The first Budget of the new Chancellor-PM team of John Healey and Andy Burnham was a fairly low-impact Budget in many ways, even though there were almost 100 new measures. There were only fairly minor changes to taxes and spending, with a number of measures aimed at giving families and businesses ‘breathing space’ from rising energy and other costs.
Many potential big decisions, such as possible increases in defence spending or welfare reform, have been put off for another day (and there was no attempt to simplify our ever-more-complex tax system, with several measures increasing complexity with little obvious rationale). But businesses and entrepreneurs will perhaps breathe a sigh of relief that the tax-raising measures were limited (increases in spending were often met by a reduction in headroom and raiding reserves rather than corresponding tax increases or reductions in spending elsewhere). Healey and Burnham are, of course, both fairly new in office, so perhaps next year’s Budget will be more substantial, when they have had more time to assess the current position and consider what changes they wish to make (they may also be hoping that forecasts will improve).
The Chancellor extended the VAT cut on domestic electricity and the 5p Fuel Duty cut to July 2027, and announced a £100 Household Energy Payment this winter for households in Council Tax bands A to D in England. For the high street, the Small Business Rate Relief threshold will rise so that a further 70,000 retail, hospitality and leisure businesses pay no business rates.
To fund this support, the Chancellor temporarily doubled the Bank Corporation Tax Surcharge. In addition, the Budget announced further increases to the rates of tax on property and savings income from April 2027. The lifetime limit for Business Asset Disposal Relief will be halved, although the planned cut to the cash ISA limit will not go ahead and there will be a new, targeted CGT relief, Founders’ Relief. For businesses, there is a further cut in the main rate Writing Down Allowance from 14% to 12% from April 2027. This funds an increase in the main rate First Year Allowance from 40% to 50% for expenditure incurred from 1 January 2027.
As usual, as well as changes announced yesterday, our summary includes measures previously announced, but only coming into effect from April 2027 or later. These include:
Personal and Employment Taxes
- Income Tax – the personal allowance, basic rate band and higher rate threshold for Income Tax all remain frozen until 2030/31
- New Pension Tax Allowance (from April 2027) should ensure that pensioners with incomes up to the full State Pension do not pay Income Tax
- Income Tax – tax rates on property income and savings income (but not dividends) increase by a further 2% from 2027/28
- Income Tax – the rates of income tax remain unchanged at 20% (basic), 40% (higher) and 45% (additional rate) for other income
- Trading Allowance tripled from £1,000 to £3,000 from 6 April 2027
- ISAs – the intended reduction in the annual cash ISA limit from 6 April 2027 has been cancelled, and there will be a new First Time Buyer ISA from April 2029
- Income Tax Payments on Account – taxpayers who make these payments will make smaller, more regular contributions throughout the year from April 2029
- National Living Wage and National Minimum Wage increase from 1 April 2027
- Pension salary sacrifice – pension contributions above £2,000 a year will be subject to employer and employee NICs from April 2029 (as announced at Budget 2025)
- Expanded Enterprise Management Incentive 2 (EMI2, formerly Company Share Option Plan) will double the value of tax-advantaged options from £60,000 to £120,000 and extend the exercise period, from 6 April 2027
Business Tax
- Corporation Tax – no changes to rates
- Bank Corporation Tax Surcharge – temporarily increases from 3% to 6%, from 1 January 2027 until 31 March 2028
- Capital Allowances – Full Expensing continues, and the main rate First Year Allowance (FYA) of 40% increases to 50% from 1 January 2027, but the main rate of Writing Down Allowance (WDA) reduces by a further 2 percentage points from 14% to 12% per year from April 2027
Capital Taxes
- Capital Gains Tax – most rates stay the same, and the annual exemption for 2027/28 remains at £3,000
- Capital Gains Tax – the lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000 from 6 April 2027
- Capital Gains Tax – new Founders’ Relief from 6 April 2027, offering a 10% Capital Gains Tax rate on up to £10 million of lifetime gains (if all conditions are met)
- Inheritance Tax – the nil-rate band continues to be frozen until April 2031
Other measures
- VAT – no changes to rates and thresholds
- Household Energy Payment – up to 20 million households in England will receive £100 towards energy bills (delivered through the council tax system), from January 2027
- Electric Vehicle Excise Duty (eVED) – a new mileage charge for electric and plug-in hybrid cars applies from April 2028 (as announced at Budget 2025)
▶ Download our Autumn Budget Summary (PDF)
If you have any questions regarding the information covered in this summary, or would like advice on a particular area, please get in touch with either your usual contact or any of the UNW Tax partners. Contact details can be found on the final page of this summary PDF.