Every Budget delivers headline noise, but what matters is how the policy shifts actually hit your cash flow, valuation, and personal balance sheet.
Chancellor announcements often give with one hand and take with the other. Budget 2026 is no exception: while headline Corporation Tax rates and core income tax bands remain frozen, major structural changes are on the horizon. From a landmark shift in exit taxes to a sharp hit on property and savings income, here is the clear, practical breakdown of what was announced and what you need to plan for.
1. Business & Corporate Tax: Planning Ahead of 2027
Most of the major corporate reforms land in April 2027. That gives proactive businesses a window to adapt rather than react.
Founders’ Relief Replaces Exit Expectations: Qualifying share disposals after 6 April 2027 can secure a 10% Capital Gains Tax (CGT) rate up to a generous lifetime cap of £10m. The trade-off? Strict eligibility: you must hold the shares for at least five years and clear specific commercial growth hurdles prior to exit.
BADR Gets Squeezed: Alongside the new Founders' Relief, Business Asset Disposal Relief (BADR) is shrinking. From 6 April 2027, the lifetime limit drops from £1m to £500,000. If an exit is on your horizon within the next 18–24 months, timing the transaction will be critical.
CSOP Evolves into EMI 2: From April 2027, the Company Share Option Plan transforms into EMI 2. Individual option limits double to £120,000, the exercise window stretches to 15 years, and restrictive interaction caps between CSOP and standard EMI limits are being scrapped—making equity incentives far more accessible for growing teams.
R&D Administrative Friction Eased: For claims made after 1 April 2027, HMRC is scrapping the rigid requirement to submit a Claim Notification Form (CNF) within six months of your period end. Missed windows under the old rule may also be salvageable if within standard statutory amendment timeframes.
Capital Allowances Rebalanced:
Main rate Writing Down Allowance (WDA) steps down from 14% to 12%.
First-Year Allowance (FYA) rises from 40% to 50% for spend outside the Annual Investment Allowance (AIA).
The 100% FYA for electric company cars ends as scheduled: 31 March 2027 for companies and 5 April 2027 for partnerships and sole traders.
Company Car BiK Ramps Up: Benefit-in-Kind (BiK) rates will tick up by another 1% for 2030/31, bringing pure EVs to 10% and top-bracket emitters (>160g/km) to 40%. The 4% diesel surcharge stays put.
Indirect Tax & Operational Deadlines:
Online Marketplace VAT (Oct 2027): Marketplaces will become responsible for collecting and remitting VAT on sales made by UK businesses via their platforms.
Electric Vehicle Road Duty (1 April 2028): A pay-per-mile system arrives at 3p/mile for battery electric vehicles (BEVs) and 1.5p/mile for plug-in hybrids (PHEVs).
E-Invoicing Roadmapped (April 2029): The shift toward mandatory B2B digital invoicing continues through active consultation.
Plastic Packaging Tax (1 April 2030): Exemption claims for the 30% recycled content threshold will require formal certification.
Soft Drinks Industry Levy: Rates will increase from 1 April 2027.
Energy-Saving Materials: Temporary zero-rating ends, returning to the standard 5% reduced rate.
What Hasn't Changed:
Corporation Tax rates remain unchanged: 19% for small profits, 25% main rate.
Mandatory payrolling of benefits is confirmed for April 2027 for specified benefits.
Mandatory direct debits for PAYE and VAT collections remain on track for April 2029.
2. Personal Tax & Wealth: A Clear Divide
The personal tax narrative is sharply divided: welcome simplicity for side-hustles and sole traders, contrasted with an aggressive tax hit on passive income.
Trading Allowance Tripled: Starting 6 April 2027, the trading allowance jumps from £1,000 to £3,000, aligning with the Self Assessment reporting threshold. This cuts unnecessary reporting overhead for early-stage ventures and micro-traders.
A 4% Surcharge on Savings & Property: From the 2027/28 tax year, non-dividend investment income takes a direct hit. Property income and savings interest will see across-the-board rate increases of 4%:
Tax Band Pre-April 2027 Rate New Rate (From April 2027)
Basic Rate (£12,570 – £50,270) 20% 24%
Higher Rate (£50,271 – £125,140) 40% 44%
Additional Rate (£125,140+) 45% 49%
If you hold buy-to-let portfolios personally rather than via corporate wrappers, reviewing your structure before 2027 is now an urgent priority.
MTD ITSA Grace Period: For sole traders and landlords joining Making Tax Digital in April 2027, HMRC has confirmed a penalty-free soft landing for late quarterly submissions across Year 1.
In-Year Tax Payments (2029): HMRC is exploring real-time or PAYE-style tax deductions for Self Assessment liabilities. This remains in the consultation phase.
State Pension Protection Allowance: A targeted relief will prevent pure state pension recipients from being pulled into income tax solely due to the frozen Personal Allowance.
What Hasn't Changed:
Salary/Earned Income rates stay at 20%, 40%, and 45%.
Dividend rates remain untouched at 10.75%, 35.35%, and 39.35%.
Personal Allowance remains fixed at £12,570.
Annual ISA contribution cap holds at £20,000.
3. Other Announcements
Young Entrepreneurs Allowance: will cover a year of living costs for young founders while they turn their ideas into businesses.
Female Founders: new scale-up programme to support female founders and the British Business Bank will double its commitments to women-led businesses and funds to £200m.Business Mileage Relief: Approved Mileage Allowance Payments (AMAP) finally increase: 55p/mile for the first 10,000 business miles and 35p/mile (up from 25p) thereafter.
Fuel Duty: The temporary 5p cut is extended until 30 June 2027.
Mansion Tax Confirmed: A high-value council tax surcharge on residential properties worth over £2m goes live in April 2028.
Subsistence Scale Rates: HMRC benchmark scale rates for unreceipted employee business travel will increase from 6 April 2028.
Energy Support: The temporary 0% VAT rate on domestic energy extends to 31 March 2027, alongside a targeted £100 grant for homes in Council Tax Bands A–D.
The recurring theme of this Budget is lead time. With many of these updates taking effect in April 2027, business owners and property investors have a clear window to model scenarios, structure shareholdings, and optimise extraction strategies before the rules tighten.