The Chancellor, John Healey, delivered the Autumn Budget on 28 October 2026, outlining a range of tax, business and economic measures that will affect individuals and companies over the coming years.
For company owners and self employed, the most relevant announcements include changes to business mileage rates, future reforms to Self Assessment payments, Making Tax Digital updates, capital gains tax changes and several measures designed to support business investment and entrepreneurship.
While many of the changes won't take effect immediately, they are worth understanding now so you can plan ahead and avoid surprises.
Business Mileage Rates Confirmed
Earlier this year, the Approved Mileage Allowance Payment (AMAP) rate increased from 45p to 55p per mile for the first 10,000 business miles travelled in a personal vehicle.
The Government has now confirmed that the higher 55p rate will remain in place rather than reverting to 45p.
There is also good news for higher-mileage drivers. From 6 April 2027, the rate payable on business mileage above 10,000 miles will increase from 25p to 35p per mile.
The approved rates will therefore be:
- 2026/27: 55p per mile for the first 10,000 business miles, then 25p thereafter.
- From 6 April 2027: 55p per mile for the first 10,000 business miles, then 35p thereafter.
For those using their own vehicles for client visits, site work or other qualifying business travel, this change may increase the amount that can be claimed tax efficiently through their limited company.
The temporary 5p per litre Fuel Duty reduction has also been extended, with the planned RPI-linked increase delayed until 1 July 2027.
Self Assessment Payments Set for Major Reform
One of the most significant announcements in the Budget is a change to the way Self Assessment tax payments will be made.
From April 2029, taxpayers who currently make Payments on Account will move towards making smaller payments throughout the tax year rather than the existing twice-yearly approach - Around three million taxpayers are expected to be affected.
The Government has not yet confirmed exactly how frequently payments will be collected, although automated methods such as Direct Debit are expected to form part of the new system. Taxpayers with sufficient PAYE income may also have the option of paying through PAYE.
Importantly, annual Self Assessment tax returns will still be required. The reform affects when tax is paid, not how much tax is due.
There will also be a transition year in 2029/30, during which taxpayers may find themselves operating under both the old and new systems.
For business owners, this means cash flow planning will become increasingly important. Businesses that currently set aside tax periodically may need to adapt to a more regular payment schedule.
Making Tax Digital: Additional Protection for New Entrants
The Government has also announced a temporary soft-landing period for taxpayers entering Making Tax Digital (MTD) from April 2027.
This applies to individuals who will be joining MTD for the first time, including:
- Those with qualifying income above £30,000.
- Certain new businesses and landlords.
- Some taxpayers who previously received temporary exemptions.
The soft landing will delay late-filing penalties during the early stages of compliance. However, taxpayers who entered MTD from April 2026 will not receive the same concession and may begin receiving penalty points for late quarterly submissions from the 2027/28 tax year.
It's important to remember that MTD and the new Self Assessment payment reforms are separate changes. MTD affects how information is recorded and reported, whereas the payment reforms affect when tax is paid.
HMRC Given Greater Collection Powers
The Budget includes measures designed to strengthen HMRC's ability to recover unpaid tax.
For those experiencing payment difficulties, engaging with HMRC as early as possible will become increasingly important. In many cases, a Time to Pay arrangement is likely to be preferable to allowing debts to accumulate.
Capital Gains Tax Changes for Company Owners
Several of the Budget announcements will be particularly relevant to company directors and business owners considering a future sale or exit.
New Founders' Relief
From 6 April 2027, the Government plans to introduce a new Founders' Relief.
The proposed relief would apply a reduced Capital Gains Tax rate of 10% on up to £10 million of qualifying lifetime gains per individual.
The relief is intended for qualifying founders and significant early investors in innovative, high-growth UK businesses. Full eligibility criteria are still being developed and legislation is expected to be introduced through Finance Bill 2026/27.
Business Asset Disposal Relief (BADR)
The Budget also confirms a reduction in the lifetime limit for Business Asset Disposal Relief.
From 6 April 2027:
- The qualifying lifetime gains limit will reduce from £1 million to £500,000.
- This follows the previously announced increase in the BADR tax rate to 18% from 6 April 2026.
Businesses considering a Members' Voluntary Liquidation (MVL), company closure or future sale should review the timing of any plans carefully, as these changes could significantly affect the tax outcome.
Business Investment Incentives
The Government announced several measures designed to encourage business investment.
From January 2027:
- The First-Year Allowance on qualifying plant and machinery expenditure will increase from 40% to 50% on 1st January 2027.
- The main Writing Down Allowance will reduce from 14% to 12% from 1st April 2027.
The Government has also reaffirmed its commitment to keeping the main Corporation Tax rate at no more than 25% and maintaining full expensing for qualifying expenditure.
For limited companies considering significant equipment purchases, the timing of expenditure could become increasingly important.
Increased Trading Allowance for Side Businesses
From 6 April 2027, the Income Tax Trading Allowance will increase from £1,000 to £3,000. This may be relevant for self-employed who generate additional income through:
- Freelancing outside their main business.
- Consultancy projects.
- Digital products.
- Small side ventures.
The allowance applies to gross trading income rather than profit and should not be confused with £3,000 of tax-free profit. Depending on individual circumstances, claiming actual expenses may still be more beneficial.
Property and Savings Income Tax Changes
The Government confirmed previously announced changes to Income Tax rates on property and savings income, effective from 6 April 2027:
- Basic Rate: 24%
- Higher Rate: 44%
- Additional Rate: 49%
Business owners with buy-to-let properties or significant savings income should review the potential impact on their future tax liabilities.
Pension Tax Allowance
From April 2027, a new Pension Tax Allowance will be introduced
Under the proposed rules, pensioners whose total income does not exceed the value of the full new State Pension will not face an Income Tax liability solely because State Pension increases push them above the Personal Allowance threshold.
The measure is currently scheduled to remain in place until April 2030.
Cash ISA Changes and a New First-Time Buyer ISA
The Government has reversed its previous proposal to reduce the Cash ISA subscription limit. The annual Cash ISA allowance will therefore remain at £20,000.
A new First Time Buyer ISA will also be introduced, with plans for it eventually to replace the Lifetime ISA for new savers from April 2029. In addition, the Lifetime ISA withdrawal charge for qualifying first-time buyers purchasing above the existing £450,000 property threshold will reduce from 25% to 20% from 29 October 2026.
Key Actions for Limited Companies and Self-Employed business owners
Although many measures do not take effect immediately, there are several areas worth reviewing over the coming months:
- Ensure mileage claims reflect the new 55p rate where applicable.
- Review cash flow planning ahead of future Self Assessment payment reforms.
- Prepare for ongoing Making Tax Digital requirements if affected.
- Seek advice before closing a company or planning an exit due to the Capital Gains Tax changes.
- Consider the timing of major business purchases given the capital allowance changes.
- Review the impact of future tax changes if you receive rental income or substantial savings income.
- Monitor pension and ISA developments as further guidance is released.
This year's Budget contains a mixture of immediate changes and longer-term reforms. For most contractors, there is no need for urgent action, but several measures could influence future tax planning, cash flow management and business decisions.
As always, the detail matters. Many of the announcements will require further legislation and HMRC guidance before their full impact becomes clear.
If you're unsure how any of these changes affect your limited company or personal tax position, speak to your accountant before making significant financial or business decisions.
This article is provided for general information purposes only and should not be regarded as tax, financial or investment advice. Professional advice should always be sought based on your individual circumstances.