UK Autumn Budget Statement 2026

The Chancellor of the Exchequer John Healey delivered his Autumn Budget statement on 28 October 2026, presenting it as one of fiscal discipline, but designed to provide much-needed breathing space for the working people and businesses that are suffering in difficult economic times.

Broadly though, it was a Budget of small tweaks and adjustments, stealthier tax raising measures, certain new initiatives that might not be as generous as they first appear, and some giveaways to pacify those who are suffering the impact of inflation and the highest energy costs in the developed world.  

There appeared to be some positive news in the Chancellor’s speech on the macroeconomic outlook.  He referenced the UK as the fastest growing economy in the G7, along with the US; the expectation of continued growth through to 2031 at rates varying between 1% and 1.8%; reducing the budget deficit to the lowest of the G7 nations by 2029; and paying down government debt year on year up to 2031/32.  

It appears optimistic, but it is predicated on economic modelling, which might not take account of geopolitical shifts and the continuing exodus of UK taxpayers.  With national debt now exceeding £3 trillion and the increasing cost of government borrowing, servicing the debt on its own will be a difficult task.

There was nothing on the radical reform to capital taxes which many commentators have predicted over recent months.  It might be viewed as a deliberate strategy to avoid wholesale changes, a quiet Budget with more stealthy tax raising measures and a few cash giveaways, with the prospect of a General Election in 2027 and a mandate to carry out major structural reform.  

The Tax Measures
Individuals

There were no changes to headline figures for income tax and national insurance contributions (‘NIC’).  Personal allowances, income tax rates and tax bandings have again been frozen, and similarly, other than the lower earnings limit, NIC rates and bandings will remain at the same levels from 6th April 2027.

The initial freeze in tax allowances, rates and bandings was made back in 2021/22 and has continued unabated over a period in which the cumulative rate of price inflation has exceeded 30%.  Taxpayers have suffered across the board, but it has particularly impacted those at the lower earnings levels.

It is worth a reminder that two significant changes announced in the Budget last year will take effect on 6th April 2027, one with modification in the current Budget, together with another measure due for introduction a year later:

• the basic and higher rates of dividend tax were increased by 2% for the current tax year, 2026/27, and for property and savings income this additional 2% was to apply at all marginal income tax rates with effect from 6th April 2027 – the Chancellor announced that this addition to the rates is increased to 4% for savers and property investors, with new rates of 24%, 44% and 49%;
• unused funds within pension schemes, which have previously been exempt from IHT, will come within scope with effect from 6th April 2027; and 
• the High Value Council Tax Surcharge (‘Mansion Tax’) is also on the horizon, due for introduction from April 2028 for properties valued at more than £2m, as announced in the Budget in 2025.

Most of the focus within the Budget was expected to be on capital taxes, based upon pre-Budget predictions and earlier comments from Andy Burnham.  He has made it clear that he considers that labour is overtaxed and assets are undertaxed.  The continuing freeze in income tax and NIC has done nothing to suggest that the pressure will be eased for the average worker, who has suffered the impact of inflation with no corresponding adjustment in allowances and bandings.

As for capital taxes, there was no mention of aligning the CGT rates to income tax rates, nor of a wealth tax, none of the radical reform to the IHT regime and no mention of exit taxes for UK leavers.  But we should not be under any illusions as to the direction of travel; the idea of a wealth tax has entered the discourse in recent times, and our view is that it will come at a later stage, allied to a major reform of the IHT regime.

In the context of tax compliance, there was again mention of the tax gap and the Chancellor’s intention to commit additional resources to recovery, including an expansion of compliance teams and consultation on a variety of measures designed to tackle avoidance.  

Of particular interest in this area was the focus on wealthy tax compliance, including the identification of billionaires with a UK footprint and a more interconnected, technology-driven approach from HMRC to ensure full compliance.  HMRC is turning its sights on those with the broadest shoulders, and a cynic might find a link to the reform of capital taxes that is on its way.        

