Autumn Budget 2026

Author: Sarah Hewson, Director, Workforce Advisory

The government has announced further changes to Approved Mileage Allowance Payments (AMAPs) and self-employed simplified mileage rates, which apply where employees use their own vehicles for business travel or self-employed individuals calculate deductible motoring expenses using HMRC's simplified rates. The increase in the rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles, introduced retrospectively from 6 April 2026, will now be made permanent rather than applying only for the 2026/27 tax year. In addition, the rate for business mileage exceeding 10,000 miles will increase from 25p to 35p per mile from 6 April 2027.

Importantly, the 10,000-mile threshold applies for income tax purposes only. For National Insurance contributions (NIC), the approved rate is 55p per mile for all qualifying business mileage, regardless of the number of miles travelled. This distinction is particularly relevant for employers reimbursing mileage above the approved income tax rates, as a payment may be subject to income tax without necessarily attracting NIC.

The changes are welcome, particularly given that the previous AMAP rates had remained unchanged since 2011 despite increases in motoring costs. They provide greater scope for employers to reimburse employees for business use of their own vehicles without triggering tax liabilities, while also increasing the deductions available to self-employed individuals using simplified mileage rates. However, employers are not required to reimburse employees at the approved rates and should review their existing mileage policies and payroll arrangements to determine whether any changes are appropriate, ensuring that the different income tax and NIC treatments are correctly reflected.

Author: Stephen Metheringham, Director, Capital Allowances

Rate amendments

Full expensing will be maintained. The main pool writing down allowance rate will reduce from 14% to 12%, while the main pool first-year allowance (FYA) will increase from 40% to 50% for qualifying expenditure.

For clients in the year of expenditure, retaining full expensing and the increase in the first-year allowance for qualifying main pool expenditure can accelerate tax relief. However, this requires in-year analysis/pooling in the year of expenditure. For clients with main pool balances carried forward, the reduction in writing down allowances will slow the future rate of tax relief. This places greater emphasis on analysis in the year of expenditure. The increase in the first-year allowance will be of additional benefit to entities that acquire assets for leasing and unincorporated businesses.

The pool rate reduction change will take effect from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax, while the increase in the first-year allowance will apply for expenditure incurred on or after 1 January 2027.

This will affect entities subject to Corporation Tax, unincorporated businesses, mixed partnerships and individuals within the charge of Income Tax.

General changes

Pre-development cost consultation: the government has published a summary of responses to the consultation and announced it will work with stakeholders to explore improvements to HMRC guidance to provide greater clarity.

Amending leasing anti-avoidance legislation: the government announced it will introduce legislation in Finance Bill 2026-27 to expand the statutory definition of a finance lease when specifically applied to lease and leaseback arrangements. The changes will take effect from 28 October 2026.

Land Remediation Relief consultation: the Autumn Budget 2026 did not include any further announcements on the current consultation.

Advance Tax Certainty Service: following its commencement in July 2026, the government will look to lower the entry threshold for qualifying projects from £1 billion to £300 million, allowing more projects to be considered. The government will also amend penalty provision points. The changes to the threshold levels and penalty rules will take effect from 4 November 2026.

Author: John Manis, Partner, Workforce Advisory

There are positive changes to the treatment of the Enterprise Management Incentives (EMI) and Company Share Option Plan (CSOP) approved share schemes; the CSOP scheme is to be renamed “EMI2”. 

The EMI2 option limit doubles from £60,000 to £120,000, its exercise period extends to 15 years, and the £120,000 limit can now be used in addition to the £250,000 EMI limit. Employees can hold the full amount under both schemes – previously, employees who had “used up” their £250,000 EMI limit could not be granted any CSOP options.

The EMI exercise window after a disqualifying event (where the qualifying conditions cease to be met) increases from 90 days to 180 days, and companies making arrangements to be sold to employee ownership trusts can now grant EMI options.

Companies that have outgrown EMI can now offer up to £120,000 of tax-advantaged EMI2 options on top of EMI. Companies too large for EMI that have previously used unapproved share schemes should consider EMI2 instead. Although the tax treatment of EMI2 options is less generous than the treatment of EMI options, the 24% capital gains tax rate can still apply. 

However, EMI options are adversely affected by the changes to business asset disposal relief: the lifetime limit is being halved to £500,000.

