Budget 2026 — what international businesses and investors need to know

Chancellor John Healey delivered his first Budget on 28 October 2026. Headline rates of income tax, National Insurance, VAT and corporation tax are unchanged; the revenue comes from asset income, capital allowances, banks and compliance. The points that matter:

• Corporate tax stability: the main rate stays at 25%, and the Corporate Tax Roadmap and full expensing are maintained.
• Capital allowances: the main-rate writing-down allowance falls from 14% to 12% from April 2027, while the main-rate first-year allowance rises from 40% to 50% for expenditure from 1 January 2027 — faster relief on new investment, slower on legacy pools.
• Bank surcharge: temporarily doubled from 3% to 6% from 1 January 2027 to 31 March 2028.
• Foreign branches: the foreign permanent establishment exemption becomes mandatory for accounting periods beginning on or after 1 January 2027, so overseas branch losses will no longer reduce UK corporation tax.
• Distributions: a new framework for taxing distributions to individual shareholders from April 2028, applied consistently regardless of legal form, company residence or transaction structure; capital treatment is protected for genuine changes of ownership and family succession, with draft legislation in 2027.
• Capital gains: the BADR lifetime limit is halved to £500,000 for disposals from 6 April 2027 (18% rate unchanged); a new Founders’ Relief offers a 10% rate on up to £10m of lifetime gains for founders of high-growth, innovative companies from 6 April 2027, subject to technical consultation.
• Share schemes: CSOP becomes “EMI2”, with the individual limit doubled to £120,000 and the exercise period extended to 15 years from 6 April 2027; EMI gains a 180-day window after disqualifying events and survives transitions to employee ownership trusts.
• Personal tax on asset income: property and savings income rates rise by a further 2 points from 6 April 2027, to 24% basic, 44% higher and 49% additional — four points above today. Dividend rates are unchanged.
• VAT and online marketplaces: from 1 October 2027, marketplaces must account for VAT on sales by UK businesses exceeding £90,000 per platform.
• VAT and cross-border services: from 1 April 2027 the reverse charge is limited to VAT-registered customers; overseas suppliers serving non-registered UK businesses must register and account for UK VAT.
• VAT and private hire: operators above around £50m of fare turnover become liable to 20% VAT on full fares from 2 January 2028, threshold under consultation.
• Foreign sovereign investors: a statutory regime from 1 January 2029 brings certain UK real estate income and gains into charge, with bespoke access to REITs.
• US LLCs and other reverse hybrids: a double tax relief mechanism for UK investors will be legislated in Finance Bill 2027-28.
• Certainty and simplification: the Advance Tax Certainty Service threshold falls from £1bn to £300m from 4 November 2026; the R&D Claim Notification Form is abolished from 1 April 2027; Securities Transfer Tax replaces Stamp Duty and SDRT from late 2027.
• Compliance: 670 additional HMRC compliance officers; direct recovery of tax debts from bank accounts from July 2029; in-year self-assessment payments from April 2029; mandatory e-invoicing for VAT invoices from April 2029; tightened IHT rules on trust liabilities effective 28 October 2026.
• Savings and pensions: the cash ISA limit stays at £20,000; a Pension Tax Allowance applies from April 2027; the triple lock is adjusted from April 2030.
• Fiscal context: OBR growth of 1.2% in 2026 and 1.0% in 2027; fiscal headroom of £15bn in 2029-30; net tax measures raise around £5.6bn a year by 2029-30.

What to do now: review disposal timetables before the April 2027 BADR change, model 12% writing-down allowances against the 50% first-year allowance for 2027 capital expenditure, map restructuring and distribution plans against the April 2028 reform, and check the VAT registration exposure of non-UK service providers selling into the UK from April 2027.