Prior to its release, there was much speculation about what Rachel Reeves’ Autumn Budget would contain. What taxes would change? How would this affect spending and borrowing? Would she manage to combat the cost-of-living crisis?
Here’s a summary of some of the headline changes…
Individuals
Personal tax: The personal allowance (for most, earnings above £12,570) and personal tax thresholds will be frozen until 2030/31. Due to inflation, this ‘stealth tax’ will drag more people into higher bands, which will in turn affect their personal savings allowance, Capital Gains Tax rate, and their dividend tax rate.
National Insurance: The lower earnings limit (LEL), which is the minimum amount you need to earn to qualify for certain state benefits including the state pension, will be £6,708 from 6 April 2026.
ISAs: From April 2027, under 65s will only be able to invest £12,000 of their £20,000 ISA allowance into Cash ISAs. The remaining £8,000 can be put into investments such as a stocks and shares ISA. This measure aims to boost the stock market.
Child Tax Credit: The cap that limits households receiving Universal Credit or Child Tax Credit from receiving further payments for a third or subsequent child will be removed from April 2026.
State Pension: As part of the ‘triple lock,’ basic and New State Pension payments will rise by 4.8 from April 2026, which is above the current rate of inflation.
Dividends: From April 2026, tax on dividends will increase by 2% for basic and higher rate taxpayers. The additional rate will remain unchanged.
Prescriptions: The cost of a single prescription in England will remain at £9.90 for 2026/27.
Employees
Minimum wage: From April 2026, the National Minimum Wage for those aged 21 and over will rise from £12.21 to £12.71 per hour. Those aged 18 to 20 will see an increase from £10 to £10.85. The under 18s and the apprentice rate increase from £7.55 to £8.00.
Salary sacrifice: Currently, a salary sacrifice scheme allows employers to pay part of your gross salary directly into your pension, which therefore means that it is free from Income Tax and National Insurance. However, from April 2029 a £2,000 cap will be introduced above which the contributions will be subject to employer and employee National Insurance. There is no change to the tax treatment.
Businesses
National Insurance: The thresholds for National Insurance paid by employers will be frozen until 2031, increasing costs as wages rise over time.
First year allowance: For businesses, there will a new 40% first-year allowance for qualifying capital expenditure that is not covered by full expensing or the Annual Investment Allowance (AIA). From April 2026, there will be a reduction in the main writing down allowance rate from 18% to 14%.
New companies: Effective immediately, and for three years, the purchase of shares in companies newly listed in the UK will be free of stamp duty. This is ahead of a new Securities Transfer Charge which is set to replace Stamp Duty and Stamp Duty Reserve Tax.
Employee Ownership Trusts: Effective immediately, the Capital Gains Tax relief on sales of businesses to Employee Ownership Trusts is being cut from 100% to 50%. Consequently, 50% of disposals will be treated as chargeable gains.
VAT: From 2029, the UK will introduce mandatory e-invoicing for all VAT invoices.
Apprenticeships: Apprenticeships will be free for small-to-medium sized businesses.
Making Tax Digital for Income Tax: MTD for ITSA comes into effect from April 2026 but there will be a ‘soft landing’ and there will be no penalties for late submissions of the quarterly returns for the first year.
Property
Rental income: From April 2027, tax charged on rental income will increase by 2%.
Mansion tax: Properties in England worth more than £2 million will face a council tax surcharge of £2,500 to £7,500, following a revaluation of homes in bands F, G and H.
Duties
Mileage tax: From April 2028, there will be a new mileage tax for electric and hybrid vehicles, £0.03 per mile for battery cars and £0.015 per mile for hybrids.
Fuel duty: Fuel duty has been frozen until September 2026. The rate has been frozen since 2010-11. It will increase with inflation after this, ending 15 years of freezes.
Postage: The Government are looking to remove the customs duty exemption on overseas parcels valued at £135 or less. This measure is meant to benefit high street retailers, where online retailers cannot undercut their prices. The Government state that this will come into effect no earlier than March 2029.
Need some guidance?
Whilst these are some of the key announcements, we encourage you to check out the full budget to explore the reforms above in more detail and stay abreast of other changes.
If you require any guidance as a result of any of the changes made in the Autumn Budget, please get in touch with us. A member of our team will be happy to assist you…