Businesses

There was no change to the headline corporate tax rates and, as already noted, a freeze on the income tax and NIC rates and bandings for self-employed business owners.  

A temporary increase in the Bank Surcharge was announced, which will increase from 3% to 5% for the period from 1st January 2027 to 31st March 2028.  This is an additional charge on a bank’s taxable profits, over and above its normal corporation tax liability.   The Chancellor’s comment was that the banks were supported in the crash of 2008, and they must reciprocate for the taxpayers who helped to bail them out.

There is a proposed new form of CGT relief for business founders, which is initially subject to consultation.  Founders’ Relief will fix the rate CGT at 10% for those who take the initial risk and realise capital gains on share disposals, limited to a lifetime gains amount of £10m.  

But this new relief may not be quite so generous on closer inspection, there will be tight restrictions that will be difficult to meet as things stand.  It will require that the claimant has been UK tax resident for at least five tax years prior to a disposal, and that the companies in question satisfy prescriptive growth criteria relating to a combination of their turnover, employee headcount and research and development spending.  It is likely to be a relief that applies to only a limited pool of new, cutting-edge trading industries, rather than the rank-and-file of new business start-ups.

At the same time, the threshold for Business Asset Disposal Relief (‘BADR’) was reduced from £1m to £0.5m.  Under BADR, the lower CGT rate of 18% will apply on capital gains up to this £0.5m threshold from 6th April 2027, with the balance of gains taxed at the higher CGT rate of 24%.  This will limit the benefit of the relief to only £30,000.

It seems that BADR is quietly being ushered out, with a new regime introduced for those who take the initial risks, albeit designed to apply on a strictly limited basis.  

There was reference to a reform to the taxation of company distributions.  No detail is available at this stage, but there will be consultation in 2027 with legislation following in 2028/29.  It appears that this will be a measure to counteract the tax advantages obtained from certain forms of dividend distribution.

There were changes to the capital allowances available to businesses on their main pool, with the first-year allowance for main rate expenditure increased from 40% to 50% and writing-down allowances reduced from 14% to 12%.  Full expensing will remain in place for eligible assets.

Indirect Taxes

A variety of points arose in relation to indirect taxes:

Value Added Tax (‘VAT’) 

• As predicted, there are no changes in the Budget to the UK rates of VAT or the thresholds for VAT registration, which remains at £90,000.  The temporary VAT rate of 0% on domestic electricity will be extended for a further three months until 30th June 2027 and the Isle of Man Government has confirmed that this measure will also apply on the Island.  Additionally, the five pence per litre reduction in Fuel Duty will remain in place until 30th June 2027.
• Further measures were announced to tackle non-compliance and reduce the UK tax gap, including modernisation and reform of the error correction regime from 1st April 2028.  Following consultation, VAT registered businesses will be required to have direct debit mandates in place with HMRC from April 2029, although they will retain flexibility to make payments using alternative methods before the due date.
• Mandatory e-invoicing is scheduled to take effect from 1st April 2029 for all VAT registered businesses.  An E-Invoicing Implementation Roadmap has been published, which outlines the key decisions and milestones required to support businesses in adopting e-invoicing.  However, the detailed scope of the requirements is not expected to be finalised until approximately 12 to 18 months before the new rules take effect.  The Government will also launch a consultation on Digital Reporting alongside mandatory e-invoicing, running until 20th January 2027.
• From April 2027, the reverse charge mechanism for supplies of services from overseas will be restricted to where the UK recipient is VAT registered.  For services supplied to a UK business that is not VAT registered, the overseas supplier will be required to register for, charge and account for UK VAT directly to HMRC.  This represents a significant change for overseas suppliers dealing with smaller UK businesses.  It would increase the VAT cost for recipients that are unable to recover VAT incurred and bring overseas suppliers within the scope of UK VAT.

