10 min read
John Healey presented his first Budget as Chancellor on 28 October. The general consensus is that it avoided broad tax rises, yet it contains a number of targeted measures that will affect property owners, small employers and anyone who relies on a vehicle for work. Several take effect as early as April 2027, so the planning window is shorter than it might appear. Below, we set out the main changes and what they mean in practice.
Landlords: Higher rates and wider digital reporting
Property income tax rates
The most significant measure for landlords is a further two percentage point increase in the tax rates on rental profits. This sits on top of the two points announced at last year’s Budget. From 6 April 2027, the rates for landlords in England, Wales and Northern Ireland will be:
| Band | 2026/27 | 2027/28 (2025 Budget) | 2027/28 (Budget 2026) |
| Basic rate (£12,571 to £50,270) | 20% | 22% | 24% |
| Higher rate (£50,271 to £125,140) | 40% | 42% | 44% |
| Additional rate (over £125,140) | 45% | 47% | 49% |
If you live in Scotland, different rules apply, because Holyrood sets its own income tax.
Savings income is different again, and it will be taxed at these new rates wherever you live in the UK. To see what it means in pounds, take £20,000 of taxable rental profit in the basic rate band. That’s £800 more tax than you’d pay today. None of this is final yet, as the legislation is still going through Parliament.
Making Tax Digital for Income Tax
Making Tax Digital isn’t a new idea, and the Budget didn’t change the plan. What it did was confirm that April 2027 still stands. If your qualifying income was over £30,000 in 2025/26, whether from property, self employment or both, you’ll have to start from 6 April 2027.
You’ll keep your records digitally and send HMRC an update every three months, whereas before you’d have filed one return at the end of the year.
The Budget also brought some practical clarity on penalties. Those joining in April 2027 won’t receive late filing penalties for their first four quarterly updates. Anyone already in the system since April 2026 is in a different position, as penalty points will start to apply to them from April 2027. Landlords who let through a limited company remain outside the scheme for now.
Areas that remain unchanged
Dividend tax rates are unchanged at 10.75%, 35.75% and 39.35%. We haven’t seen any announcement on stamp duty, nor a new increase in Capital Gains Tax on residential property.
Some commentators expect the higher rental rates to increase interest in incorporation. It’s a legitimate option for certain portfolios, but transferring properties into a company can trigger Capital Gains Tax and Stamp Duty Land Tax. We’d always recommend modelling the full cost before taking any decision.
Small businesses: Reliefs, rates and reporting
Allowances and reliefs
- Trading allowance: The allowance rises from £1,000 to £3,000 from 6 April 2027. Individuals earning below that amount from self employment needn’t register or pay tax on it. Above the limit, you can deduct either the allowance or your actual expenses, but not both.
- Business Asset Disposal Relief: The lifetime limit on qualifying gains falls from £1 million to £500,000. Anyone considering a sale in the next few years should review their timing.
- Founders’ Relief: A new 10% Capital Gains Tax rate will apply to lifetime gains of up to £10 million for founders of qualifying high growth companies. Eligibility criteria will follow a technical consultation.
- Capital allowances: The first year allowance on main rate assets rises from 40% to 50% for spending from 1 January 2027. From April 2027, the writing down allowance drops from 14% to 12%. Full expensing continues for companies only.
Business rates and wage costs
If you run a shop, pub, restaurant or leisure business in England, there’s some help with business rates from April 2027. The Small Business Rates Relief limit goes up from £12,000 to £18,000 in rateable value. The government says that will take about 70,000 more businesses out of rates altogether.
Not everyone will qualify, but retail, hospitality and leisure firms that miss out will have their bills frozen until April 2029. Pubs, social clubs and most live music venues also get an extra 20% off from 1 April 2027.
Staff costs are rising too. The National Living Wage goes up 3.9% to £13.21 an hour, and the rate for 18 to 20 year olds goes to £11.27. If you have employees, put those figures into your 2027 forecasts now.
Administration and VAT
Several changes are scheduled further ahead, and they point towards a more automated tax system:
- October 2027: Online marketplaces such as Amazon, eBay and Temu will become responsible for collecting the VAT owed by retailers whose annual turnover through a single marketplace is above £90,000.
- April 2029: Instead of two big Self Assessment payments in January and July, you’ll pay smaller amounts through the year. HMRC will ask for feedback before it sets the details, so the exact schedule isn’t decided yet.
- April 2029: You’ll need a Direct Debit instruction set up for VAT and PAYE. You don’t have to pay by Direct Debit. If you settle your bill by another method before the deadline, that’s fine. HMRC will only use the Direct Debit to collect anything you haven’t paid.
- April 2029: VAT invoices will need to be issued in a set electronic format. The government plans to publish the full rules by April 2028, so you’ll have time to get ready.
The government has also published a red tape reduction package, which it estimates could save businesses almost £800 million a year. It includes simpler company reporting requirements.
Vehicles, drivers and taxi operators
The motoring measures drew less attention in the Chancellor’s speech, but several affect business running costs:
- Mileage rates: The 55p per mile rate for the first 10,000 business miles becomes permanent. From 6 April 2027, the rate above 10,000 miles increases from 25p to 35p.
- Electric Vehicle Excise Duty: From April 2028, electric car drivers will pay 3p for every mile they drive, and plug in hybrid drivers will pay 1.5p. This is on top of normal road tax.
- Road tax and fuel duty: Vehicle Excise Duty will go up in line with RPI from April 2027. Fuel duty stays frozen, and the 5p cut stays in place, until 1 July 2027.
- Public charging: From 1 November 2026, electricity from public and workplace chargers is confirmed as subject to 20% VAT.
- Private hire operators: From 2 January 2028, larger operators will charge 20% VAT on the full value of fares. The government’s lead proposal is a threshold of £50 million in annual fare turnover, which would leave most small taxi firms outside the rules. The threshold remains subject to consultation.
Practical steps to take now
Depending which of the Chancellor’s edicts apply to you:
- Recalculate 2027/28 rental profits using the new 24%, 44% and 49% rates.
- Confirm whether Making Tax Digital applies to you from April 2027, and put software and record keeping in place well beforehand.
- Review any planned business sale in light of the lower Business Asset Disposal Relief limit.
- Consider the timing of equipment purchases against the 1 January 2027 allowance change.
- Take advice before incorporating a property portfolio.
The official detail is available in the Budget 2026 document and HMRC’s Budget 2026 tax documents.
Speak to Golding
The right response to these changes depends on your circumstances, and early planning usually gives you more options. At Golding, we provide bookkeeping, payroll, tax filing and financial management for landlords and small businesses across the UK. Contact our team and we’ll help you work out what the Budget means for you.
Anthony Burrell is the Tax Director at Golding Accountancy, specialising in UK personal tax, compliance, and strategic tax planning. He works with business owners, landlords, and property investors across the UK, helping them navigate complex tax legislation while ensuring they remain compliant and tax-efficient. Outside the office, Anthony is a dedicated West Ham supporter and has been a season ticket holder for more than 40 years. He also recommends Dext to clients looking to simplify their bookkeeping and financial processes.
