After months of speculation, the Chancellor has outlined the government’s latest tax and spending plans, seeking to strike a balance between driving economic growth and addressing ongoing cost-of-living pressures.
Her statement says she’s taking “fair and necessary choices to deliver on our promise of change.” The key tax announcements affecting both individuals and businesses are summarised below.
Individuals Income tax and National Insurance
The Chancellor announced several significant changes affecting income tax and National Insurance:
Tax thresholds frozen:
The income tax personal allowance (£12,570), higher-rate threshold (£50,270) and additional-rate threshold (£125,140), along with the equivalent NIC thresholds, will remain frozen for a further three years, until 5 April 2031.
National minimum wage:
the Government announced an increase to the national minimum wage (NMW) from 1 April 2026.
Workers over 21 will see their hourly rate increase by just over 4% to £12.71.
18–21 year-olds will see NMW rise by 8.5%. Apprentices and under 18s will receive a 6% pay rise.
Pension salary sacrifice NIC changes:
From 6 April 2029, salary-sacrificed pension contributions exceeding £2,000 per year will be subject to both employer and employee NICs.
Homeworking expenses:
Tax relief for non-reimbursed homeworking expenses will be withdrawn from 6 April 2026.
Dividend tax increases:
From 6 April 2026, the dividend tax rates will rise:
– Basic rate: from 8.75% to 10.75%
– Higher rate: from 33.75% to 35.75%
Increases to savings and property income tax rates:
From 6 April 2027, the basic, higher and additional rates on savings income UK-wide and on property income in England, Wales and Northern Ireland will each increase by two percentage points, to 22%, 42% and 47% respectively.
MTD income tax
The government has announced that taxpayers joining MTD income tax in April 2026 will not receive penalty points for late submission of their first four quarterly updates. It is understood that this soft landing will only apply to the first cohort of taxpayers and not those mandated to use MTD income tax from April 2027 and April 2028.
Reduced relief on disposals to Employee Ownership Trusts (EOTs):
From 26 November 2025, the CGT relief available on qualifying disposals to EOTs will be reduced from 100% to 50%. This means sellers will now be liable for CGT on half of the qualifying gain.
Incorporation relief must be actively claimed:
From 6 April 2026, incorporation relief will no longer apply automatically. Individuals transferring a business to a company will need to submit an active claim in order to benefit from the relief.
Transferability of APR/BPR allowance:
The combined £1 million APR and BPR allowance will be transferable between spouses and civil partners.
Mansion Tax
From 1 April 2028, owners of residential properties in England valued at £2 million or more will be subject to a new annual surcharge, ranging from £2,500 to £7,500, indexed annually in line with the Consumer Price Index (CPI).
Changes to ISA allowances:
From April 2027, the cash ISA allowance for individuals aged under 65 will be reduced from £20,000 to £12,000. The overall ISA limit will remain £20,000.
The two child benefit cap will be scrapped from April 2026.
New 40% first-year allowance:
A 40% first-year capital allowance will be introduced for qualifying expenditure incurred from 1 January 2026.
Reduced writing-down allowance rates:
The main rate of capital allowance writing-down allowance will decrease
– from 18% to 14% for corporation tax purposes from 1 April 2026, and
– from 18% to 14% for income tax purposes from 6 April 2026.
- New separate tax rates for property income, so property income will have its own individual tax rates. From April 2027, the property basic rate will be 22%, higher rate 42% and additional rate 47%. Finance cost relief will be provided at the separate property basic rate (22%).
- Soft drinks levy extended to high-sugar drinks, including milk-based drinks.
- A new tourist tax on overnight stays
- Permanently lower business rates for hospitality premises paid for by warehouses of online companies
- Fuel duty frozen until September 2026 followed by staged increases. Temporary 5p cut also retained until September
- Payments from inherited blood compensation free from IHT
- Abolish access to voluntary Class 2 NICs for people living abroad
- Low value imports into the UK. The £135 or less relief to be abolished from March 2029
- New settlement opportunity on the long-running loan charge
- Tobacco, vaping and alcohol duties to rise with inflation
- Gambling taxes to rise on remote gambling (but no change on in-person gambling)
- Bingo duty to be abolished
- EMI scheme to be made more generous
- Student loan repayment threshold frozen at the 2026/27 level for three years
- Help to Save scheme to be permanent. Those eligible will receive a 50% bonus for every £1 they save over 4 years, a potential gain of £1,200.
- Small and medium-sized enterprises will continue to benefit from the existing exemption from transfer pricing.
- Two-child benefit cap lifted from April 2026
- Greater resources to crack down on tax and benefits fraud
- National debt will rise to above £3 trillion for the first time.
- Rail fares frozen
- State pension to rise under the triple lock
- £150 average cut off energy bills from April 2026 (removing green levies)