Budget 2026: What It Means for Individuals, Sole Traders, Landlords and Limited Companies
Updated: Oct 29
Chancellor John Healey delivered the 2026 Budget today, 28 October. The headline promise was no rise in the main rates of Income Tax, National Insurance or VAT. But that doesn't mean nothing has changed.
Landlords face a second increase in tax on rental income in as many years. Business owners selling up will see a key relief halved. On the plus side, sole traders with small side incomes get a bigger tax-free allowance, and business mileage rates finally go up.
Here is what today's announcements mean for our sole trader, landlord, limited company and retired clients, and what you might want to do about it.
📊 The 2026 Budget at a Glance
Rental and savings income: tax rates rise to 24%, 44% and 49% from 6 April 2027.
Pensioners: a new Pension Tax Allowance from 6 April 2027 means the full new State Pension won't be taxed, but the triple lock is set to be watered down from 2030.
Trading allowance: rises from £1,000 to £3,000 from 6 April 2027.
Business Asset Disposal Relief: lifetime limit cut from £1 million to £500,000 from 6 April 2027. A new Founders' Relief offers a 10% rate on up to £10 million of gains for founders of high-growth companies.
Capital allowances: a new 50% first-year allowance for main rate assets from 1 January 2027, but the annual writing-down allowance drops to 12%.
Business mileage: the rate above 10,000 miles rises from 25p to 35p per mile from 6 April 2027. Alongside, a confirmation of a permanent increase to the 55p per mile rate for the first 10,000 business miles in the tax year.
Making Tax Digital: no late submission penalty points in the first year for those joining in April 2027.
Unchanged: Income Tax, NI and VAT headline rates, Corporation Tax at 19% and 25%, dividend tax rates and the £20,000 cash ISA limit.
💼 Sole Traders and the Self-Employed
For most sole traders, this was a fairly quiet Budget. Class 4 National Insurance stays at 6% on profits between £12,570 and £50,270, and 2% above that. The Personal Allowance stays frozen at £12,570.
A bigger trading allowance. From 6 April 2027, the trading allowance triples from £1,000 to £3,000. If your total income from a small side business is under £3,000 before expenses, you won't need to declare it or pay tax on it. That's good news for anyone selling crafts, doing occasional freelance work or running a small online shop.
Better mileage rates. The approved mileage rate for business miles above 10,000 a year rises from 25p to 35p from 6 April 2027. This also applies to the simplified mileage rate many sole traders use, so high-mileage businesses will be able to claim more. The Government have also made permanent the increase to the pre-10,000 rate from 45p to 55p.
Making Tax Digital (MTD). MTD for Income Tax (MTD for ITSA) already applies to those with qualifying income over £50,000. It extends to those over £30,000 from April 2027 and over £20,000 from April 2028. The Budget confirmed that anyone joining in April 2027 won't get late submission penalty points for their quarterly updates in 2027-28. You'll still need to send all four updates before you can file your tax return.
Changes to payments on account. From April 2029, people who make payments on account will pay smaller, more regular amounts through the year instead of two lump sums. Payments will be automated, and some people will be able to pay through PAYE. The details are still being worked out.
Parental pay. Self-employed fathers and partners will be able to receive paid parental leave for the first time.
🏠 Landlords and Property Owners
Landlords are the clear losers from this Budget. Last year's Budget had already set new, separate tax rates for rental income from April 2027. Today the Chancellor added a further two percentage points on top.
Tax band | Now (2026-27) | Planned at Budget 2025 | From 6 April 2027 |
Basic rate | 20% | 22% | 24% |
Higher rate | 40% | 42% | 44% |
Additional rate | 45% | 47% | 49% |
These rates apply to landlords who own property in their own name in England, Wales and Northern Ireland. Mortgage interest relief is still given as a tax credit at the property basic rate, which means it should rise to 24% too.
What it could cost you. Take a higher-rate landlord with £20,000 of rental profit. They pay £8,000 in tax on that profit this year. From April 2027, that rises to £8,800, an extra £800 a year. A basic-rate landlord with £10,000 of profit would pay £2,400 instead of £2,000. These examples ignore mortgage interest, which will change the figures for most landlords.