These changes will take effect from 6 April 2027. Companies should review existing arrangements before then.

Employers with or considering share plans, especially growing companies beyond the EMI limits or using growth shares, as well as their employees and owners exploring employee ownership, will be affected.

Author: Caroline Fleet, Partner, Head of Read Estate

Following the recent First-tier Tribunal decision in favour of the taxpayer (HC-One No. 1 Ltd v HMRC), the government is amending the legislation to ensure that a clawback of group relief can still be applied for Stamp Duty Land Tax (SDLT) purposes, where the transferor is liquidated within the three-year time period.

Companies should take care where group relief has been claimed on properties transferred within a corporate group. It will no longer be possible to effectively ‘turn off’ the three-year window by liquidating the transferor. This change will apply from 29 October 2026.

This will affect companies that own properties that have been transferred or will be transferred within a corporate group (broadly, 75% or more common corporate ownership).

Author: Kenny Law, Director, Workforce Advisory

Common sense has prevailed, at least in part, in today’s Autumn Budget. Certificate of Sponsorship (CoS) fees and Immigration Skills Charges (ISC) paid by sponsoring employers on or after 28 October 2026 will no longer be treated as taxable benefits.

However, the exemption is not retrospective and is narrowly drawn. Employers should therefore review the treatment of Certificate of Sponsorship fees and Immigration Skills Charges paid before 28 October 2026 and continue to consider sponsorship licence fees separately, as these remain outside the exemption.

The change affects employers sponsoring employees or prospective employees under the Skilled Worker route.

Author: Andrew Hawley, Partner, Corporate Tax

HMRC has retained its plan to standardise Corporation Tax computations but moved to a longer, more flexible development timetable. A further consultation on the completed requirements is planned for early 2027, with no implementation date yet set. Mandatory online filing of amended returns has been deferred.

Alongside these changes, the government has launched a Call for Evidence on Modernising the Administration of Corporation Tax, looking more broadly at how technology, software, data, automation and information flows could shape the longer-term administration of Corporation Tax.

Businesses should expect greater standardisation of computation content and XBRL tagging, potentially requiring changes to tax reporting processes, systems and data collection. HMRC acknowledges that implementation may create additional costs and compliance burdens and has committed to ensuring requirements are proportionate. The wider Call for Evidence provides businesses with an opportunity to help shape future Corporation Tax administration.

There is no confirmed implementation date for prescribed computations. Further consultation will take place in early 2027 before the implementation timetable is determined. Online filing will become mandatory for amendments submitted from 1 April 2028, subject to exceptions.

The proposals potentially affect the full Corporation Tax population, together with advisers and software providers. HMRC intends to engage particularly with businesses and sectors with complex or specialist requirements as the proposals develop.

Author: Trevor Ling, Partner, Corporate Tax

The government has confirmed that it will proceed with reforms to the taxation of distributions and returns of capital following consultation. The changes cover capital reductions and demergers, purchases of own shares, distributions and loans from overseas companies, and the Transactions in Securities rules.

The reforms will affect the tax treatment of returns to shareholders and how commercial reorganisations are structured. Among the proposed measures, the widening of the statutory demerger rules is welcome, particularly where a demerger is undertaken ahead of a third-party sale.

We also welcome the government's recognition of concerns around genuine commercial transactions and the practical points raised in our consultation response. However, it remains unclear whether the revised rules will provide sufficient flexibility for groups undertaking commercial reorganisations. The draft legislation will be key to assessing the practical impact.

Draft legislation will be published in 2027, with the new rules applying from April 2028. The measures will affect companies and shareholders undertaking capital reductions, demergers or share buybacks, alongside individuals receiving distributions or loans from overseas companies.

Author: Stuart Weekes, Partner, Head of Research and Development

The government has shown its continued support for R&D carried out by UK companies.

HMRC will simplify the administration of R&D tax reliefs, with the aim of reducing the burden on businesses.

The new Founders' Relief could make the UK more attractive for R&D-led businesses by providing a 10% CGT rate on qualifying share disposals from 6 April 2027.

The changes should make it easier for businesses to access R&D tax relief by reducing administrative requirements and streamlining the claims process. From April 2027, companies will no longer need to notify HMRC of their intention to make an R&D tax relief claim. Further simplification is expected from Autumn 2027 when the Additional Information Form is revised to remove duplication and improve reporting requirements. 

