Finance Act 2026 already sets savings income rates of 22%, 42% and 47% for 2027/28, with the same enacted rates for property income in 2027/28. Budget 2026, delivered on 28 October, announced a further two percentage-point increase to 24%, 44% and 49% from 6 April 2027. The announced property income rates would apply in England, Wales and Northern Ireland, subject to devolved powers, while the savings rates would apply across the UK. The Budget rates require Finance Bill 2026-27 to become law.
The Budget also announced a lower Business Asset Disposal Relief lifetime limit and retained the cash ISA limit. The inheritance tax thresholds are unchanged.
The changes below are announcements requiring legislation unless stated otherwise. Their start dates differ: an announcement on Budget day does not necessarily change the tax you pay in 2026/27. This guide covers property income, the treatment of estates and owner-managed businesses.
What are the main Budget 2026 tax changes?
| Measure | Budget 2026 announcement | Planned start |
|---|---|---|
| Property and savings income | Further increase from the enacted 22%, 42% and 47% rates to 24%, 44% and 49% | 6 April 2027, 2027/28 |
| Business Asset Disposal Relief | Lifetime limit falls from £1 million to £500,000; rate remains 18% | Qualifying disposals from 6 April 2027 |
| Founders' Relief | Proposed 10% CGT rate on up to £10 million of qualifying lifetime gains; conditions under consultation | Qualifying disposals from 6 April 2027 |
| Trading allowance | Rises from £1,000 to £3,000, alongside the trading income reporting threshold | 6 April 2027, 2027/28 |
| Cash ISA | £20,000 limit retained; planned reduction cancelled | April 2027, 2027/28 |
| Main-rate first-year allowance | Rises from 40% to 50% | Qualifying expenditure from 1 January 2027 |
| Main-rate writing-down allowance | Falls from 14% to 12% | 1 April 2027 for corporation tax; 6 April 2027 for income tax |
Sources: HMRC's tax policy summary, the rates and allowances tables, the Founders' Relief policy paper and the technical consultation.
What changes for landlords and savers?
Finance Act 2026 sets property and savings income rates of 22%, 42% and 47% for 2027/28. Budget 2026 announces a further two-point rise to 24%, 44% and 49% from 6 April 2027. HMRC states that the announced property rates would apply in England, Wales and Northern Ireland, with powers for Scotland and Wales to set property rates. The announced savings rates would apply across the UK. See sections 1.1 and 1.2 of HMRC's summary.
These are taxes on income. They do not replace the capital gains tax rules when you sell a property. Annex A retains the ordinary individual CGT rates of 18% and 24% for 2027/28.
For an individual landlord in England, rental profit is taxed at 20%, 40% and 45% in 2026/27. Finance Act 2026 sets separate property income rates of 22%, 42% and 47% for 2027/28, while Budget 2026 announces 24%, 44% and 49% for that year. So a 2026/27 rental profit is taxed at one set of rates and a 2027/28 profit at another.
A residential letting with borrowing also involves the finance-cost restriction. Finance Act 2026 sets the property basic rate at 22% for 2027/28 and ties the tax reduction to the property basic rate from that year. Budget 2026 announces a 24% property basic rate, but the papers published on 28 October 2026 do not confirm the finance-cost tax-reduction rate for 2027/28. The headline property rate alone is not the complete calculation. Our property and tax consultation covers the wider position.
For savers, the government has cancelled the planned cut in the cash ISA limit. The announced limit for 2027/28 is £20,000 for adult savers. This sits within the overall annual ISA allowance; it is not an additional £20,000 allowance for 2027/28 alongside stocks and shares ISAs.
What changes if you sell a business?
The proposed Business Asset Disposal Relief change reduces the lifetime limit for qualifying gains from £1 million in 2026/27 to £500,000 for disposals from 6 April 2027. The relief rate remains 18% for qualifying disposals from 6 April 2027. Qualifying gains count towards the lifetime limit; it is not a cap on sale proceeds.
A contract signed before 6 April 2027 does not necessarily preserve the existing BADR limit. HMRC specifically flags provisions for uncompleted contracts and certain share reorganisations and exchanges. Previous claims also matter because the limit is a lifetime one.
For qualifying disposals from 6 April 2027, the proposed Founders' Relief would apply a 10% CGT rate to up to £10 million of qualifying lifetime gains for founders and significant early investors in high-growth, innovative UK companies. The technical conditions remain under consultation, so the relief is not an automatic replacement for BADR on a business sale.
Example: what the savings rate change means
Assume an adult UK resident living in England has a salary of £60,000, the standard Personal Allowance, no dividends or other income apart from £2,000 of interest from an ordinary taxable UK bank account, not an ISA, in each tax year. They remain a higher-rate taxpayer after the interest is included, have no additional-rate income and have no other savings interest, so the £500 Personal Savings Allowance is set against this interest. The comparison holds those facts constant for 2026/27 and 2027/28, assumes that allowance remains £500 as published in Annex A, and assumes no relief or adjustment changes the result.
