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Harrison Hill Castle & Co – Chartered Accountants

Autumn Budget 2026

Budget
Autumn Budget 2026 – Harrison Hill Castle & Co

SUMMARY OF TAX MEASURES & CHANGES

Executive Summary

The Chancellor presented the Autumn Budget 2026 today, focusing on targeted tax adjustments, anti-avoidance measures, and specific relief enhancements. Key personal tax highlights include a reversal of previously planned ISA limits, an additional surcharge on property and savings income, and increased mileage reimbursement allowances. On the commercial front, capital allowances are expanded, while the main Corporation Tax rates remain stable, alongside a temporary surcharge increase for the banking sector. Finally, a disappointing reduction in the level of gain eligible for CGT business asset disposal relief, although a new ‘Founders’ Relief’ is to be introduced.

Personal Taxation & Wealth

Income Tax & Rates

  • Employment Income Rates: Base, higher, and additional rates of tax on main employment income remain unchanged.
  • Property & Savings Surcharge: From April 2027, an additional tax surcharge applies to property (rental) and savings income. The new total rates will be 24% (basic rate), 44% (higher rate), and 49% (additional rate).
  • Dividend Rates: Dividend tax rates remain at the previously established levels (10.75% basic rate, 35.75% higher rate) with no further rate hikes.
  • Trading Allowance Boost: The tax-free Trading Allowance for casual or micro-business turnover rises from £1,000 to £3,000 per annum.

Savings & ISAs

  • Cash ISA Cut Reversed: The proposed reduction of the annual Cash ISA allowance (which was set to drop from £20,000 to £12,000 for under-65s) has been scrapped. The total annual ISA limit remains £20,000.
  • Starter Investment ISA: A consultation has been announced to introduce a new starter investment framework to replace/reform the Lifetime ISA for first-time buyers.

Mileage & Employment Benefits

  • Approved Mileage Allowance Payments (AMAPs): The tax-free mileage rate for business travel in personal vehicles remains at 55p per mile for the first 10,000 miles. However, the rate for excess mileage over 10,000 miles increases from 25p to 35p per mile starting April 2027.
  • Mandatory Payrolling: Mandatory payrolling of benefits in kind (including company cars, fuel, and private medical insurance) remains scheduled for April 2027.

Business & Capital Taxes

Capital Gains Tax (CGT)

  • Main Rates: Main CGT rates remain unchanged.
  • Business Asset Disposal Relief (BADR): The lifetime limit for BADR at the 10% rate is reduced from £1,000,000 to £500,000.
  • Founders' Relief: A new relief framework ("Founders' Relief") has been introduced with a £10 million lifetime cap taxed at 10% for qualifying founder entrepreneurs, subject to strict qualification criteria. Further comment to follow once rules examined.

Capital Allowances & Corporation Tax

  • First-Year Allowance (FYA): The first-year allowance for main-rate plant and machinery assets increases from 40% to 50%, primarily benefiting unincorporated businesses and leasing sectors.
  • Bank Corporation Tax Surcharge: A temporary 3% increase raises the Bank Surcharge from 3% to 6% for a 15-month window running from 1 January 2027 to 31 March 2028.
  • International Compliance: Confirmation that the International Controlled Transactions Summary requirement for corporate entities takes effect for periods starting on or after 1 January 2027.

Indirect Taxes & Duties

Value Added Tax (VAT)

  • Domestic Energy VAT: The temporary VAT cut on domestic electricity bills is extended through to 1 July 2027 (down from 5% to 0%).
  • Deposit Return Scheme (DRS): VAT accounting on unreturned drinks container deposits will be simplified and managed centrally by the Deposit Management Organisation (DMO) upon launch in October 2027.

Duties & Customs

  • Fuel Duty: The 5p fuel duty discount and duty freeze have been extended again until 1 July 2027, holding standard petrol/diesel duty at 52.95p per litre.
  • Customs Tariffs: Import tariffs/customs duties are being removed across over 100 goods, including imported kerosene and commercial fertilisers.
  • Gambling Duties: Remote Gaming Duty adjustments for restricted plays and tournament formats come into force from 1 April 2027.

Property & Local Taxation

  • High-Value Property Surcharge (Council Tax): Properties valued at £2 million or higher will face a high-value council tax surcharge commencing April 2028. Surcharges are banded, starting at £2,500 (£2m–£2.5m band) up to £7,500 for properties over £5 million.
  • Business Rates: Small Business Rates Relief is expanded, raising the relief threshold from £12,000 to £18,000. Local authorities will also gain enhanced legal support and powers via a General Anti-Avoidance Rule (GAAR) for business rates.

Administration & Compliance Timelines

  • Making Tax Digital (MTD) for ITSA: Phased implementation continues as planned:
    • April 2026: income over £50,000
    • April 2027: income over £30,000
    • April 2028: income over £20,000
  • Self-Assessment Payment Acceleration: Acceleration in payment-on-account schedules for Self-Assessment returns was reaffirmed for rollout starting in 2029.
  • HMRC Enforcement: Dedicated compliance funding allocated to HMRC alongside stronger legal collection powers targeting overdue tax debts.

If you have any questions about how these changes affect your personal tax or company tax planning, please don’t hesitate to contact our team. Visit our social media for regular updates: Twitter | LinkedIn