Autumn Budget 2026

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Reflections from our Tax Policy Leader, Colin Graham

UK businesses wanted a “no surprises” Budget and, for the most part, that is what they got: relatively restrained, targeted and unlikely to force most businesses back to the drawing board.

Economics

Buying Time: UK Autumn Budget 2026 Initial Reaction

Our economists give their initial assessment of the 2026 Autumn Budget, covering the key measures announced, their economic impact and implications for businesses.

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WDAs

The main writing down allowance falls from 14% to 12% from April 2027 with additional changes to FYAs. The full expensing regime continues.

24%

Increase in UK WHT on interest by 2% percentage points to 24% from April 2027.

6%

The Bank Corporation Tax Surcharge doubles from 3% for 15 months, from 1 January 2027.

+2% pts

Tax rates on savings and property income rise by a further 2 percentage points from 6 April 2027.

A summary of the key announcements:

Energy and sector-specific measures

Corporation taxes

Main rates unchanged: The main corporation tax rate stays at 25% and the small profits rate at 19%.
Bank surcharge temporarily increased: The corporation tax surcharge on banking companies will temporarily rise from 3% to 6% from 1 January 2027 until 31 March 2028 (15 months).
Capital allowances main rate FYA up, WDA down: The main rate first-year allowance will rise from 40% to 50% for expenditure incurred on or after 1 January 2027. The main rate writing-down allowance will fall from 14% to 12% from 1 April 2027 for corporation tax and 6 April 2027 for income tax. The full expensing regime continues.
Leasing anti-avoidance: Capital allowances anti-avoidance rules concerning lease-and-leaseback arrangements will be widened to cover relevant right-of-use leases as well as finance leases from 28 October 2026.
R&D administration: The requirement to submit a claim notification form will be removed for claims made on or after 1 April 2027 and the additional information form will be simplified and rationalised from Autumn 2027.
Creative reliefs and CIR: From 1 January 2027 Audio-Visual and Video Games Expenditure Credits will be excluded from tax-EBITDA for purposes of the Corporate Interest Restriction rules.

International tax

Withholding tax: The rate of withholding tax on interest income will increase as a result of the increase in the rate of income tax on interest and property income, rising by 2% to 24% from April 2027.
Foreign permanent establishment exemption made mandatory: As previously announced, it was confirmed that the foreign PE exemption will become compulsory for accounting periods beginning on or after 1 January 2027. Groups that currently claim relief for foreign branch losses will lose that relief.
Pillar Two: As previously announced, Multinational and Domestic Top-up Tax will be amended to implement the OECD Side-by-Side package for accounting periods beginning on or after 1 January 2026, with further technical changes mostly effective for periods beginning on or after from 31 December 2026 (with an option to elect for earlier application).
Double tax relief for US LLC investors: Following a consultation earlier this year, the Government plans to create a mechanism which will provide relief for UK investors in US LLCs and similar reverse hybrid entities where relief is currently unavailable.
Sovereign investors: The government will consult on modernising the taxation of foreign sovereign investment, with the stated aim of giving sovereign investors greater certainty. From 1 January 2029, a new statutory regime is expected to tax foreign sovereigns directly in certain circumstances, while bringing real estate income and gains into the scope of UK tax. Bespoke rules will be introduced giving sovereign investors access to REITs for investment in UK real estate.

Business rates

Retail, hospitality and leisure: From April 2027, Small Business Rates Relief thresholds for qualifying properties will rise to a rateable value of £18,000 for 100% relief (from £12,000) and £21,000 for tapered relief (from £15,000).
Pubs and live music venues: As previously announced, the Chancellor has confirmed that the relief for pubs, social clubs and live music venues will rise from 15% to 35% from 1 April 2027. Venues with a rateable value of £1m or more will not get this increase.
Tackling avoidance: A business rates General Anti-Avoidance Rule will be introduced following consultation, and funding provided to local authorities for challenging avoidance will be expanded.
Other changes: The 2026 Supporting Small Business scheme will be extended for a year, and the 1p Transitional Relief Supplement for two years. From April 2027 vape shops and Adult Gaming Centres will no longer be eligible for retail, hospitality and leisure multipliers, and vape shops will no longer be eligible for Small Business Rates Relief.

