BRIEF HIGHLIGHTS OF BUDGET CHANGES:
National Insurance:
Employees:
- Main rate of Class 1 NICs remain unchanged at rate of 8%.
Self-Employed:
- Class 4 NICs rate remain unchanged at 6%.
Employers:
- No further increase to Employers NICs rate from 15%.
- Employers NIC secondary threshold remains at £5,000.
- Employers NIC "Employment Allowance" remains at £10,500 from April 2025.
- Employer NIC relief for veterans hiring veterans in their first civilian role will be extended to April 2028.
Tax and allowances:
- Personal Income Tax and National Insurance contributions thresholds, will now be fixed for a further 3 years beyond April 2028 to 2031.
- National Living Wage to increase from £12.21 an hour for age 21 and over to £12.71 from 1 April 2026.
- NMW rates to apply from April 2026:
>18 to 20 year olds from £10.00 to £10.85 per hour
>16 to 17 year olds from £7.55 to £8.00 per hour;
- Dividend Allowance to remain at £500 for the 2026/27 Tax Year.
- Dividend Tax rate changes from 6 April 2026: the 8.75% ordinary rate will be increased by 2 percentage points to 10.75% and the upper rate will be increased by 2 percentage points to 35.75%. The additional rate will remain unchanged at 39.35%.
- Property Rental taxes from April 2027 are increasing. The property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%.
- Savings income taxes from April 2027 are increasing. The savings basic rate will be increased by 2 percentage points to 22%, the savings higher rate will be increased by 2 percentage points to 42% and the savings additional rate will be increased by 2 percentage points to 47%.
- Capital Gains Tax higher rate on residential property gains remains at 24% and 18% for the basic rate.
- No change to Capital Gains Tax Annual Exempt Amount of £3,000.
- No change to Corporation Tax rates:
>19% for taxable profits below £50,000 (small profits rate)
>25% for taxable profits above £250,000 (main rate)
Marginal Relief available to be tapered between the small profits rate and the main rate.
- 100% Capital Allowance first year tax relief (in addition to current AIA allowances) for Limited Companies only, remains.
- New 40% First Year Allowance available from 1st January 2026, incorporated and unincorporated businesses.
- Reduction of the rate of Writing Down Allowances from 18% to 14% for unincorporated and incorporated businesses (1 April 2026 / 6 April 2026).
- No change to the Individual's undrawn pension fund being subject to Inheritance Tax from 6 April 2027.
- From April 2026 any unused £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners, including if the first death was before 6 April 2026.
- ISA changes from April 2027: £20,000 full cash ISA limit still available for the over 65’s. Under 65’s cash ISA limit reduced to £12,000.
- Van and Fuel benefit amounts increased in line with inflation from April 2026.
- Introduction of Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, with effect from April 2028. Drivers will pay for their mileage on a per-mile basis alongside their existing Vehicle Excise Duty.
- No change to the High Income Benefit Charge threshold from £60,000.
- Alcohol duty will be uprated with the RPI on 1 February 2026.
- Extension of the temporary 5p fuel duty cut for a further five months, with the cut being reversed in three stages: 1p on 1 September 2026, 2p on 1 December 2026 and 2p on 1 March 2027.
- High Value Council Tax Surcharge: introduction of the High Value Council Tax Surcharge from 2028/29. This will be a new charge on owners of residential property in England worth £2 million or more. Local authorities will collect this revenue on behalf of central government.
- Salary sacrifice changes: employer and employee NICs charges will apply on pension contributions above £2,000 per annum made via salary sacrifice. This will take effect from 6 April 2029.
- From April 2026 the VCT income tax relief will decrease to 20% (from 30%).