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.