Limited company landlords pay Corporation Tax instead, so they are not hit by the new rates. Today's change will lead many landlords to ask whether moving into a company makes sense. That can work, but it often triggers Capital Gains Tax and Stamp Duty, so it needs careful thought first. Our guide to the benefits of owning rental properties through a limited company covers this in detail.
Other property changes:
HMRC will consult on getting more data about rental income directly from third parties, such as letting agents and platforms.
The High Value Council Tax Surcharge on homes worth £2 million or more, announced last year, still starts in April 2028.
Capital Gains Tax rates on property stay at 18% and 24%, with a £3,000 annual exemption.
Landlords with income over £30,000 join Making Tax Digital in April 2027 (see above).
🏢 Limited Companies and Directors
Corporation Tax is unchanged. The small profits rate stays at 19% for profits up to £50,000, and the main rate stays at 25% above £250,000, with Marginal Relief in between. Dividend tax rates also stay at 10.75%, 35.75% and 39.35%, with a £500 tax-free dividend allowance.
Selling your business? The relief has been halved. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) lets you pay 18% Capital Gains Tax when you sell or close a qualifying business. From 6 April 2027, the lifetime limit falls from £1 million to £500,000. Gains above that will be taxed at up to 24%. If you're planning to sell in the next year or two, it's worth talking to us now about timing. There are transitional rules for contracts signed before 6 April 2027 but not yet completed.
A new Founders' Relief. Also from 6 April 2027, a new Founders' Relief will offer a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains. It's aimed at people who build and scale high-growth, innovative UK companies. The government is consulting on who will qualify until 30 November 2026. Until those rules are published, it isn't clear whether owners of established local businesses will be eligible, so it's best not to count on it replacing Business Asset Disposal Relief.
Capital allowances. The £1 million Annual Investment Allowance is unchanged, so most small companies can still deduct equipment costs in full in the year they buy. From 1 January 2027, a new 50% first-year allowance applies to main rate spending. But from April 2027, the yearly writing-down allowance on the main pool drops from 18% to 12%. Assets that don't qualify for the Annual Investment Allowance, such as company cars, will get tax relief more slowly.
Employers. The National Living Wage rises 3.9% to £13.20 an hour from April 2027, and the rate for 18 to 20 year olds rises to £11.27. Employer National Insurance stays at 15%, and the Employment Allowance stays at £10,500. From 6 April 2027, company car, van, fuel and medical benefits must be reported through payroll instead of on P11D forms.
Future changes to watch. The Government will consult on modernising how company distributions to shareholders are taxed, with changes planned for April 2028. It also confirmed VAT e-invoicing from April 2029. No change was announced to the £90,000 VAT registration threshold.
🧓 Pensioners and Older Clients
For pensioners, this Budget brings a short-term tax break on the State Pension but a less generous triple lock in the longer term.
The State Pension rises in April 2027. The full new State Pension is expected to go up 3.9%, from £241.30 to about £250.70 a week. That's around £13,036 a year.
A new Pension Tax Allowance. That £13,036 is more than the £12,570 Personal Allowance, which stays frozen. Without help, nearly one million pensioners living on the State Pension alone would start paying Income Tax. The new Pension Tax Allowance stops that from 6 April 2027 until 2029-30. In the first year it's worth about £93 to someone whose only income is the full new State Pension. The Government hasn't yet confirmed exactly how it will work for people with a small private pension or some savings income on top.
The triple lock will change from 2030. At the moment, the State Pension rises each year by the highest of inflation, earnings growth or 2.5%. From April 2030, the Government plans to drop earnings growth from that guarantee, so the pension would rise by the higher of inflation or 2.5%. It says a separate mechanism will keep the State Pension in line with earnings over the long term. This change comes after the next general election, so the details could still change.
Other changes that matter in retirement:
Rental income: retired landlords will pay the new 24%, 44% and 49% property rates from April 2027.
Savings interest: taxed at the same higher rates from April 2027. The £20,000 cash ISA limit stays, so keeping savings in ISAs matters more than ever.
Inheritance Tax: unused pension funds will count towards your estate from 6 April 2027, and the nil-rate bands stay frozen. Now is a good time to review your will and pension nominations.
Selling a business to retire: the Business Asset Disposal Relief limit halves to £500,000 from 6 April 2027, so timing a sale matters.
