Whilst the headline rates of Income Tax on earnings, National Insurance and VAT remain unchanged, the Budget includes increases to taxes on savings and property income, changes to business tax reliefs and new measures affecting pensions and Inheritance Tax.
Many of these changes will take effect from April 2027, so businesses and individuals should consider how they may be affected and whether any action is needed before the new tax year.
Income Tax thresholds remain frozen
The Personal Allowance will remain at £12,570 for the 2027/28 tax year, with Income Tax and National Insurance thresholds continuing to be frozen until 2030/31.
Although the main Income Tax rates on earnings remain unchanged, the continued freeze means that employees and business owners receiving pay increases could find themselves paying more tax or moving into higher tax bands.
Meanwhile, Income Tax rates on savings and property income will increase by a total of four percentage points from 6th April 2027. This includes increases previously announced by the government, alongside a further two percentage points confirmed in this Budget.
Changes affecting businesses and employers
The Budget includes several announcements that could affect business costs, investment decisions and tax liabilities.
National Living Wage increase
From 1st April 2027, the National Living Wage for workers aged 21 and over will increase by 3.9%, from £12.71 to £13.21 per hour.
Employers should take this increase into account when reviewing their payroll budgets and cash flow forecasts for the next financial year.
Capital allowances
Changes to capital allowances could affect businesses planning to invest in machinery, equipment and other qualifying assets.
The main writing-down allowance will reduce from 14% to 12% from April 2027, whilst the First Year Allowance for certain qualifying expenditure will increase from 40% to 50% from January 2027.
Businesses considering significant investment in equipment or machinery should review the timing of planned purchases to ensure they make the most of the available tax reliefs.
Business Asset Disposal Relief
From 6th April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) will reduce from £1 million to £500,000.
This could increase Capital Gains Tax liabilities for business owners planning to sell their business or retire, so it is worth reviewing any existing plans before the changes take effect.
The government has also proposed a new Founders' Relief, offering a 10% Capital Gains Tax rate on qualifying disposals of shares in certain high-growth businesses.
Making Tax Digital expands in April 2027
The next phase of Making Tax Digital for Income Tax (MTD ITSA) will begin on 6th April 2027.
Sole traders and landlords with qualifying income exceeding £30,000 in the 2025/26 tax year will be required to maintain digital records and submit quarterly updates to HMRC using compatible software.
Those affected should ensure they have suitable accounting systems and processes in place before the deadline.
Changes to savings, pensions and Inheritance Tax
The Budget confirmed that the annual cash ISA allowance will remain at £20,000, reversing previously announced plans to reduce the limit.
A new First Time Buyer ISA is also planned for April 2029, replacing the Lifetime ISA for new savers.
For pensioners, a new Pension Tax Allowance will be introduced from April 2027, designed to ensure those whose total income does not exceed the full new State Pension are not liable for Income Tax.
Meanwhile, most unused pension funds and pension death benefits will be included in estates for Inheritance Tax purposes from April 2027.
This is an important change for individuals reviewing their pensions, wills and estate planning arrangements.
Read LWA's full Autumn Budget 2026 summary
For further details of the announcements, including changes to Income Tax, Capital Gains Tax, Inheritance Tax, VAT, business rates and other measures, please read our full Autumn Budget summary here.
If you would like advice on how the Budget announcements could affect you or your business, please get in touch with the LWA team on 0161 905 1801 for our Manchester office, or 01925 830 830 for our team in Warrington, or email mail@lwaltd.com.
Our experienced accountants and tax advisers will be happy to help.