Employment taxes

National Living Wage and National Minimum Wage: From 1 April 2027 the NLW will rise 3.9% to £13.21 per hour. The NMW for 18–20-year-olds will rise to £11.27, to £8.31 for 16-17-year-olds and eligible apprentices; the accommodation offset will rise to £11.53 per day.
NICs: For 2027-28 the Lower Earnings Limit will be £6,916 a year (£313 per week) and the Small Profits Threshold will be £7,355. Class 2 voluntary contributions will be £3.80 per week and Class 3 £19.05.
Mandatory payrolling of benefits in kind: Payrolling through Real Time Information will be required for company cars, vans, fuel and medical benefits from 6 April 2027, and for most other benefits from 6 April 2028 (employment-related loans and living accommodation are excluded).
Van benefit and car and van fuel benefit charges: For 2027-28 the van benefit charge will be £30,200, the van fuel benefit charge will be £825, and the car fuel benefit charge multiplier will be £4,310.
Mileage: Approved mileage rates above 10,000 business miles will rise from 25p to 35p per mile from 6 April 2027. 55p per mile for the first 10,000 miles will be made permanent.
Subsistence: From 6 April 2028 new benchmark scale rates of £20 (5+ hours of travel), £60 (10+ hours of travel) and £75 (24+ hours of travel) apply, and overseas scale rates will be simplified with a tiered approach that links to the updated rates.
Employee Management Incentives: The exercise window for individuals after a disqualifying event will be extended from 90 to 180 days. The requirement to separately notify a grant of an EMI option is to be replaced by reporting in the end-of-year return.
Employee Management Incentives 2: From 6 April 2027 the Company Share Ownership Plan will be known as Enterprise Management Incentives 2. The individual option limit will be increased to £120,000 (up from £60,000), interaction with EMI individual option limits will be removed, allowing eligible employees to receive the full amount of options available under each scheme and the exercise period extended to 15 years.
Other: Employer-paid Certificate of Sponsorship fees and the Immigration Skills Charge will be exempt from income tax from 28 October 2026.

Energy and sector-specific measures

Exploration and exploitation rights: Exploration and exploitation rights relating to the UK and the UK Continental Shelf will be treated as immovable property (from accounting periods beginning on or after 13 July 2026 for corporation tax).
Oil and gas: As previously announced, a new permanent Oil and Gas Revenue Levy of 35% on exceptional revenues during periods of unusually high prices will apply when the Energy Profits Levy ends on either 1 April 2030, or earlier if the Energy Security Investment Mechanism is triggered.
Electricity Generator Levy: As previously announced, the rate will rise from 45% to 55% until 31 March 2028, and the levy will be extended beyond 2028.

Income tax

Capital gains tax

Savings and ISAs

Income tax

Two percent increase to savings and property income tax rates: From 6 April 2027 savings income will be taxed at 24% (basic), 44% (higher) and 49% (additional) across the UK.
Distributions and repayments of capital: Following a consultation earlier this year, the government will amend the distributions rules; changes will affect the income and capital treatment of certain shareholder transactions and the treatment of payments and loans from overseas companies. Reforms will also be made to Purchase of Own Shares relief, demerger relief and the anti-avoidance rules applying to distributions, with changes expected from 6 April 2028.
Trading allowance: The trading and miscellaneous income allowance, and the Self Assessment reporting threshold, will rise from £1,000 to £3,000 from 6 April 2027.
Employment expenses: The Government will remove the £2,500 Income Tax Self Assessment threshold for claiming employment expenses from April 2028, allowing more taxpayers to claim tax relief on non-reimbursed employment expenses through PAYE.

Capital gains tax

Business Asset Disposal Relief lifetime limit: The lifetime limit will fall from £1m to £500,000 for disposals on or after 6 April 2027. The rate remains unchanged at 18%.
New CGT Founders' Relief: Following a consultation, a new Capital Gains Tax Founders’ Relief will be introduced from 6 April 2027, offering a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains for founders and early investors in high-growth, innovative companies. A consultation has been published regarding the detail.

