Today, Chancellor John Healey delivered Labour’s third fiscal Budget, setting out the Government’s latest economic plans and tax measures.
In a speech lasting just over an hour, and despite a few lively interruptions in the House of Commons, the Chancellor outlined a series of changes affecting individuals, investors, landlords and businesses.
Alongside the announcements, the Government referenced 54 consultations, either planned or already underway, and a further 20 taskforces intended to inform future economic and fiscal decisions. This means some of the finer details are still to be confirmed.
As ever, much of the detail sits beyond the headline announcements. We’ve reviewed the key measures to highlight what matters most to you, your finances and your business, and here’s our breakdown of the principal announcements.
Personal tax and income tax
- Income Tax: The main rates of Income Tax remain unchanged.
- Personal Allowance and thresholds: The Personal Allowance remains frozen at £12,570, with the higher-rate threshold staying at £50,270 for taxpayers entitled to the full Personal Allowance. Although the rates themselves haven’t changed, frozen thresholds can still result in a higher tax burden as earnings increase.
- Savings income: From 6 April 2027, tax rates on savings income will increase to:
- Basic rate: 24%
- Higher rate: 44%
- Additional rate: 49%
This is an important change for individuals receiving taxable interest on savings and investments.
- Dividend Tax: Dividend tax rates remain unchanged.
- National Insurance: There are no changes to the principal National Insurance rates.
- Individual Savings Accounts (ISAs): The proposed reduction in the Cash ISA limit has been cancelled. The annual ISA allowance will remain at £20,000.
Capital gains, property and inheritance tax
- Capital Gains Tax (CGT): The standard CGT rates remain at 18% and 24%.
- Business Asset Disposal Relief (BADR): The CGT rate applicable under Business Asset Disposal Relief remains at 18%. However, the lifetime limit for qualifying gains will reduce from £1 million to £500,000 from 6 April 2027. This is particularly relevant for business owners considering selling their business or disposing of qualifying business assets.
- Proposed new Founders’ Relief: The Government has announced a consultation on a new Founders’ Relief, which would introduce a proposed 10% CGT rate on up to £10 million of qualifying lifetime gains for founders of eligible high-growth and innovative companies, from 6 April 2027. The detailed qualifying conditions are still being finalised. Based on the proposals so far, the relief appears likely to have a relatively narrow application, with a focus on innovative, research and development-led businesses.
- Rental income: From 6 April 2027, individual landlords will face new property income tax rates of:
- Basic rate: 24%
- Higher rate: 44%
- Additional rate: 49%
For landlords, this could have a meaningful impact on the after-tax profitability of rental properties, making it important to review existing arrangements and future investment plans.
- Stamp Duty Land Tax (SDLT): The existing residential SDLT rates and the additional property surcharge remain unchanged.
- Inheritance Tax (IHT): The standard Inheritance Tax rate remains at 40%, with the nil-rate band unchanged at £325,000. Previously announced changes bringing most unused pension funds within the scope of Inheritance Tax from April 2027 remain in place.
- High-value residential properties: The previously announced additional council tax surcharge on residential properties valued at £2 million or more is still expected to take effect from April 2028.
Business taxation and employers
- Corporation Tax: The main Corporation Tax rate remains at 25%, while the small profits rate stays at 19%.
- Capital allowances: There are several changes to the tax relief available on qualifying business investment:
- The main writing-down allowance will reduce from 14% to 12% from April 2027.
- The main-rate first-year allowance will increase from 40% to 50% for qualifying expenditure from 1 January 2027.
- The £1 million Annual Investment Allowance remains available.
- Qualifying 100% full expensing also remains available.
These changes make the timing and nature of capital expenditure particularly important. Businesses planning to invest in equipment, machinery or other qualifying assets should consider how the revised rules could affect their tax position.
- Business rates: From April 2027, qualifying retail, hospitality and leisure properties in England will benefit from increased small business rates relief thresholds. The rateable value threshold for 100% relief will rise from £12,000 to £18,000. This could provide welcome support for eligible businesses operating from smaller commercial premises.
- Trading Allowance for sole traders: The Trading Allowance will increase from £1,000 to £3,000 from April 2027.
- Self Assessment tax payments: The Government is considering a proposal to replace the current six-monthly payments on account with smaller, more frequent payments from April 2029.
VAT and indirect taxes
- VAT on household electricity: The temporary 0% VAT rate for qualifying domestic electricity supplies will be extended until 30 June 2027.
- Fuel Duty: The existing temporary 5p per litre reduction in Fuel Duty will continue until 30 June 2027, with increases scheduled thereafter.
Although many headline tax rates remain unchanged, today’s Budget contains several measures that could have significant implications for personal finances, property investments and business planning.
In particular, we’d encourage:
- Savers and landlords to consider the impact of higher tax rates from April 2027.
- Business owners planning an exit to review the reduction in the Business Asset Disposal Relief lifetime limit.
- Businesses considering capital investment to assess the revised capital allowances and the potential implications for expenditure timing.
- Individuals reviewing estate planning to factor in the previously announced Inheritance Tax changes affecting unused pension funds.
As always, the precise impact will depend on your individual circumstances, and some proposals remain subject to consultation and further detail.
We’re here to help
Our tax team will continue to review the announcements and any further guidance as it becomes available.
If you’d like to understand how the Budget could affect you, your family or your business, please get in touch with your usual Champion contact. We’re here to help you navigate the changes and plan ahead with confidence.