The £2,000 interest less the £500 allowance leaves £1,500 taxable in each year. At the 2026/27 savings higher rate of 40%, the tax is £600. Finance Act 2026 sets the 2027/28 savings higher rate at 42%, which would make the tax £630. Budget 2026 announces a further rise to 44% for 2027/28, taking the tax to £660. The increase from 2026/27 to the announced 2027/28 position is £60, of which £30 comes from Budget 2026's further two-point rise. This compares tax on the interest only; it is not a calculation of the person's total tax bill.
Did Budget 2026 change inheritance tax?
The main inheritance tax thresholds are unchanged for 2027/28: the nil-rate band remains £325,000 and the residence nil-rate band remains £175,000 where its conditions are met. The residence nil-rate band depends on a qualifying home passing to direct descendants and tapers away for estates above £2 million in 2027/28. These thresholds remain frozen to 5 April 2031. See the Budget rates table and HMRC's threshold policy paper.
Most unused pension funds and pension death benefits are still due to enter the estate for inheritance tax for deaths from 6 April 2027. HMRC confirms that this was legislated in Finance Act 2026. The Budget 2026 announcement adds a mechanism allowing a prospective personal representative to direct a pension scheme to pay the inheritance tax, subject to conditions.
A separate announcement removes the rule under which otherwise tax-free pension death benefits can become taxable solely because payment is delayed more than two years after the scheme knew, or could reasonably have known, of the death. HMRC's Budget-day policy paper confirms the change, and the announced effective date is for payments from 28 October 2026 through Finance Bill legislation. This does not make all pension death benefits tax-free.
The April 2027 pension change therefore remains relevant to the value of an estate for inheritance tax. Our inheritance tax planning service and guide to pensions and inheritance tax explain the wider issues.
What changes for companies and people with side income?
The Budget retains the corporation tax main rate of 25% and small profits rate of 19% for the financial year beginning 1 April 2028. Capital allowances are changing, however. The announced main-rate writing-down allowance falls to 12% from April 2027, with different start dates for corporation tax and income tax shown above.
HMRC also announces that the main-rate first-year allowance will rise from 40% to 50% for qualifying expenditure incurred from 1 January 2027. The allowance available for a particular asset depends on the qualifying conditions and final legislation. The corporation tax rate does not decide when the cost of equipment gets relief; the capital allowances do.
For individuals with trading or miscellaneous income, HMRC's Budget-day policy paper confirms that the trading allowance will rise from £1,000 to £3,000 for 2027/28, from 6 April 2027. The Self Assessment trading income reporting threshold rises alongside it. The measure concerns trading and miscellaneous income; it does not announce an increase in the separate property allowance.
When is it worth checking the detail?
A planned business sale can involve earlier BADR claims and special contract rules. An estate with pension benefits involves the April 2027 pension change as well as the inheritance tax bands. A property business can involve tax on rent, finance-cost restrictions and a separate capital gain on disposal. Which rules apply turns on the date of the sale, the death or the tax year in question.
Our tax planning service covers these areas. The inheritance tax calculator gives a separate estimate using its stated tax-year assumptions.
Frequently asked questions
The effective date depends on the particular measure. Many changes covered here are announced for 2027/28 or later, while the pension death-benefit announcement applies to payments from 28 October 2026 through forthcoming legislation.
No. HMRC's Budget-day policy paper describes it as a separate planned charge on owners of residential properties worth £2 million or more in England, from April 2028. The government also published its consultation response on Budget day; it is not a replacement for inheritance tax.
No. Annex A lists separate dividend rates of 10.75%, 35.75% and 39.35% for 2027/28, unchanged from 2026/27. Rental income has separate rules from dividends or a capital gain.
No. Finance Act 2026 already sets savings rates and property rates of 22%, 42% and 47% for 2027/28. Budget 2026 announced a further rise to 24%, 44% and 49%, which requires Finance Bill 2026-27 to become law.
No. HMRC's Budget-day policy paper applies the £3,000 allowance to trading and miscellaneous income from 6 April 2027, not rental income.
About Vision Consulting
Vision Consulting is a firm of chartered accountants and registered auditors, regulated by ICAEW. We work with landlords and business owners on the tax issues covered in this guide, including rental income, business sales, capital allowances, inheritance tax and pensions.
We have offices in the City of London, the West End and Gants Hill. If you need help understanding how a Budget 2026 measure applies to you, or planning before a change takes effect, call 020 8554 2135, email info@visionconsulting.co.uk or make an enquiry.
By the Vision Consulting team.
This is general information, not advice. Your position depends on your circumstances. Speak to us before acting.