UK Budget 2026

The Budget in three sentences

The Chancellor, John Healey, presented the Budget to Parliament on 28 October 2026. The government expressly rules out broad tax rises and wants to spare most people and businesses. Instead it turns screws aimed squarely at investment income, property ownership and large business sales.

What matters for reading it: almost everything announced on 28 October is only to become law with the Finance Bill 2026-27. Until then it is a plan, not law. Last year's announcements, by contrast, are largely enacted: the Finance Act 2026 received Royal Assent on 18 March 2026. What Budget 2025 brought is in our piece on UK Budget 2025.

Savers and landlords pick up the bill

The hardest point for private investors: interest is to be taxed from 6 April 2027 at 24%, 44% and 49%. The Finance Act 2026 had already enacted 22%, 42% and 47% for 2027/28; Budget 2026 adds two points. The same rates are to apply to property income in England, Wales and Northern Ireland. Scotland and Wales may set their own rates on rents. The personal savings allowance and the starting rate for savings stay as they are.

If you live in Rotterdam, Stockholm or Lyon and let a flat in Manchester, you pay the new rates just the same: UK rental income stays taxable in the UK wherever you live. The good news is the ISA: last year's announced cut of the cash ISA to £12,000 is cancelled, and it stays at £20,000 a year. If you can, move savings into an ISA before April 2027.

Business owners, founders, pensioners

Sell your company and you lose half your relief: the Business Asset Disposal Relief lifetime limit is to fall from £1 million to £500,000 from 6 April 2027. In its place comes a new founders relief: 10% capital gains tax on up to £10 million of lifetime gains for founders of high-growth, innovative companies. The catch for newcomers: to get it you must have been UK resident for at least five consecutive tax years before the sale. The details are still under consultation.

For small side income the trading allowance rises to £3,000. Pensioners with income up to the full new State Pension get a pension tax allowance, which tapers by £1 for every £3 of income above that.

Wealth, estates and moving to the UK

Inheritance tax stays at a £325,000 nil-rate band and £175,000 for the family home in 2026/27 and 2027/28, with full relief for businesses and farms at £2.5 million. Unused pension funds fall into the estate from 6 April 2027 as enacted; new is that the personal representative will be able to direct the pension scheme to pay the tax directly (Finance Bill 2026-27). Trusts get a new rule on liabilities, intended to apply to deaths and chargeable events from 28 October 2026.

For newcomers the key sentence is a statement of intent: the government will keep reviewing whether the residence-based system after the end of non-dom status strikes the right balance. It changed nothing in the FIG regime. But it wants to make moving to the UK with existing trusts easier: if a trust becomes UK resident only because a trustee moves to the UK and leaves again in the same or the next year, no CGT exit charge is to arise.

For businesses based abroad

VAT on services: from 1 April 2027 the reverse charge on services from abroad is only to apply where the UK customer is VAT-registered. If you supply UK businesses without a VAT number, you will then have to account for UK VAT yourself, which in many cases means registering in the UK. How the rules work today is in VAT on services. The legislation comes with the Finance Bill 2026-27.

E-invoicing: from 1 April 2029 VAT-registered businesses must issue and receive invoices between them as e-invoices. Budget 2026 published the roadmap: Peppol will be the technical backbone, the enabling powers come with the Finance Bill 2026-27, and a technical consultation follows in spring 2027.

Customs: the customs relief for consignments up to £135 is to go from October 2028, replaced by new customs procedures. If you ship goods directly to UK customers, build that into prices and logistics.

Corporation tax and investment: the main rate stays at 25%, also for the year from 1 April 2028, together with 19% for small profits. The first-year allowance for investment rises to 50% for expenditure from 1 January 2027, and the main pool writing-down allowance falls to 12% from April 2027. More in UK corporation tax.

Staff and capital markets: the EMI2 framework for tax-advantaged employee options doubles to £120,000 per employee from 6 April 2027. For R&D claims from 1 April 2027 the advance notification goes. Stamp duty and stamp duty reserve tax on shares are to be replaced by a Securities Transfer Tax in late 2027, brought in by regulations.

Sources: HM Treasury: Budget 2026 document (28 October 2026); HMRC: Budget 2026 Overview of tax legislation and rates (OOTLAR); HMRC: E-invoicing implementation roadmap; GOV.UK: High Value Council Tax Surcharge; HMRC: Research and Development tax reliefs, improving the claims process (TIIN)