While largely avoiding broad-based tax increases, The Autumn Budget 2026 introduces a range of tax, business and employment measures that may require early planning. Our legal experts have distilled the key headlines to help you understand the potential impact on your life and business.
It is important to note that many of these policy changes apply primarily to England and Wales. Details relevant to Scottish taxpayers will be set out in the devolved Scottish Budget on 3 December 2026.
If you have any questions about today’s Budget, you can speak to one of our legal experts by calling us on 03330 430150 or making an enquiry online.
Key takeaways for individuals
Reform of the Payments on Account for Income Tax Self-Assessment regime
The UK Government will modernise the Payments on Account (POA) system for Income Tax Self-Assessment (ITSA).
From April 2029, taxpayers using the POA system for ITSA will have to make smaller, more regular payments towards their tax bill throughout the year. This will bring the payment of tax closer to when the income is received, making payments more manageable and avoiding the receipt of large bills and potential debt.
The modernised system will also make it easier for employees to claim tax relief on employment expenses by removing the need to use ITSA solely to make these claims.
Tax increase for savings income
The Chancellor announced that the tax on savings income will increase by a further 2%.
From April 2027, the basic rate on saving income will increase to 24%, the higher rate will be 44%, and the additional rate will be 49%.
No changes were announced in today's budget for income from employment and dividends.
ISA Cash Allowance remains at £20k for everyone
The Cash ISA allowance will remain £20,000 per year for people of all ages, while plans to introduce a new 'Starter' Stocks and Shares ISA are being developed for first-time investors to help make investment more accessible.
Pension Tax Allowance (PTA)
Starting April 2027, the tax-free allowance for pensioners will rise to £13,036 being the full annual value of the new State Pension. This allowance will apply regardless of where the income comes from.
If your total income is slightly higher than the full annual value of the new State Pension, you may still receive an income tax reduction and pay less income tax than you otherwise would. The value of your PTA will gradually decrease as your income increases until it is fully withdrawn. For every £3 of income above the full level of the new State Pension, your PTA will reduce by £1. This means that once your income reaches £13,319, you will not receive any PTA.
The PTA will be updated annually in line with the annual value of the new State Pension.
Key takeaways for businesses
Reduction of Business Asset Disposal Relief (BADR)
The Chancellor announced a reduction of BADR, which applies in relation to Capital Gains Tax (CGT) and reduces the rate of tax to 18% for the first £1m of gains on business assets disposed of in lifetime. From April 2027, this relief will only apply to the first £500,000 of gains.
CGT Founders’ Relief
From April 2027, significant early investors in and founders of high-growth, innovative companies will benefit from a new lifetime allowance on gains of up to £10m. There is a consultation running already which will close at the end of November 2026 and this will inform the shape of the final design.
Demergers
Reference was made to modernising the tax framework relating to company distributions. No detail has been provided on this but the stated intention is to engage in consultation during 2027 with any changes coming into effect from April 2028.
This should accelerate any consideration of company restructuring. This could potentially become challenging without the current reliefs.
Key takeaways for employers
Parental allowance for fathers, partners and adopters
A statutory parental allowance will be introduced for eligible self-employed fathers, partners and adopters from April 2029. Those who are recently employed or unemployed, or with a broken or irregular pattern of employment, and therefore do not qualify for statutory paternity or adoption pay, will also benefit providing they have sufficient work and earnings history.
Immigration and international talent
The Chancellor announced plans to make it easier for UK businesses to attract and retain highly skilled international talent by reviewing salary requirements, expanding the High Potential Individual visas to qualified applicants from 150 qualified global institutions, extending the Graduate visa duration to 24 months for eligible universities, and giving Highly Skilled sponsored workers a curtailment period of up to six months to find a new job. These reforms are designed to help employers access the skills they need to support business growth and innovation.
Key takeaways for property and landowners
Council tax payment
Up to 20 million households in Council Tax bands A to D in England will receive a one-off payment of £100 from January 2027 to assist with the cost of rising household energy bills. The UK devolved governments will receive their share of funding through the Barnett formula which will enable them to provide similar support if they decide to do so.
Tax increase for property rental income
In 2025, the UK Government announced a 2% tax rate increase on income received from property, effective from April 2027. In today's budget, the Chancellor announced a further 2% increase, also to apply from April 2027.
This means that in the tax year 2027-28, the basic rate on property income will be 24% and the higher rate will be 44%. This will apply to England, Wales and Northern Ireland only.
Income tax in Scotland is devolved. So far, the Scottish Government has not looked to follow suit in relation to property income. However, if introduced in Scotland, this could have a significant impact for owners of let properties. Individuals who receive property income should consider their ownership structure and the potential tax exposure if this were to change.
We expect further clarity and draft legislation to be published in due course. Our legal experts will continue analysing the detail as it becomes available and will issue updated guidance.
If you have questions about how today’s announcements may affect you or your organisation, please contact your usual Thorntons adviser, or reach out to one of our specialists. You can make an enquiry by calling us on 03330 430150 or getting in touch here.
