Budget

Personal & Employment Tax

Income tax thresholds frozen until 2030–31

Income tax personal allowance thresholds will remain frozen for an extra three years, keeping

  • Personal allowance: £12,570
  • Higher-rate threshold: £50,270
  • Additional-rate threshold: £125,140

The equivalent National Insurance Contribution (NIC) thresholds are also being frozen until 5 April 2031

Dividend, savings and property income tax increasing by 2 percentage points

The dividend income tax rate will increase from 8.75% to 10.75% for basic rate taxpayers and from 33.75% to 35.75% for higher rate taxpayers, and 39.35% remains for additional rate taxpayers from 6 April 2026.

The basic, higher, and additional rates on savings UK-wide, and property income will increase by two percentage points to 22%, 42%, and 47% respectively from 6 April 2027.

Salary sacrifice NIC reform (from 6 April 2029)

From 6 April 2029, any salary-sacrificed pension contributions above £2,000 per year will be chargeable to employer and employee NICs

Other measures

Voluntary Class 2 NICs to be abolished for individuals living abroad.

Dividend tax credits for non-UK residents will be abolished from 6 April 2026.

Tax relief for non-reimbursed homeworking expenses will be removed from 6 April 2026.

The rate of income tax relief on Venture Capital Trust (VCT) investments will reduce to 20% from 6 April 2026.

Personal Finances

National Minimum Wage rising from April 2026

  • Age 21+: £12.71 per hour
  • Age 18–20: £10.85 per hour
  • Age 16–17 and apprentices: £8.00 per hour

Fuel duty 5p cut extended to September 2026

The current 5p cut will continue until September 2026.

Staged increases will begin later in 2026, as planned.

Allowances & Savings

Cash ISA rule change

The overall ISA limit remains £20,000, but from April 2027:

  • A maximum of £12,000 can be held in a cash ISA
  • The remaining £8,000 must go into investment products
  • Over-65s will retain the full £20,000 cash ISA allowance

State Pension rising by 4.8% from April 2026

  • New State Pension: £241.30 per week
  • Basic State Pension: £184.90 per week

This uplift reflects the 4.8% rise under the triple lock.

Help to Save scheme made permanent and expanded

Help to Save will become a permanent scheme, with eligibility extended to 1.5 million additional low-income workers from 2028.

Business Tax & Investment

Capital allowances changes

The main rate of capital allowance writing down allowance will reduce from 18% to 14% from 1 April 2026 for corporation tax and 6 April 2026 for income tax.

A new capital allowances 40% first-year allowance will be introduced from 1 January 2026. This will apply to new expenditure on eligible assets, including plant or machinery for leasing, but excluding second-hand assets and cars.

The 100% first-year allowances for zero-emission cars and electric vehicle charge-points are being extended until 31 March 2027 for corporation tax and 5 April 2027 for income tax purposes.

Individuals will be required to actively claim Incorporation Relief via Self Assessment when transferring a business to a company, rather than the relief being applied automatically.

Loans to participators

From 6 April 2026, the rate of s.455 tax charged on loans to participators in close companies will increase to 35.75%.

Reduced CGT relief for Employee Ownership Trusts

Capital gains tax (CGT) relief on qualifying disposals to employee ownership trusts (EOTs) is reduced from 100% to 50% from 26 November 2025.

Lower business rates for retail, hospitality and leisure

More than 750,000 properties will see reduced business rates.

This will be funded by higher rates on larger sites valued above £500,000.

Property & Council Tax

High Value Council Tax Surcharge (HVCTS)

From 2028, an annual surcharge will apply to higher-value residential properties in England:

  • Homes over £2m: £2,500 per year
  • Homes over £5m: £7,500 per year

Vehicles & Transport

Electric vehicle mileage charge from 2028

A new mileage-based charge will apply from April 2028 on  EVs and plug-in hybrids:

  • Electric vehicles: 3p per mile
  • Plug-in hybrids: 1.5p per mile

These charges will increase annually in line with CPI.

Revenue from this reform will support road maintenance and the expansion of EV charging infrastructure.

Car and Van Fuel benefit charges for 2026-27

from 6 April 2026, the Van Benefit Charge and Car and Van Fuel Benefit Charges will be uplifted by CPI.

Rail fares frozen until March 2027

Regulated rail fares in England will be frozen until March 2027, the first long-term freeze in more than 30 years.

Inheritance tax

The inheritance nil-rate band of £325,000, the residence nil-rate band of £175,000, and the combined £1 million allowance for the 100% rate of agricultural property relief (APR) and business property relief (BPR) (being introduced from 6 April 2026) will be frozen for an extra year until 5 April 2031.

The combined £1 million APR and BPR allowance will be transferable between spouses or civil partners.

Inheritance tax relevant property trust charges will be capped at £5 million for historic trusts settled by former non‑domiciled individuals from 6 April 2025.

Welfare & Social Policy

Two-child benefit cap removed from April 2026

The two-child limit in Universal Credit will be removed from April 2026.

Energy bills to fall by approximately £150 per household

The Government will scrap the ECO energy scheme, reducing the average household energy bill by around £150 from April 2026.

Reversal of earlier welfare cuts

The Government will reverse previously announced changes to winter fuel payments and health-related benefits.

£820m Youth Guarantee programme

A new £820m programme, delivered over three years, will expand access to apprenticeships, skills training and employment support for 18–21-year-olds.

Motability scheme reform

The Motability scheme will remove luxury vehicles from eligibility, refocusing support on cost-effective mobility options for disabled people.

Infected Blood compensation exempt from inheritance tax

Compensation payments made through the Infected Blood Scheme will be fully exempt from inheritance tax, regardless of how they are passed on.

Compliance & Administration

Corporation Tax returns due to be filed on or after 1 April 2026:The value of late filing penalties will double. The penalty for: 

  • The first instance of filing a return late will increase from £100 to £200.
  • Filing more than three months late will increase from £200 to £400.
  • Three successive failures will increase from £500 to £1,000.
  • Three successive failures where the return is more than three months late will increase from £1,000 to £2,000.

For VAT and Income Tax, from April 2027: 

  • Late payment penalties for VAT and Income Tax Self Assessment will increase. Late Payment Penalty (LPP) 1 will rise from 3% to 4% at day 16, and from 3% to 4% at day 31, while the per annum rate for LPP 2 remains at 10% per year.

Fraud in the Construction Industry Scheme (CIS)

From 6 April 2026: 

  • HMRC’s powers to tackle fraud within the CIS will be strengthened.
  • Where a business makes or receives a payment they knew or should have known was connected to fraud, HMRC will have powers to remove Gross Payment Status (GPS) immediately, assess the business for the tax lost, and charge a penalty of up to 30% on the business or the business’s officers.
  • The time limit for reapplication, where GPS has been immediately removed, will be increased from one year to five years.

Market Snapshot

UK markets saw brief volatility following the early release of OBR documentation.

10-year gilt yields eased as investors responded to revised growth forecasts and the confirmed package of tax measures.

The pound briefly strengthened before stabilising.