Founders and shareholders of qualifying innovation-led businesses may also benefit from a reduced 10% CGT rate on eligible share disposals, compared with the 24% headline CGT rate.

The requirement to notify HMRC of an intention to make an R&D tax relief claim will be removed from 1 April 2027. The new Founders' Relief will apply to qualifying share disposals from 6 April 2027. From Autumn 2027, the Additional Information Form will be simplified. HMRC will also review the end-to-end R&D claims process and the effectiveness of its R&D Expert Advisory Panel.

These changes will affect companies carrying out R&D activities, particularly R&D-intensive SMEs and innovation-led businesses, and are also relevant to founders, shareholders and tax teams involved in R&D tax relief claims. 

Author: Sarah Hewson, Director, Workforce Advisory

The government has announced further changes to Approved Mileage Allowance Payments (AMAPs) and self-employed simplified mileage rates, which apply where employees use their own vehicles for business travel or self-employed individuals calculate deductible motoring expenses using HMRC's simplified rates. The increase in the rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles, introduced retrospectively from 6 April 2026, will now be made permanent rather than applying only for the 2026/27 tax year. In addition, the rate for business mileage exceeding 10,000 miles will increase from 25p to 35p per mile from 6 April 2027.

Importantly, the 10,000-mile threshold applies for income tax purposes only. For National Insurance contributions (NIC), the approved rate is 55p per mile for all qualifying business mileage, regardless of the number of miles travelled. This distinction is particularly relevant for employers reimbursing mileage above the approved income tax rates, as a payment may be subject to income tax without necessarily attracting NIC.

The changes are welcome, particularly given that the previous AMAP rates had remained unchanged since 2011 despite increases in motoring costs. They provide greater scope for employers to reimburse employees for business use of their own vehicles without triggering tax liabilities, while also increasing the deductions available to self-employed individuals using simplified mileage rates. However, employers are not required to reimburse employees at the approved rates and should review their existing mileage policies and payroll arrangements to determine whether any changes are appropriate, ensuring that the different income tax and NIC treatments are correctly reflected.

Author: Nicky Owen, Partner and Head of Professional Practices

The proposed changes to Self Assessment Payments on Account from 6 April 2029, are more than an administrative issue for professional practices, partnerships and LLPs.

Many firms retain tax reserves on behalf of partners and settle their tax liabilities directly. These reserves form an important part of firms’ working capital before payment to HMRC. More frequent payments could accelerate cash leaving the business, requiring firms to revisit cashflow forecasts, partner drawings policies and potentially the level or timing of capital calls.

Firms are still absorbing the cashflow consequences of Basis Period Reform and other increasing costs of doing business. They will also need to manage the transition between existing liabilities and the new payment regime, an issue specifically raised during the consultation.

From 6 April 2027 the lifetime limit on Business Asset Disposal Relief (BADR) will reduce from £1 million to £500,000.

This follows the increase in the capital gains tax rate applied to BADR to 18% from 6 April 2026, narrowing the gap between the BADR rate and the full rate of 24%, making the relief much less valuable than previously.

For a higher or additional rate taxpayer with the full limit unused, the reduction increases the tax on a qualifying gain by up to £30,000, cutting the maximum BADR saving from £60,000 to £30,000.

The chancellor announced this change will mean “no changes to three in four claimants” but will nevertheless be disappointing for those affected.

Author: Claire Sugrue, Senior Manager, Private Clients

From 6 April 2027, a proposed founders’ relief will tax qualifying lifetime gains at 10%, up to £10 million, for individuals starting and scaling high-growth, innovative UK companies. Prior BADR and investors’ relief claims reduce this limit, and restrictive conditions will likely limit eligibility to a few sellers.

Founders must initially hold at least 25% of ordinary share capital, with corresponding voting, profit and winding-up rights; hold shares for five years; and be continuously UK tax resident for five tax years before disposal. However, they need not work in the business.

There are further conditions applied to the company itself. They must fall within UK corporation tax, maintain substantial UK presence for five accounting periods before disposal, and be trading companies or trading-group holding companies continuing their original trade. Turnover must reach £10 million, with at least 15 qualifying full-time employees in the accounting period before disposal.

