The short version
The Budget on 28 October 2026 left the headline rates of Income Tax, National Insurance, VAT and Corporation Tax alone. The changes that matter to small businesses sit underneath those headlines, and most of them start on 6 April 2027. Nothing here changes what you pay for the current tax year, 2026/27.
Key dates
- 1 January 2027: the main rate first year allowance for plant and machinery rises from 40% to 50%.
- 1 April 2027: the National Living Wage rises to £13.21 an hour. Overseas suppliers start charging UK VAT on services sold to UK businesses that are not VAT registered.
- 6 April 2027: the trading allowance rises to £3,000. Rental and savings income is taxed at 24%, 44% and 49%. The mileage rate above 10,000 miles rises to 35p. The Business Asset Disposal Relief limit falls to £500,000. Company cars, vans, fuel and medical benefits must go through payroll.
- October 2027: online marketplaces start collecting the VAT on sales by UK sellers.
- 2 January 2028: the largest private hire operators must charge VAT on the full fare.
- April 2029: people who make payments on account move to more regular payments during the year, and a new Parental Allowance opens to self employed fathers, partners and adopters.
Sole traders and side income
Trading allowance trebles. From 6 April 2027 the trading allowance rises from £1,000 to £3,000, and the Self Assessment reporting threshold for trading income rises to £3,000 with it. HMRC estimates that up to 1.4 million people could benefit and that about 100,000 will no longer need to report trading income at all. Until 5 April 2027 the limit is still £1,000.
Zara earns £2,400 a year selling handmade cards. In 2026/27 she is over the £1,000 limit, so she has to tell HMRC and pays tax on £1,400 after the allowance. From 2027/28 the whole £2,400 is covered by the new £3,000 allowance.
If you earn more than £3,000 you will still be able to choose between deducting the allowance and deducting your actual expenses, whichever gives the lower profit.
Mileage rises again. The 55p rate for the first 10,000 business miles is now permanent. From 6 April 2027 the rate above 10,000 miles rises from 25p to 35p, for the self employed and for employees who use their own vehicle.
A private hire driver covers 22,000 business miles a year. In 2026/27 the claim is £5,500 plus £3,000, so £8,500. From 6 April 2027 it is £5,500 plus £4,200, so £9,700. That is £1,200 more to set against income, worth about £312 in tax and National Insurance to a basic rate taxpayer.
Making Tax Digital. If you join Making Tax Digital for Income Tax in April 2027, HMRC will not issue late submission penalty points for quarterly updates during 2027/28. The quarterly updates themselves are still required.
National Insurance. The Class 4 rates and thresholds are unchanged. For 2027/28 the Small Profits Threshold rises to £7,355 and voluntary Class 2 contributions rise to £3.80 a week.
Paying your bill. From April 2029 people who make payments on account will have to make more regular payments during the year. The detail has not been published yet.
Landlords
From 6 April 2027 rental profits in England, Wales and Northern Ireland will be taxed at their own rates: 24%, 44% and 49%, in place of 20%, 40% and 45%. Last year's Budget had set these at 22%, 42% and 47%. This Budget added a further 2 points before they even started.
A basic rate landlord with £10,000 of rental profit pays £2,000 today and £2,400 from 2027/28. A higher rate landlord with £20,000 of rental profit pays £8,000 today and £8,800 from 2027/28.
Relief for mortgage interest is given as a tax credit. HMRC's technical note says that from 2027/28 it will be given at the property basic rate, so the credit should rise in step with the new rate. That softens the increase for landlords with borrowing but does not remove it. The note was written before this Budget, so we will update this page when HMRC republishes its worked figures.
Your Personal Allowance is set against wages, pensions and trading profits first. Only what is left over is then used against rental, savings or dividend income.
Three things are worth reviewing before April: how the property is owned between spouses, whether every allowable expense is being claimed, and whether a limited company makes sense for future purchases. The right answer depends on your own figures.
Savers
Savings interest above your allowances will also be taxed at 24%, 44% and 49% from 6 April 2027, across the whole of the UK. A higher rate taxpayer with £3,000 of interest and a £500 Personal Savings Allowance pays £1,000 today and £1,100 from 2027/28.
The planned cut to the cash ISA limit will not go ahead. The limit stays at £20,000 for all adult savers from April 2027, which makes ISAs more valuable now that interest outside them is taxed more heavily.
Company directors
- Rates held for 2027/28: Corporation Tax stays at 19% and 25%, employer National Insurance at 15% and dividend tax at 10.75%, 35.75% and 39.35%.