Savings and ISAs

Cash ISA limit kept at £20,000: The cash ISA limit will remain at £20,000 from April 2027, and the government will work with industry on an incentive for first-time stocks and shares ISA investors.
First Time Buyer ISA: From April 2029, the government will introduce a new First Time Buyer ISA which will replace the Lifetime ISA for new savers, with a 25% bonus (maximum £20,000) towards a purchase of a first home worth up to £450,000. From 29 October 2026, the Lifetime ISA withdrawal charge for homes above the price cap falls from 25% to 20%.

VAT

Stamp duty and property taxes

Duties

Environmental taxes

Customs

VAT

Domestic electricity: The temporary 0% VAT rate on domestic electricity will be extended to July 2027. Energy-saving materials will revert to 5% from 1 April 2027, with heat batteries added.
VAT online marketplace liability extension: From October 2027, online marketplaces will have to collect VAT on sales by UK VAT-registered businesses and other UK businesses with £90,000 or more of annual sales per platform. The rules will not apply to non-business, second-hand goods and business to business sales.
Reverse charge restricted: From April 2027 the reverse charge on cross-border supplies of services will be restricted to VAT-registered UK recipients. Overseas suppliers to non-VAT registered UK businesses will have to charge and account for UK VAT.
Private hire vehicles: From 2 January 2028, larger operators (threshold to be consulted on, with £50m annual fare turnover as the lead option) will be liable for VAT on the full value of the fare.
E-invoicing: A recommitment to introduce legislation to enable HMRC to make regulations requiring VAT invoices to be issued and received in a prescribed electronic format. An implementation roadmap has been published, with changes to take effect from April 2029.
Zero rate for land sold to relevant housing associations: New zero rate of VAT on the sale of land to registered social housing providers from 1 April 2027.
VAT126 powers and safeguards: Future introduction of powers and safeguards for VAT126 claims - being non-business VAT refund claims made by certain non-VAT registered bodies.
Other VAT changes: Electricity supplied through publicly accessible, and workplace electric vehicle charging points is confirmed as standard rated for VAT. Publicly accessible electric vehicle charging points will not be considered domestic use for the Climate Change Levy from 1 November 2026. The government has also published a call for evidence for the review on the VAT treatment of travel services, including the Tour Operators’ Margin Scheme.

Stamp duty and property taxes

SDLT - group relief: SDLT group relief rules will be amended from 29 October 2026 such that the winding up of a vendor does not prevent the relief from being clawed back within 3 years if the acquiring entity later leaves the group.
Assured tenancies: SDLT will no longer apply to rent under assured tenancies from 1 May 2026.
Securities Transfer Tax: As previously announced the new Securities Transfer Tax will replace Stamp Duty and Stamp Duty Reserve Tax in late 2027.
Local Government Pension Scheme - relief for SDLT: For transactions with an effective date on or after 28 October 2026 and before 1 April 2032, acquisitions of land and property made by Local Government Pension Scheme asset pool companies from Local Government Pension Scheme member funds will be subject to SDLT relief.
Annual Tax on Enveloped Dwellings: From 1 April 2027, the Annual Tax on Enveloped Dwellings will rise by 3.5% from 1 April 2027 in line with inflation.

Duties

Fuel duty: The 5p per litre cut in the main rates of fuel duty will be extended from 1 January 2027 to 30 June 2027, and certain other fuels keep their additional 3.7p per litre cut over the same period. From 1 July 2027 rates will go back to pre-March 2022 levels and are updated in line with RPI.
Alcohol duty: Various changes, but broadly rates will rise in line with RPI from 1 February 2027.
Vehicle taxes: Excise taxes for most vehicles will rise in line with RPI from 1 April 2027. Electric Vehicle Excise Duty (3p per mile for battery and hydrogen vehicles, 1.5p for plug-in hybrids) implemented from 1 April 2028.
Soft Drinks Industry Levy: From 1 April 2027 the rates will be £2.25 and £3.01 per 10 litres. From 1 January 2028 the threshold will fall from 5g to 4.5g of sugar per 100ml and the milk-based drinks/milk substitute drinks exemptions will be removed.
Machine Games Duty: Machines with a maximum charge to play over £1 or a prize over £100 will pay 25% instead of 20% from 1 April 2027. From 1 April 2028, suppliers will become liable for machines they own that are operate under profit-share arrangements.
Other gambling duties: The gaming duty gross gaming yield bands will be frozen from 1 April 2027 to 31 March 2028.

