Smarter Budget Blog –
What Does It Mean for You?

Yesterday saw the Chancellor deliver the Autumn Budget and, after all the speculation beforehand, we finally know what we are dealing with.

In contrast to recent years though, the pre-budget leaks (and documents!) were kept very much to a minimum, but as ever, there was plenty of Parliamentary theatre, lots of announcements and a considerable amount of detail hidden behind the headlines.

The good news is that this was perhaps not the tax-raising Budget that many had feared. However, that certainly does not mean everyone escaped. Landlords, savers and business owners considering selling their businesses are amongst those with most reason to pay attention.

Some of the announcements are fairly straightforward. Others will take a bit more time, and in some cases further legislation, before the full implications become clear.  So, rather than reproduce hundreds of pages of Budget documents, here are the changes that we think are most relevant to our clients.

Income Tax on Property and Savings

This is one of the more important announcements for many of our clients.

From 6 April 2027, the Income Tax rates applying to property income will be 24%, 44% and 49% for basic, higher and additional-rate taxpayers respectively. Savings income will also be taxed at 24%, 44% and 49% across the UK.

For landlords in particular, this is another increase in the tax burden associated with owning investment property.

For somebody already considering whether to retain, sell or restructure their property portfolio, this announcement certainly adds another factor to the calculation.

As always, however, tax should not be the only reason for making a major financial decision. Please speak to us before taking action.

Selling Your Business? An Important Change

There was a significant announcement for business owners who may be considering a future sale.

The lifetime limit for Business Asset Disposal Relief (BADR) will reduce from £1 million to £500,000 for qualifying disposals from 6 April 2027.

That makes the timing of a business sale potentially much more important.

There are special provisions covering contracts entered into before 6 April 2027 but completed afterwards, so anybody contemplating a disposal should take advice rather than simply assuming that signing something before April solves the problem.

Interestingly, the Government is also consulting on a new Founders’ Relief, intended to provide a lower Capital Gains Tax rate for qualifying disposals by founders and early investors in certain high-growth companies from 6 April 2027. The detail is still subject to consultation.

If you’re considering selling your business, please talk to us early. Planning after a transaction has happened is normally considerably less useful than planning before it!

Corporation Tax

For most owner-managed companies there was at least no unpleasant headline increase in Corporation Tax.

The Government has confirmed that for the financial year beginning 1 April 2028, the Corporation Tax main rate will remain at 25%, with the small profits rate remaining at 19%.

There are numerous technical Corporation Tax announcements, but many will have limited relevance to the majority of Smarter clients.

Capital Allowances: A Bit of Give and Take

There are changes coming to capital allowances.

For qualifying expenditure incurred from 1 January 2027, the main-rate first-year allowance will increase to 50%. However, the main-rate writing-down allowance will fall to 12%, taking effect from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.

The practical impact will therefore depend on the type of investment being made and the allowances available.

For businesses planning significant expenditure on equipment, vehicles or machinery, it remains sensible to speak to us before placing the order, particularly where the timing of expenditure can legitimately be varied.

Trading Allowance Increased

One welcome simplification is an increase in the Trading Allowance.

From 6 April 2027, the allowance will increase from £1,000 to £3,000, with the Self Assessment reporting threshold for trading income also increasing to £3,000.

This should remove some smaller amounts of casual trading and miscellaneous income from the tax and reporting system altogether.

In a tax system that seems to become more complicated every year, we’ll happily take any genuine simplification we can get!

Employers and Benefits in Kind

Businesses with employees receiving taxable benefits should also be aware of the continued move towards mandatory payrolling.

From 6 April 2027, employers will be required to payroll company cars and vans, car and van fuel and medical benefits through Real Time Information. Most other benefits will follow from 6 April 2028, although employment-related loans and employer-provided living accommodation are excluded from that timetable.

We will obviously deal with this as part of the payroll services we provide to affected clients.

Business Mileage

There was better news for those using their own cars for business.

The Budget policy costings confirm the 55p per mile tax-free and tax-deductible rate for the first 10,000 business miles, introduced from April 2026, and an increase in the rate above 10,000 miles to 35p per mile from 6 April 2027.

With the cost of running a vehicle these days, this feels rather more realistic than the old mileage rates.

Business Rates

There was also support targeted at retail, hospitality and leisure businesses.

From 1 April 2027, the valuation thresholds for Small Business Rate Relief for qualifying retail, hospitality and leisure properties will increase, with the threshold for 100% relief moving from £12,000 to £18,000 and the tapered-relief ceiling moving from £15,000 to £21,000.

There is also a transitional support package for the sector, including a two-year real-terms bills freeze.

Energy Costs and Fuel

Away from tax, the Chancellor announced measures intended to ease some of the pressure from energy and motoring costs.

VAT on domestic electricity is being held at 0% until 1 July 2027, while the temporary 5p-per-litre Fuel Duty cut has also been extended and the planned RPI increase deferred until 1 July 2027.

These measures are welcome, although clearly businesses and households continue to operate in a difficult environment for energy and other costs.

Tax Administration

Again, an area with both good and bad news for some Smarter clients.

The Budget documents confirm that those joining MTD for income tax from April 2027 will also receive the soft landing i.e. no penalty points for late filed quarterly returns during 2027/28. The soft landing for those already in from April 2026 will not be extended though.

Slightly more disappointing though is that government are still consulting on Timely Payment of Self Assessment Tax, with yesterday’s news anticipating changes from 2029. The devil will be in the detail, which is far from finalised, but is likely to mean quarterly payments at least we think.

So, What Do We Think?

With the Chancellor’s opening line of “This is a budget for the working people of Britain…” some of us may have had our head in our hands, as recently that has meant businesses picking up the costs, but compared with some recent Budgets, perhaps the biggest surprise was that yesterday wasn’t worse! The cynics amongst us may think that points towards an early General Election, we’ll wait and see.

There are some welcome announcements, and the decision not to impose another broad increase in Corporation Tax will come as a relief to businesses.

However, we remain concerned about the direction of travel.

The increased taxation of property and savings income adds further complexity and creates yet more different tax rates depending upon where someone’s income happens to come from. Sadly, it feels like the savers of the world are being further punished.

The reduction in Business Asset Disposal Relief will also be disappointing for entrepreneurs who have spent many years building a business and expected the existing relief to be available when they eventually sold it.

As we said after the last Budget, the UK tax system is already ridiculously complicated. Unfortunately, continually adding different rates, allowances and reliefs depending upon the type of income doesn’t exactly feel like simplification.

For most clients, though, there is no reason for a knee-jerk reaction. There is considerably more detail behind yesterday’s announcements than we can sensibly put into one client blog without curing everyone’s insomnia!

However, if you think, or are concerned, any of the above policies (or something we haven’t mentioned that you’ve heard about) mean you need to change something or affect you, please do not hesitate to get in touch with your usual Smarter contact. In particular, anyone considering selling a business, making substantial business investments or reviewing a property portfolio should speak to us before taking action.

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