Stamp Taxes

• The Government announced further reforms to stamp taxes, including the removal of Stamp Duty Land Tax on rent under assured tenancies, changes to group relief provisions and the introduction of a new Securities Transfer Tax from late 2027, which will replace both Stamp Duty and Stamp Duty Reserve Tax.

   

Other Indirect Taxes

• VAT exemption is being removed for supplies of locum doctors, who are likely to become subject to the 20% VAT rate from 1st May 2027.
• There was a range of changes to gambling duties that will take effect from 1st April 2027, including increases to Machine Games Duty on higher-stakes machines, changes to liability provisions for the duty and amendments to Remote Gaming Duty rules relating to free plays, prizes and tournaments.

• The higher rate of Air Passenger Duty will be extended to all aircraft weighing 5.7 tonnes or more that are used as private or business jets.

   

Offshore Matters

The question that arises for non-UK residents with close connections to the UK is, what effect could these Budget announcements have for them?

There was nothing of any real significance that should directly impact non-UK residents and their offshore structures, other than announcements that had previously been made and which take effect on 6th April 2027:  the unused funds within pension schemes that will be brought within the scope of IHT and the addition of 4%, up from 2%, to the standard rates of income tax that will apply to UK rental and savings income.  

The new savings income rate might not generally be an issue for non-UK residents, depending upon how they are taxed on UK source income (if at all under the disregarded income provisions), but the 4% increase in the rate across the board for UK rental income will certainly have an impact, given that rental income falls outside these provisions and tax is unavoidable.

Again, there was a return to the topic of the UK ‘s offshore anti-avoidance provisions and whether they are fit for purpose.  The government seems to be committed to the idea of simplification of these provisions, although there was nothing of substance within the Budget, other than a new consultation on reforming the offshore penalty regime.  The likelihood is that reform will happen, but not until April 2028 at the earliest.

The bigger issue now is for those UK residents who see no end to the tax raising measures, with the prospect of more fundamental changes to come in relation to capital taxes.  They have witnessed a decline in infrastructure and public services in the UK, a burgeoning welfare state and the accumulation of sizeable national debt, whilst suffering the impact of inflation and rising energy costs.  The Budget will do nothing to ease their fears, and we expect a continued outflow from the UK.

There has been significant activity in relocations to the Crown Dependencies within the last 12 months or so.  It is not just the non-UK domiciliaries, the entrepreneurs, business owners and other value creators who are forming the exodus, but now those of more modest means who are considering their longer-term future in the knowledge that they, as savers and investors, will be hit the hardest by current measures and those that are likely to come.

Final Thoughts

The Budget felt like the calm before the storm, a relatively quiet affair with no headline grabbing ideas.  There was nothing of significance to report in relation to the various changes and tweaks to the tax system.  Overall, these appear to be largely tax raising measures, but with small giveaways for those who are suffering the most.  

Even the introduction of a new CGT regime, Founders’ Relief, did not grab the headlines as one might have expected.  This new relief will not have any significant impact on the rank-and-file of UK business owners due to its strict conditions, whilst those who have historically benefited from the less restrictive relief under BADR will see this relief curtailed further.

It seems likely that the Budget was a prelude to the main act to follow.  Our expectation is that an early General Election will be called at some stage in 2027, and if the Labour Party receives a mandate for a further five years, the radical reforms will begin in earnest.  

From 2027 or 2028, we expect the focus to be squarely onto capital rather than income, with radical reform of the IHT regime, a new wealth tax, alignment of CGT rates to income tax rates and potentially a new CGT exit charges for leavers.  There is one thing that we can confidently predict: the burden of taxation, which next year will be the highest it has ever been in the UK, will not diminish in the foreseeable future.

At Equiom Tax Services Limited, we combine global expertise with local insight to guide individuals and businesses through complex international tax matters. For any questions or to explore how Equiom can support you, contact Andrew Cardwell today.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom Group to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.

For information on the regulatory status of our companies, please visit www.equiomgroup.com/regulatory