Budget 2026 summary for accountants: the key changes

The Chancellor, John Healey, delivered Budget 2026, his first, on 28 October 2026. Billed as giving households and businesses “breathing space”, it puts most of its tax rises on income from savings and property, business sales and capital allowances, and spends much of its effort on how HMRC collects tax. For accountants the headlines are higher tax on interest and rents from April 2027, a halved BADR limit, a new Founders’ Relief, and a run of administrative reforms from Making Tax Digital to Direct Debit. This page summarises every measure that matters to practices and links to our detailed posts.

What did not change

The Budget document says the government is keeping its commitment of no increase to the headline rates of income tax, National Insurance or VAT. For 2027-28:

• income tax rates and bands are unchanged, with the personal allowance frozen at £12,570
• employer National Insurance stays at 15%, and most NICs thresholds stay frozen until 2030-31
• the VAT registration threshold stays at £90,000
• corporation tax stays at 19% and 25%
• dividend tax rates stay at 10.75%, 35.75% and 39.35%
• capital gains tax rates stay at 18% and 24%
• inheritance tax thresholds are unchanged
• the cash ISA limit stays at £20,000, reversing a planned cut

The key measures at a glance

Personal tax

The main revenue raisers fall on income from assets. Budget 2025 had already set savings and property income rates of 22%, 42% and 47% from April 2027. Budget 2026 adds two more points, and the government says 84% of income tax payers will be unaffected. The BADR lifetime limit halves from 6 April 2027, with the government saying three-quarters of claimants will still get relief on their whole gain. In return there is a new 10% Founders’ Relief for founders of high-growth companies, a tripled trading allowance for small side businesses, and a Pension Tax Allowance so pensioners on the full new State Pension or less pay no income tax.

Business tax

Corporation tax rates are confirmed for 2028. The main rate writing down allowance falls to 12% while the main rate first-year allowance rises to 50%, raising about £1 billion a year overall. Rules on extracting profits through share buybacks and holding company structures will be modernised from April 2028. R&D claim notification forms go from April 2027, and the CSOP limit doubles. Banks pay a 6% surcharge for 15 months from January 2027. See Corporation Tax in Budget 2026.

Employers and payroll

The National Living Wage rises to £13.21 from 1 April 2027. Benefits in kind start moving into payroll in April 2027, mileage rates rise for high-mileage drivers, and new benchmark subsistence rates arrive in 2028. See payroll changes for 2027-28.

VAT

Beyond e-invoicing, marketplace collection and Direct Debit, the reverse charge will only apply to VAT-registered customers from April 2027, larger private hire operators will charge VAT on full fares from January 2028, and public EV charging is confirmed at 20%. See VAT changes in Budget 2026.

HMRC and compliance

HMRC gets 670 more compliance officers, a new duty for taxpayers to correct errors, power to recover small debts from bank accounts, and tougher rules on promoters and deliberate defaulters. Software providers face registration and stronger standards, and an intermediation roadmap for advisers is due in spring 2027. See HMRC compliance and enforcement changes.

Property and business rates

Owners of homes in England worth £2 million or more will pay a surcharge from April 2028. In England, retail, hospitality and leisure businesses get small business rates relief up to £18,000 of rateable value and a two-year real-terms freeze from April 2027. See business rates.

The economy

The Office for Budget Responsibility forecasts GDP growth of 1.2% in 2026, slowing to 1.0% in 2027 before recovering to 1.6% in 2028. It expects CPI inflation of 3.1% in 2026 and 3.4% in 2027, falling to 2.1% in 2028. Borrowing is forecast to fall from 4.2% of GDP this year to 1.8% by 2030-31, and the government has £15 billion of headroom against its main fiscal rule in 2029-30. The Guardian reports the OBR expects real household disposable income to fall by 0.6% next year, mainly because of higher energy costs. For clients, that means cost pressures and slower growth through 2027.

All our Budget 2026 coverage

For clients by type

• Budget 2026 for landlords
• Budget 2026 for limited company directors
• Budget 2026 for sole traders and the self-employed
• Key dates and client checklist for practices

Personal tax and capital gains

• Savings and property income tax rises
• BADR lifetime limit halved
• Founders’ Relief explained
• Trading allowance triples to £3,000
• Pension Tax Allowance
• IHT, pensions and trusts

Business tax

• Corporation Tax in Budget 2026
• Capital allowances
• Company distributions reform
• EMI and CSOP changes
• Business rates

Employers

• Payroll changes for 2027-28
• Payrolling benefits in kind
• Mileage rates
• Employee expenses

VAT

• VAT e-invoicing from April 2029
• Online marketplaces and VAT
• Other VAT changes

HMRC administration

• MTD for Income Tax
• Payments on account reform
• Direct Debit for VAT and PAYE
• Direct recovery of tax debts
• Duty to correct errors
• HMRC compliance and enforcement

For earlier fiscal events, see our Autumn Budget 2025 summary and the Budget archive.

Frequently asked questions

When was Budget 2026?

Chancellor John Healey delivered Budget 2026 on Wednesday 28 October 2026.

Did Budget 2026 raise income tax?

Not on earnings. Income tax rates and thresholds on wages and pensions are unchanged, but tax on savings and property income rises by two percentage points from 6 April 2027, to 24%, 44% and 49%.

What are the biggest Budget 2026 changes for accountants?

The higher savings and property income rates, the halved BADR limit, the MTD penalty easement for April 2027 joiners, mandatory payrolling of car and medical benefits, the duty to correct errors from 2028, and the move to e-invoicing, Direct Debit and regular Self Assessment payments from 2029.

When will the Budget 2026 tax changes be law?

Most measures will be in Finance Bill 2026-27. Some will follow in later Finance Bills or secondary legislation, and a few, such as Founders’ Relief, are still being consulted on.