Yesterday's Autumn Budget brought a number of important changes affecting small business owners, company directors and individual taxpayers.
We appreciate there's a lot to unpack, so we’ve pulled together a clear, easy-to-read summary of the points we believe will matter most to you. The highlights are below but, as always, the impact will vary depending on your circumstances.
Please note that the content included in this article is based on our understanding of tax law at the time of writing. It may be subject to change and may not be applicable to your circumstances.
💷Taxes, Pensions and Savings
- Income Tax and NICs - No increase to the tax on employment income. Income tax and National Insurance thresholds remain frozen until 2031, as previously announced.
- Tax on Property and Savings Income - Last year’s Budget confirmed a 2% increase from April 2027. A further 2% has now been added on top. From April 2027:
- Savings: the basic, higher and additional rates of income tax on interest will rise to 24%, 44% and 49% respectively.
- Property: the basic, higher and additional rates of income tax on rental income will rise to 24%, 44% and 49% respectively.
- Dividends - Good news for company owners: there will be no change to the tax on dividend income.
- New Pension Tax Allowance - Pensioners with income up to the value of the full new State Pension will not pay income tax for the rest of this Parliament.
- ISAs - The planned cut to the Cash ISA allowance has been scrapped, so the £20,000 annual allowance stays as it is. A new “Starter ISA” is also being introduced to encourage investment.
🧑🏻💼Business
- Business Asset Disposal Relief (BADR) - From April 2027, the lifetime limit will be halved from £1m to £500,000. If you’re thinking about selling your business, this is well worth a chat with us.
- Founders’ Relief - A brand new capital gains tax relief offering a 10% rate on lifetime gains of up to £10m for qualifying founders of high-growth companies, from April 2027.
- Trading Allowance - The tax-free allowance for income from a new venture will triple from £1,000 to £3,000.
- Business Rates - The small business rates relief threshold for retail, hospitality and leisure businesses will rise from £12,000 to £18,000 rateable value.
- Living Wage / Minimum Wage - From April 2027, the National Living Wage will increase by 3.9% to £13.21 per hour, the National Minimum Wage for 18 to 20 year olds will increase to £11.27 per hour, and the rate for under 18s and apprentices will rise to £8.31 per hour.
- Making Tax Digital for Income Tax - A reminder that from April 2027, MTD will apply to sole traders and landlords with income above £30,000. We’re now less than six months away.
🚗Travel
- Fuel Duty - The planned increases have been cancelled, and fuel duty is frozen until July 2027.
- Mileage Allowance - The tax-free mileage rate is being permanently set at 55p per mile for the first 10,000 business miles, with the rate after that rising from 25p to 35p.
🆘Please Remember
If you’d like to talk through how any of these changes may affect you or your business, please don’t hesitate to get in touch with your client manager. We’re here to help you plan ahead and make informed decisions over the coming months.