- Selling your company: the lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000 for disposals on or after 6 April 2027. Relief you have already claimed counts towards the new limit, and there are rules to stop contracts being signed early just to beat the date.
- Founders' Relief: a new relief from 6 April 2027 offers a 10% rate on up to £10 million of lifetime gains for qualifying founders of high growth, innovative companies. The conditions are out for consultation until 30 November 2026.
- Dividends and other distributions: the government will go ahead with changes to how distributions from companies are taxed from April 2028. The detail will follow further consultation.
- Director salary planning: the Lower Earnings Limit rises to £6,916 for 2027/28, so a salary set at that level to protect your State Pension record needs to move up with it.
- Benefits in kind: company cars, vans, fuel and medical benefits must be taxed through payroll from 6 April 2027. Other benefits follow from 6 April 2028.
A director sells her company with a qualifying gain of £800,000. Before 6 April 2027 the whole gain is taxed at 18%, which is £144,000. After that date only the first £500,000 qualifies. The remaining £300,000 is taxed at 24%, bringing the bill to £162,000. The delay costs £18,000.
Online sellers
Marketplaces will collect your VAT. From October 2027, marketplaces such as Amazon and eBay will be responsible for collecting the VAT on goods sold to UK consumers by UK VAT registered businesses, and by other UK businesses whose sales on that platform are above £90,000 a year. Personal sales, second hand goods and sales to other businesses are outside the change. HMRC expects about 100,000 businesses to be significantly affected. The exact date and the detailed rules will be set in later legislation.
If you sell through a marketplace and are VAT registered, expect changes to how your payouts, prices and VAT returns work, and possibly a move to reclaiming VAT from HMRC. It is worth reviewing your pricing and cash flow well before October 2027.
Services bought from abroad. Today, if you are not VAT registered and buy services from an overseas supplier, no VAT is charged, but the value counts towards your VAT registration threshold. From 1 April 2027 the overseas supplier will charge you UK VAT instead, and the reverse charge will only apply to VAT registered buyers. For an unregistered seller that means some overseas services will cost more.
Taxi and private hire
Drivers gain from the mileage change above, because most cover far more than 10,000 business miles a year.
From 2 January 2028, where a journey is booked through an operator acting as agent, the journey will be treated as supplied by the operator, who must charge VAT on the full fare. This applies only to operators with annual fare turnover above a threshold. The threshold is being consulted on, with £50 million as the lead option, so smaller operators are not affected.
Employers
- National Living Wage: £13.21 an hour from 1 April 2027 for those aged 21 and over.
- 18 to 20 year olds: £11.27 an hour.
- 16 to 17 year olds and apprentices: £8.31 an hour.
- Employer National Insurance: unchanged at 15% above £5,000.
Pensioners and parents
A new Pension Tax Allowance runs from 6 April 2027 to 5 April 2030. It means pensioners whose total income is no more than the full new State Pension will not have to pay small amounts of Income Tax through Simple Assessment.
From April 2029 a new Parental Allowance will give eligible self employed fathers, partners and adopters in Great Britain access to parental pay for the first time. The rates and rules have not been published yet.
What did not change
- Personal Allowance: £12,570, with the same tax bands, for 2027/28.
- National Insurance rates: 8% and 2% for employees, 6% and 2% for the self employed.
- Capital Gains Tax: 18% and 24%, with a £3,000 annual allowance.
- VAT: 20%, with the registration threshold still £90,000.
What to do now
- Side income under £3,000: you still need to report for 2026/27 if you are over £1,000. The relief starts in April 2027.
- Landlords: ask for a forecast of your 2027/28 bill at the new rates, so the increase is planned for and not a surprise.
- Thinking of selling your company: if your gain could exceed £500,000, take advice now. The date that matters is 6 April 2027.
- Marketplace sellers: review prices and margins during 2027, before the October change.
- High mileage drivers: keep a full mileage log. Every business mile above 10,000 is worth 10p more from April 2027.
Common questions
When does the £3,000 trading allowance start?
How much tax will landlords pay on rent from April 2027?
Did the Budget change dividend tax?
What is the mileage rate from April 2027?
Do Amazon and eBay sellers need to do anything now?
Is the cash ISA limit being cut?
What is happening to Business Asset Disposal Relief?
Checked against GOV.UK on 10 November 2026: Budget 2026: overview of tax legislation and rates, Annex A: rates and allowances, Budget 2026, Increasing the trading allowance, Property and savings income rates, Business Asset Disposal Relief lifetime limit, VAT and online marketplaces, VAT and private hire operators, Reverse charge reform.