October 26 Budget points
29th of October, 2026Budget 28 October 2026 – points that caught our attention
No changes to VAT, National Insurance, CGT, personal allowances, rates or tax thresholds – except for landlords and savers.
Landlords and savers are already on notice of an additional 2% increase in tax rates on rental income and savings income, but the budget announced a further 2% to come in from April 2027. However as income tax rates are devolved in Scotland we will need to wait and see what the Scottish Government announce on this in their budget due on 3 December 2026.
“Breathing space”
£100 payment to Council tax bands A to D (Scottish government should match)
Freezing of the 5p reduction to fuel duty until July 2027
Continuation of no VAT on domestic electricity until July 2027.
Reorganising charges between standing charges and unit pricing for gas and eventually electricity should be simpler and arguably fairer but could also have mixed impacts.
Other points
National Minimum Wage (and National living wage) to increase by 3.9% which would amount to a further 50p per hour on the age 21and over rate currently at £12.71. However the full details of this increase have not yet been announced.
Tax Free ISA limit to stay at £20k per person irrespective of age
Cliff edge faced by carers whose paid work takes them over the threshold to be addressed but not implemented until 2030.
Self employed mothers and fathers to be able to tap into Government Funding for paid parental leave for the first time, but all the details and timescales are still to be firmed up.
For new and emerging businesses where people have a “hobby” or “side hustle” it will be possible to earn up to £3,000 in income before having to register as a business and pay tax on that income. (This is currently only £1,000). This change would be from April 2027.
Business Rates relief in England and Wales is to have the Small Business rates relief threshold increased from £12,000 to £18,000 from 1 April 2027. Again this may well be mirrored in Scottish Government announcements.
Reduction to the Business Asset Disposal Relief lifetime limit (down from £1m to £500k) for Capital Gains tax and changes to the writing down allowance rate against Corporation tax.
Online market places will become responsible for collecting VAT on qualifying sales made by UK VAT registered businesses through their platforms.
Four changes for the future about administration and payments
- From April 2029 it will be mandatory to produce VAT invoices electronically in a specified digital format. This does have serious implications for businesses which are not yet using digital software.
- From April 2029 self assessment tax payers will be switched to paying quarterly alongside the MTD quarterly deadlines and in 2029/2030 this change will mean that self assessment tax payers will have to settle tax for the previous year on the old basis and at the same time pay tax on the current year in real time. This could stretch cashflow and I would advise to start saving up now! The exact process will be clarified nearer the time and maybe there will be some sort of transitional relief. It will be a good headline in terms of how much money HMRC has collected in taxes in a single year!
- From April 2029 HMRC will introduce mandatory direct debit arrangements for VAT and PAYE. Many of our clients already have direct debits set up but for those who don’t this will be enforced by 2029.
- For Self assessment tax payers joining Making Tax Digital in April 2027 who had gross sales of over £30,000 in their 2025/26 Tax Return, they will also get a penalty free first year if MTD returns are filed late, like those who started on the scheme in April 2026. However for those who will be in their second year, penalties will be levied for late filing. These penalties are yet to be announced.
Again it was announced that there would be a further increase in investment in HMRC compliance activity so debt chasing and investigations will be being stepped up and alarmingly, HMRC will have new powers from July 2029 to recover certain unpaid tax debts directly from taxpayers’ bank accounts by instalments.
Many of the above will require further announcements from either the UK government or the Scottish government and we will seek to keep abreast of these and advise where we have further information.
