At lunchtime yesterday, Chancellor John Healey delivered his first Budget speech, promising "Breathing Space now, Hope for the Future". Mr Healey said he had rejected broad-based tax rises as families and businesses face rising energy costs. The Chancellor extended the VAT cut on domestic electricity and the 5p Fuel Duty cut to July 2027 and announced a £100 Household Energy Payment this winter for households in Council Tax bands A to D in England with equivalent funding to be given to the devolved administrations should they decide to match this payment.
To fund this support, the Chancellor temporarily doubled the Bank Corporation Tax Surcharge. In addition, the Budget announced further increases to the rates of tax on property and savings income from April 2027. The lifetime limit for Business Asset Disposal Relief will be halved to £500,000, although the planned cut to the cash ISA limit will not go ahead.
As has been the trend in recent years, the primary tax raising measure has simply been to freeze existing tax thresholds leaving inflation to naturally lead to higher tax bills for all.
Company owners will be relieved to see no change to corporation tax rates but, for all business owners, a cut in main rate capital allowances to 12% is coming from April 2027 along with an increase to 50% for first year allowances. In advance of the Budget, the Government announced a 3.9% increase from April 2027 to the National Minimum Wage and the National Living Wage, meaning a worker aged 21 or above working 35 hours a week will now be paid a minimum of £24,042 from April 2027.
As always, we attach an analysis of the key announcements for your information, you will also find useful commentaries to help you understand how any relevant changes may affect you personally so that you can start planning for the future.
Please note that the Scottish Government will announce their budget for 2027/28 on 3rd December 2026, this may result in further income tax changes for Scottish tax residents.