👥 Changes That Affect Everyone
Income Tax thresholds stay frozen. The Personal Allowance stays at £12,570 and the higher rate threshold at £50,270. As incomes rise, more people will be pulled into higher tax bands.
Tax on savings goes up. Savings interest will be taxed at 24%, 44% and 49% from 6 April 2027, matching the new property rates. The good news is that the planned cut to the cash ISA allowance has been scrapped. You can still save up to £20,000 a year tax-free in a cash ISA.
First-time buyers. A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029. It will pay a 25% bonus on savings up to £20,000 for homes costing up to £450,000.
Inheritance Tax. The £325,000 nil-rate band and £175,000 residence nil-rate band stay frozen. As announced previously, unused pension funds will count towards your estate for Inheritance Tax from 6 April 2027.
A new duty to correct mistakes. From 1 April 2028, everyone will have a legal duty to correct errors in their Tax Returns once they spot them. HMRC will also be able to send a notice asking you to check your return if it suspects something is wrong. Good record-keeping matters more than ever.
Help with household costs. The 5p fuel duty cut and the 0% VAT on household electricity are both extended to 30 June 2027.
📅 Key Dates
Date | What changes | Who it affects |
1 January 2027 | New 50% first-year allowance on main rate assets | Businesses buying equipment |
April 2027 | National Living Wage rises to £13.20 | Employers |
6 April 2027 | Property and savings income taxed at 24%, 44% and 49% | Landlords, savers |
6 April 2027 | Trading allowance rises to £3,000 | Sole traders with side income |
6 April 2027 | Business Asset Disposal Relief limit cut to £500,000 | Business owners planning to sell |
6 April 2027 | Founders' Relief: 10% Capital Gains Tax on up to £10 million of lifetime gains | Founders of high-growth companies |
6 April 2027 | Mileage rate above 10,000 miles rises to 35p | Self-employed, employees using own car |
6 April 2027 | MTD for ITSA extends to income over £30,000 | Sole traders, landlords |
6 April 2027 | Unused pensions count for Inheritance Tax | Everyone with a pension |
6 April 2027 | New Pension Tax Allowance starts | Pensioners living mainly on the State Pension |
1 April 2028 | Legal duty to correct errors in tax returns | Everyone |
April 2028 | MTD for ITSA extends to income over £20,000 | Sole traders, landlords |
April 2028 | High Value Council Tax Surcharge starts | Owners of homes worth £2m+ |
April 2029 | More regular, automated payments on account | Self Assessment taxpayers |
April 2029 | VAT e-invoicing required | VAT-registered businesses |
April 2030 | Triple lock changes: earnings growth dropped from the guarantee (planned) | Current and future pensioners |
✅ What Should You Do Now?
Most of these changes don't start until April 2027, so there's time to plan. A few steps are worth taking now:
Landlords: work out what the new rates will cost you, and talk to us before making any decision about moving properties into a limited company.
Business owners planning to sell: check how much of your £1 million Business Asset Disposal Relief limit you've used. A sale before 6 April 2027 could save a significant amount of tax.
Sole traders and landlords earning over £30,000: get ready for Making Tax Digital in April 2027. Choose your software and move your records over in good time.
Directors: review your salary and dividend mix for 2027-28, especially if you also have rental or savings income.
Pensioners and those nearing retirement: check how much of your income comes from outside the State Pension, make full use of your ISA allowance, and review your will and pension nominations before April 2027.
Everyone: keep good records. The new duty to correct errors from 2028 means mistakes will be harder to leave behind.
💡Final Thoughts
This Budget avoided the big headline tax rises, but landlords, savers and business owners planning to sell will all pay more from April 2027. Pensioners get welcome short-term protection on the State Pension, though the triple lock looks less generous from 2030.
With most changes still five months away, now is the time to plan rather than react.
📞 Need Help?
Our team in Crawley works with sole traders, landlords, limited companies and retirees every day. If you'd like to talk through how the Budget affects you, give us a call on 01293 525656 or book a consultation at a more convenient time for a no-obligation chat with one of our experts here at ASBA Accounting.
This article is a general summary of the Budget announced on 28 October 2026 and is not personal tax advice. Some measures are subject to consultation and may change before they become law.
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