They must also meet two of three tests: 25% average compound annual turnover growth across three consecutive accounting periods within 10 years before sale; equivalent employee growth over three consecutive periods; or at least £1.5 million qualifying R&D spending, with R&D tax relief claimed for periods ending within three years of disposal.

The consultation period closes on 30 November 2026, and final conditions may change before the Finance Bill 2026-27. Business owners looking to sell may wish to undertake a review now to confirm if they are able to satisfy the conditions before any sale. 

Author: David Conway, Director, Private Clients

From 6 April 2027, the income tax rates applying to savings income will increase to 24%, 44% and 49% for basic-rate, higher-rate and additional-rate taxpayers, respectively. Separate rates applying to property income will also increase to 24%, 44% and 49%. This represents a further two-percentage-point increase on the 22%, 42% and 47% rates announced for April 2027 at Budget 2025.

Individuals receiving taxable interest or rental profits will face a 4% higher tax charge than individuals receiving the same amount of employment, pension or trading income. For example, a higher-rate taxpayer with £20,000 of taxable rental profit could pay £800 more tax each year compared with taxation at the existing 40% main rate.

Landlords should review their expected returns from their portfolios, particularly where borrowing and other property costs already reduce net income. Savers may wish to review how investments are held and make appropriate use of available tax-efficient wrappers and allowances, such as Individual Saving Accounts.

The new rates will apply from 6 April 2027, for the 2027/28 tax year.

The savings rates will apply to individuals across the UK. The property rates will apply across England, Wales and Northern Ireland, subject to the devolved rate-setting powers available to Wales. Property income rates for Scottish taxpayers are determined by the Scottish Parliament.

Author: Pete Fairchild, Partner and National Head of Private Clients

Individuals within the Self Assessment Payments on Account regime currently make interim tax payments in January and July. It is proposed that, from 6 April 2029, these will be replaced by smaller, more regular automated payments during the year.

The Chancellor’s rationale is that spreading payments more evenly will help taxpayers who might otherwise struggle to set aside funds for larger bills every six months.

The precise payment frequency has not yet been decided, although consultation responses generally favoured quarterly rather than monthly payments.

Eligible taxpayers would also be able to choose to pay through increased tax deductions via PAYE. This option is distinct from the payment frequency still to be determined for the wider regime.

Author: Duncan Cleary, Senior Manager, Professional Practices & Private Clients

A new Pension Tax Allowance will be introduced for people who have reached, or reach, State Pension age during the tax year. It is intended to prevent those with a total income no greater than the full new State Pension from having to pay a small amount of income tax as the State Pension rises above the frozen Personal Allowance.

In 2027/28, the full allowance will be worth up to £94, broadly offsetting the tax arising on the difference between the Personal Allowance of £12,570 and the full new State Pension of £13,036.

Eligibility will be based on total income, regardless of source. Therefore, private pensions, earnings, savings, dividends and property income will all be relevant.

Those with total income of up to £13,036 in 2027/28 will receive the full reduction. Above that level, the allowance will be withdrawn by £1 for every £3 of additional income, disappearing once total income reaches £13,319. Although designed to reduce the need for Simple Assessment, this taper introduces additional complexity for pensioners with income close to the threshold. HMRC will apply the allowance automatically, although adjustments may be required where income changes.

The measure will apply from 6 April 2027 and will be available for the 2027/28, 2028/29 and 2029/30 tax years. Arrangements beyond 5 April 2030 are not specified, despite the Personal Allowance being frozen until 5 April 2031.

The change affects a small group of UK taxpayers who are above State Pension age, or reach it during the tax year, and have relatively low total income under the Personal Allowance.

Author: Natalie Butt, Director, Private Clients

Pensions coming into IHT from 6 April 2027: the main policy remains. Two helpful technical changes have also been announced. Personal representatives will be able to direct pension schemes to pay Inheritance Tax (IHT) directly to HMRC, which should help address some of the liquidity and administrative issues created by bringing pensions within IHT.

There is also greater flexibility in how pension assets are treated when calculating the 36% charitable rate. This may lead to increased use of charitable pension nominations as part of IHT planning, although careful coordination between the Will and pension nominations will be essential. Both changes take effect from 6 April 2027.