Environmental taxes

Environmental levies: Landfill Tax and Plastic Packaging Tax rise from 1 April 2027 by RPI and CPI respectively. In 2028 and 2029 the Climate Change Levy rates on electricity and LPG will be frozen, while the Climate Change Levy on gas and solid fuels will rise with RPI. From 1 April 2027, rate of Aggregates Levy will be increased in line with RPI.
Carbon Border Adjustment Mechanism: Country-specific default values will apply from 2029, and extending CBAM to refinery products is under consultation until 20 January 2027.

Customs

Tariffs on food products: Tariffs will be suspended on all UK imports of over 100 food products until December 2028.
Tariffs on fertiliser and kerosene heating oil: Tariffs will be suspended on fertiliser and kerosene heating oil until December 2028 (kerosene) and fertiliser (December 2027).
Duty suspensions: Extension of tariff suspensions across chemicals, plastics, hydrogen, automotive, and food and drinks industries that were due to expire in December 2026 and June 2027, until 31 December 2028 and 31 December 2027, respectively.

Other proposals

Payment and administration

HMRC powers, penalties and compliance

Other proposals

Advance Tax Certainty Service: The recently launched Advance Tax Certainty Service threshold will fall from £1bn to £300m from 4 November 2026, to encourage wider use of the service.

Other notable publications: A number of new consultations and policy papers have been published. Notable amongst these are the Entrepreneurship in the UK prospectus, the Corporation Tax Simplification for Business Investment and a multi-year plan for HMRC’s approach to wealthy taxpayers.

Payment and administration

Self Assessment payments: From April 2029, Self Assessment taxpayers who make payments on account will pay smaller, more regular automated amounts during the year, with the option to pay through PAYE.
Making Tax Digital for Income Tax: Taxpayers joining MTD in April 2027 will not receive late-submission penalty points for quarterly updates in 2027-28. The roll-out of MTD for some taxpayer groups is also being deferred until further notice.
Corporation tax filing: Amended company tax returns must be filed online from 1 April 2028, and the introduction of prescribed computations will follow on a longer timetable. Following a consultation earlier this year, the proposed reporting of company payments to participators will now not go ahead.

HMRC powers, penalties and compliance

Correcting errors: Following an earlier consultation, from 1 April 2028 taxpayers will be required to correct inaccuracies once identified, and HMRC will be able to issue Customer Correction Notices where it has reason to suspect an inaccuracy.
Penalties and publication: A civil penalty for excise evasion will be introduced, alcohol duty penalties will be brought into line with the VAT and Income Tax penalty regimes, more detail will be published about deliberate defaulters (including Personal Liability Notices) and courts will be able to disqualify directors for convictions under HMRC securities legislation.
Tackling the tax gap: 670 more compliance officers will be recruited by 2029-30 on top of the previous commitment to recruit 5,500 additional officers. In addition, a review of persistent non-compliance by larger businesses (including a review of the Special Measures regime) has been announced.

Our reactions

Podcasts

Times Business Podcast

What to expect from the Budget with Andy Haldane and Claire Blackburn

In this episode of The Times 'The Business' podcast, Andy Haldane, President of the British Chambers of Commerce and Claire Blackburn, PwC's UK Tax Leader discuss what to expect from the UK Budget on 28 October.

Economics in business podcast

The Autumn Budget: what could rising bond yields mean for the Chancellor?

PwC UK Chief Economist Barret Kupelian is joined by Andy Haldane, former Chief Economist at the Bank of England, to look ahead to the 2026 Autumn Budget and explore the growing pressures in the bond market.

Autumn Budget 2026

On Wednesday 28 October 2026, the Chancellor John Healey presented the Autumn Budget, alongside the latest economic forecast from the Office for Budget Responsibility (OBR). A summary of the key announcements is set out below.

Reflections from our Tax Policy Leader, Colin Graham