 35p from 6 April 2027.
- Business rates: From 1 April 2027, the 100% Small Business Rate Relief threshold for qualifying retail, hospitality and leisure premises in England rises from £12,000 to £18,000, with tapered relief up to £21,000.
- Minimum wage: From 1 April 2027, the National Living Wage rises 3.9% to £13.21 an hour for workers aged 21 and over, and the 18-20 rate rises to £11.27.
- Self-employed parental pay: A new Parental Allowance for eligible self-employed fathers, partners and adopters in Great Britain from April 2029.
- Founders’ relief: A 10% CGT rate on up to £10 million in lifetime gains for qualifying founders of high-growth, innovative companies from 6 April 2027, subject to eligibility rules.
The Treasury has published the Budget 2026 Red Book. You can read the full Budget document on GOV.UK. The figures and dates below are drawn from the published Red Book.
Further tax and administration changes
Capital allowances: The main-rate first-year allowance rises to 50% for qualifying expenditure from 1 January 2027; the main writing-down allowance falls to 12% from April 2027. The headline Corporation Tax rate remains capped at 25%.
R&D and Making Tax Digital: The R&D tax credit Claim Notification Form is abolished from April 2027, and a 12-month penalty easement applies to taxpayers joining MTD for Income Tax from April 2027.
Fuel duty: The 5p cut and freeze are extended until 1 July 2027.
From October 2027, online marketplaces will become responsible for collecting VAT on sales by UK businesses making more than £90,000 of sales through the marketplace. The government also plans mandatory VAT e-invoicing from April 2029.
The tax rules for company distributions are due to change in April 2028, with draft legislation to be consulted on during 2027. The Budget also proposes smaller, more regular Self Assessment payments on account from April 2029 for taxpayers already using that system.
ISAs, savings and rental income
Cash ISA limit stays at £20,000. The planned reduction to £12,000 for under-65s from April 2027 has been dropped. The government will also explore an incentive for first-time stocks and shares ISA investors; the details have not yet been settled.
New First Time Buyer ISA. From April 2029, this will replace the Lifetime ISA for new savers, with a 25% government bonus towards a first home costing up to £450,000. The bonus is capped at £20,000. Existing Lifetime ISA holders can keep their accounts. From 29 October 2026, the withdrawal charge for buying above the £450,000 cap falls from 25% to 20%; other unauthorised withdrawals still attract 25%.
Landlords and savers face higher tax. From 6 April 2027, the basic, higher and additional rates on property and savings income will be 24%, 44% and 49%. That is a further two percentage points above the rates previously announced for April 2027. Savings rates apply UK-wide; the property rates apply in England, Wales and Northern Ireland. The savings increase concerns taxable interest outside tax-free accounts, rather than the amount saved.
See HMRC’s Budget tax measures for the ISA rules and new income tax rates.
Other measures affecting household finances
- Energy bills: The temporary 0% VAT rate on qualifying domestic electricity is extended to 30 June 2027. Households in council tax bands A-D in England will receive a £100 Household Energy Payment from January 2027, with funding for devolved governments to provide support.
- Pension tax: From 6 April 2027, the Pension Tax Allowance will protect people above State Pension age whose total income is no more than the full new State Pension from Income Tax. It tapers for incomes just above that level.
- Bus fares: Single fares in England outside London will be capped at £2 for one year from 1 January 2027.
Pre-Budget announcements
The government has made one substantial announcement for businesses ahead of the Budget. On 23 October, HM Treasury outlined plans to reduce administrative requirements and extend tariff suspensions on imported goods.
Ministers estimate the package could save businesses almost £800 million a year, including more than £600 million in regulatory administration costs and up to £155 million from extending tariff suspensions on more than 250 products.
The proposals include simpler company reporting requirements and clearer compliance guidance for smaller businesses. These follow recommendations from the Small Business Regulatory Taskforce, which examined ways to reduce paperwork without removing core protections.
For owners of small limited companies, the key question is which reporting obligations will change, when those changes take effect, and whether they reduce the work involved in running a company. See the Treasury’s 23 October announcement and the government’s response to the taskforce.
Budget 2026 – official documents
- Budget 2026 Red Book – full Treasury document and policy decisions.
- HMRC’s Budget 2026 tax documents – technical notes on tax changes as they are released.
- Office for Budget Responsibility – the economic and fiscal forecasts accompanying the Budget.
- House of Commons Library Budget summary – an independent Budget briefing.