Author: David Conway, Director, Private Clients

From April 2027, eligible stablecoins will be treated more like money for tax purposes, rather than being subject to the usual tax treatment applying to crypto assets. Stablecoins are crypto assets designed to maintain a value referenced to a fiat currency, such as sterling, US dollars or euros.

The government will also introduce no gain/no loss treatment for certain transfers by individuals and Trustees into and out of qualifying crypto asset lending and liquidity pool arrangements. Broadly, crypto asset lending involves temporarily transferring tokens in return for income, while liquidity pools let investors provide tokens to support decentralised trading and earn income.

Under the current rules, moving crypto assets into or out of lending and liquidity pool arrangements can result in a taxable disposal, even where the investor continues to have an economic exposure to the assets. The proposed treatment should defer any capital gain or loss until an economic disposal takes place. This should reduce dry tax charges, where tax can arise before an investor has realised an economic gain, and simplify record-keeping for qualifying transactions.

The stablecoin changes should similarly reduce tax friction when eligible tokens are used like conventional money. The detailed eligibility conditions will be important, and the new treatment will not necessarily apply to every stablecoin, loan or liquidity pool.

The stablecoin changes will take effect from 6 April 2027 for individuals and Trustees; 1 April 2027 for companies. The lending and liquidity pool provisions will apply from 6 April 2027.

The measures affect individuals, Trustees and businesses using eligible stablecoins. The specific no gain/no loss rules for crypto asset loans and liquidity pools apply to individuals and Trustees.

Author: Duncan Cleary, Senior Manager, Professional Practices & Private Clients

A welcome change to the Trading Allowance, which will increase from £1,000 to £3,000 from April 2027. The increased allowance will benefit individuals receiving income from casual work and online selling activities through platforms such as eBay or Vinted, where those activities amount to trading.

Individuals with gross trading or miscellaneous income of £3,000 or less should generally no longer need to declare or pay tax on that income. This may remove the requirement to complete a Self Assessment tax return if this type of income was the only reason for filing.

The £3,000 allowance applies per individual, rather than separately to each trade or source of income. Therefore, an individual with £2,000 of consultancy income and £2,000 from another trading activity would have combined relevant income of £4,000. They could claim the £3,000 allowance, leaving £1,000 subject to tax.

For an additional-rate taxpayer, the £2,000 increase in the allowance could provide an additional tax saving of up to £900.

However, individuals with allowable expenses exceeding £3,000 will benefit from deducting their actual expenses. The increased allowance and reporting threshold will apply from 6 April 2027.

The change affects individuals with small amounts of trading or miscellaneous income to help reduce their administrative burden and reduce their overall tax bill.

The UK Budget sets out the government’s plans for taxation, public spending and the economy, informed by independent forecasts from the Office for Budget Responsibility (OBR). The government has committed to one annual Budget, usually in the autumn, alongside a Spring Statement, giving businesses greater certainty and time to prepare for changes.

What the Budget does:

• Taxation: Announces changes to income tax, national insurance, business taxes, and duty rates.
• Public Spending: Allocates funding for major public services, including the NHS, schools, and defence.
• Economic Forecasts: Publishes independent economic and fiscal growth forecasts from the Office for Budget Responsibility. 

Government ministers use red boxes to carry official briefing papers, but the Chancellor’s has become an enduring symbol of Budget day. The tradition dates back to 1860, when William Gladstone carried his speech from Downing Street to the House of Commons. Today, the Chancellor holding up the red box outside Downing Street remains one of the day’s defining images. Fittingly, the word ‘Budget’ comes from the French ‘bougette’, meaning ‘little bag’.

The OBR stands for the Office for Budget Responsibility, which is the official independent economic and fiscal forecaster for the United Kingdom.

They have five main roles:

• Economic Forecasting: providing independent forecasts for the UK economy, including predictions for GDP growth, inflation, employment, and wages.
• Public Finances Analysis: tracks and forecasts government tax receipts, public spending, borrowing, and national debt levels.
• Scrutiny of Policy: evaluates government tax and welfare policy costings for each official Budget and Spring Statement.
• Checking Fiscal Targets: independently assesses how well the government is performing against its own self-imposed fiscal rules and targets.
• Long-Term Sustainability: publishes periodic reports analysing long-term pressures on public finances, such as an ageing population or climate costs.