The Autumn Budget for 2026 has now been released. The announced policy changes this year were less significant than in previous budgets, but there were more changes across the board than we have seen previously. We have summarised the most relevant updates that we feel are important for our client base.
🏠 Property & Savings Tax Rates
The previous budget introduced the new tax rates for savings and property income for individuals. These have now been raised as below and will take effect from April 2027:
Basic rate – 24%
Higher rate – 44%
Additional rate – 49%
📃 Business Asset Disposal Relief (BADR)
The lifetime allowance for BADR will be reduced to £500,000. This is down from £1,000,000 previously.
The lifetime allowance is the total amount of capital gains that can be favourably taxed when an owner of a trading business winds up their company and takes the retained profit. It can be used for multiple businesses until the total allowance is used up.
Most clients will still be able to close their business and claim the full amount of retained earnings under BADR to get the favourable rate.
If you have already claimed BADR before though, you may find that not all of your next eligible business wind up is covered.
👔 Founders’ Relief
From 06th April 2027 a new Capital Gains tax relief will be introduced called Founders’ Relief.
The rate on any Capital Gains that are eligible and fall within an individual's lifetime allowance of £10,000,000 will be taxed at a lower rate of 10%.
This is much more generous than BADR. However, the current criteria are very hard to reach, and we think it is unlikely to apply to most business owners.
🍼 Paternity Leave for Sole Traders
From 2029, self-employed fathers, partners and adopters will be eligible for government support paying Statutory Paternity Pay.
📈 Trading Allowance
The trading allowance for sole traders with low or no expenses will be increased to £3,000 from the current £1,000. This is important to note if you are just starting out as a sole trader or if your trade does not incur that many expenses.
Please note, you can either claim the Trading Allowance or deduct expenses from your turnover to arrive at your taxable profit figure.
💵 National Minimum Wage Increase
The minimum wage for adults is increasing to £13.20 from £12.71 from 01st April 2027. This is smaller than recent increases but will mean a full-time equivalent increase of around £910 per year on a 37.5 hour week.
For staff aged between 18 to 20, the rate will increase to £11.27 from £10.85; a full-time equivalent increase of £819 on a 37.5 hour week.
We advise checking any staff salaries you may have to see if an increase is needed from 01st April for Hourly or Full-time equivalent salaries.
Please speak to your client manager if you are unsure.
📖 Writing Down Allowance (WDA)
The writing down allowance will be reduced to 12% per year on qualifying assets from April 2027.
This is following similar reductions in the previous budgets, but means that capital assets not covered by some of the other more generous allowances are less attractive for businesses.
If you already have an asset receiving WDA, your claims will be reduced from April 2027.
📆 100% First Year Allowance (FYA)
Electric vehicles & charging points purchased by limited companies will no longer be eligible for the full 100% FYA Capital Allowance from April 2027.
It isn’t clear yet if any new relief will be introduced to replace it. Otherwise, it looks like the WDA above would apply.
This will have a big impact on the tax implications of buying an electric car through a ltd company and may mean some clients no longer choose this option.
🚗 Mileage Rates
The higher mileage rates of 55p per mile under 10,000 miles and 35p per mile over 10,000 will be made permanent.