On 28 October 2026, new Chancellor John Healey delivered his first Budget. He described the Budget as offering ‘breathing space’. For business owners and high-net-worth individuals, the picture is more mixed: a valuable new relief for some founders and early investors, but less generous treatment for established business owners, savers and landlords.
As expected, there were no broad increases to the headline rates of Income Tax, National Insurance or VAT. That does not mean tax advisers can put their feet up. As ever, the devil will be in the detail, and we wait with interest to see the fine print behind the announcements.
Read on for our summary of today’s measures.
CGT: a boost for founders, but a hit for other business owners
From 6 April 2027, a new Founders’ Relief will offer a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders and significant early investors in high-growth, innovative companies. The detailed eligibility rules are still subject to consultation, so not every owner-managed company should expect to qualify.
Under the proposals, the individual founder will need to:
The company will need to satisfy two out of three growth and innovation tests based on turnover growth, headcount growth and qualifying R&D expenditure, although the company does not have to have made an R&D claim.
At the same time, the lifetime limit for Business Asset Disposal Relief will fall from £1 million to £500,000 for disposals from 6 April 2027.
Anyone considering a business sale or liquidation should review the timing in the light of the above announcements, while bearing in mind that tax should not drive the commercial decision.
EMI2: the share scheme formerly known as CSOP
The Company Share Option Plan will be renamed ‘EMI2’ from 6 April 2027. Its individual option limit will double from £60,000 to £120,000, its exercise period will increase from 10 to 15 years, and employees will be able to receive the full limits under both the original Enterprise Management Incentive (“EMI”) scheme and EMI2.
The existing EMI rules will also become more flexible. The exercise window following a disqualifying event will increase from 90 to 180 days, while companies moving to an Employee Ownership Trust will retain access to EMI.
Capital allowances: give with one hand…
For qualifying expenditure from 1 January 2027, the main-rate first-year allowance will rise to 50%. However, the main-rate writing-down allowance will fall to 12% from 1 April 2027 for companies and 6 April 2027 for unincorporated businesses. The result is more relief upfront, but slower relief thereafter for expenditure not covered by full expensing or the Annual Investment Allowance.
More tax on savings and property income
From 6 April 2027, the tax rates applying to savings income will rise to 24%, 44% and 49%. Separate property income rates of 24%, 44% and 49% will apply in England, Wales and Northern Ireland.
Landlords and those with significant cash or investment income may wish to review ownership, allowances and ISA use. Restructuring should not be undertaken lightly, as Capital Gains Tax, Stamp Duty Land Tax and other costs can outweigh the income tax saving.
ISAs: the cash limit survives
It wouldn’t be a Budget without a U-turn! In a reversal of previous announcements, the cash ISA limit will remain at £20,000 from 6 April 2027.
A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029, while the Lifetime ISA withdrawal charge will reduce from 25% to 20% from 29 October 2026 where a first-time buyer purchases above the current £450,000 cap.
A little less paperwork
The government will not, ‘at this time’, proceed with proposals requiring close companies to give HMRC detailed transaction-level information about payments and transfers involving participators (shareholders). Existing close company and loans-to-participators rules remain unchanged, but owner-managed companies have been spared an additional reporting burden for now.
The R&D Claim Notification Form will also disappear from 1 April 2027, and the Additional Information Form is due to be simplified from autumn 2027. Companies will still need strong evidence to support their claims: fewer forms should not mean fewer records.
Other changes worth knowing about
The trading allowance will rise from £1,000 to £3,000 from 6 April 2027.
From April 2029, Self Assessment taxpayers who make payments on account will be required to make more regular in-year payments, although the mechanics have not yet been published.
A new Pension Tax Allowance will run from 6 April 2027 to 5 April 2030, aimed at preventing pensioners with income no higher than the full new State Pension from paying small amounts of Income Tax. For individuals with total income above the value of the full new State Pension, the Pension Tax Allowance will be withdrawn at a rate of £1 for every £3 of income above this level.
Meanwhile, the plan to bring unused pension funds and certain death benefits into estates for Inheritance Tax from April 2027 remains in place.
Finally, the tax-free and tax-deductible mileage rate for business travel in an employee’s own car or van will rise to 55p for the first 10,000 business miles, retrospectively from 6 April 2026. The rate above 10,000 miles will increase to 35p from 6 April 2027. Employers and employees may therefore need to review mileage payments and claims already made for 2026/27. At least one Budget announcement should be easy to explain.
What should you do now?
Several measures do not take effect until 2027 or later, and some still need consultation or detailed legislation. The priority now is to identify business disposals, capital expenditure, share incentives and estate-planning decisions that may straddle the change dates. Please contact us if you would like to discuss how the announcements could affect you.
