Autumn Budget 2026: What does it mean for you and your business? Chancellor John Healey delivered his first Budget on 28 October 2026, promising to give households and businesses some much-needed 'breathing space' from rising costs. While there were no changes to the headline rates of Income Tax on earnings, National Insurance or VAT, a number of announcements could have significant implications for taxpayers over the coming years. The Government expects its tax measures to raise around £7 billion a year by 2031/32, with many of the changes taking effect from April 2027. So, while there may be some immediate relief, there is plenty for individuals and business owners to consider. Income Tax and allowances The Personal Allowance will remain frozen at £12,570 for 2027/28, with most Income Tax and National Insurance thresholds staying unchanged until 2030/31. This means that as earnings increase, more income may become subject to tax, even without an increase in the headline rates. For those receiving savings interest or rental income, the changes are more noticeable. From 6 April 2027, Income Tax rates on savings and property income will increase by four percentage points, bringing the basic, higher and additional rates to 24%, 44% and 49% respectively. There is some welcome news for smaller traders, with the Trading Allowance increasing from £1,000 to £3,000 from April 2027, alongside an increase in the Self Assessment trading income reporting threshold to £3,000. Changes affecting businesses and employers The National Living Wage will increase by 3.9% to £13.21 per hour from 1 April 2027, with corresponding increases for younger workers and apprentices. Employers should factor these additional costs into their budgets. From 6 April 2027, employers will also be required to process Income Tax on company cars, vans, fuel and medical benefits through payroll, with most other taxable benefits following in April 2028. For businesses investing in equipment, the Annual Investment Allowance remains at £1 million, although the main Writing Down Allowance will reduce from 14% to 12% from April 2027. Meanwhile, the First Year Allowance for certain qualifying expenditure will increase from 40% to 50% from January 2027. Corporation Tax rates remain unchanged, with the main rate at 25% and the small profits rate at 19%. Company directors and business owners One announcement worth particular attention concerns Business Asset Disposal Relief. From 6 April 2027, the lifetime limit for qualifying gains will fall from £1 million to £500,000, although the reduced Capital Gains Tax rate remains at 18%. For someone considering selling their business, this could make a substantial difference to the eventual tax bill. The timing of a disposal may therefore be important, although anti-avoidance provisions mean that simply signing a contract before the deadline will not necessarily preserve the existing relief. The Government is also reviewing how profits are extracted from companies, particularly arrangements designed to secure Capital Gains Tax treatment rather than Income Tax. Further reforms are expected from April 2028. Making Tax Digital and electronic invoicing Making Tax Digital for Income Tax continues its phased introduction. From April 2027, sole traders and landlords with qualifying gross income exceeding £30,000 in 2025/26 will generally need to maintain digital records and submit quarterly updates to HMRC. Looking further ahead, VAT-registered businesses will be required to issue and receive structured electronic VAT invoices from April 2029, unless an exemption applies. Both changes reinforce the importance of keeping accurate, up-to-date records and ensuring accounting systems are suitable for the requirements ahead. Savings, pensions and household costs The Government has reversed its planned reduction to the cash ISA limit, meaning adults can continue to save up to £20,000 annually in cash ISAs. From April 2027, most unused pension funds and pension death benefits will also be included in an individual's estate for Inheritance Tax purposes. With the £325,000 nil rate band and £175,000 residence nil rate band remaining frozen, this could have implications for estate planning. On household costs, the temporary 0% VAT rate on domestic electricity will continue until 30 June 2027. Households in England in Council Tax bands A to D will also receive a £100 Household Energy Payment from January 2027. What should you do now? This Budget contained plenty of smaller announcements rather than one or two headline-grabbing changes. Some will provide welcome relief, while others could increase costs or create additional administrative responsibilities. Much of the legislation is still to be finalised, and several measures remain subject to consultation. Nevertheless, there are already areas where planning ahead could make a difference, particularly for business owners considering a sale, landlords, savers and employers preparing for new payroll requirements. As ever, the important thing isn't simply knowing what has been announced, but understanding how it affects your own circumstances. If you're unsure what the Budget means for you or your business, please get in touch . We can help you understand the changes and plan accordingly.

HMRC cancels record number of tax penalties – could yours be challenged? HMRC cancelled a record 48,189 tax penalties during the 2025/26 tax year, with new figures suggesting that challenging a penalty can be worthwhile if you believe it's been issued incorrectly. According to recent analysis, 65% of penalties challenged by taxpayers were cancelled. Most related to automatic fines for late filing or late payment, including the familiar £100 penalty for missing the Self Assessment deadline. Why are so many penalties being overturned? The number of cancelled penalties has been rising. The 48,189 cancelled in 2025/26 represents a 4% increase on the 46,266 overturned in 2024/25, and a reported 75% increase since 2020/21, when 5,499 penalties were cancelled during the pandemic. Many of these penalties are generated automatically, meaning there isn't necessarily someone reviewing the individual circumstances before a fine is issued. That doesn't mean every penalty is wrong, of course, but it does mean there can be circumstances that haven't been properly considered. Separate figures covering HMRC's statutory reviews, which deal with more complex tax disputes, also show an increase in decisions being changed. HMRC cancelled or amended 926 substantive decisions in 2025/26, up 35% from 688 the previous year. Meanwhile, the proportion of reviews that upheld HMRC's original decision fell from 73% to 67%. When might a penalty be challenged? One case highlighted by accountancy firm Price Bailey involved a taxpayer who received £1,600 in automated late filing penalties. The taxpayer believed their return had been successfully submitted after HMRC's online system appeared to indicate that the filing was complete. Subsequent emails from HMRC were diverted into a junk folder, meaning the problem wasn't identified until the penalties had accumulated. The case eventually reached a tax tribunal, which overturned the penalties, finding that easily missed automated communications did not amount to effective notice in those circumstances. It's a useful reminder that an automatically generated penalty isn't necessarily the final word, particularly where there are questions about whether HMRC's systems or communications have contributed to the problem. Does this mean HMRC is getting it wrong? Not necessarily in every case, but the figures do highlight the importance of reviewing penalties rather than simply assuming they're correct. Andrew Park, tax investigations partner at Price Bailey, pointed out that high-volume automated penalties lack human oversight when they're first issued. He explained that HMRC's independent internal reviewers provide an important additional check, allowing individual circumstances to be considered before disputes potentially reach a tribunal. Of course, the fact that 65% of challenged penalties were cancelled doesn't mean that 65% of all penalties issued by HMRC are incorrect. It tells us about the cases taxpayers chose to challenge, rather than every penalty HMRC issued. What should you do if you receive a penalty? The first thing is not to ignore it. Check what the penalty relates to, whether the information HMRC has used is correct and whether there are circumstances that might justify an appeal. There are time limits for challenging penalties, so it's important to act promptly rather than leaving the letter sitting on your desk. Equally, it's worth remembering that a genuine missed deadline doesn't automatically mean a penalty will be cancelled. HMRC will consider the circumstances, and an appeal needs to have a reasonable basis. For me, the interesting point from these figures is that HMRC's original decision isn't always the end of the matter. Automated systems are useful for handling large volumes of work, but they don't necessarily capture every individual circumstance. If you've received an HMRC penalty and aren't sure whether it's correct, get in touch. We can look at the circumstances and help you understand whether there may be grounds to challenge it.