Autumn Budget 2026: Budget 2026 personal tax changes hit savers, landlords and business sellers

The Chancellor has promised to give people breathing space, and for working people that has meant no increase in headline income tax rates. But with personal allowances still frozen, many will continue to feel worse off as rising wages pull them into higher tax bands.

For those with savings, property income or plans to sell a business, Budget 2026 brings some more significant changes.

How much more tax will savers and landlords pay?

Budget 2025 had already announced a 2% increase in the income tax rates on savings and property income from April 2027. Today, the Chancellor added a further 2%, so these rates will now rise by 4% in total.

From April 2027, basic rate taxpayers in England will pay 24% on this income, higher rate taxpayers 44% and additional rate taxpayers 49%. Scotland will set its own income tax rates, and it is hoped that the Scottish Government will avoid adding further complexity to its existing structure.

For landlords, savers and families with substantial cash savings, these changes mean that rental income and savings interest will be taxed more heavily than income from work. This makes it more important to review how savings and property are held, which family members own them and whether tax-efficient options are being used.

Will fuel duty rise in 2027?

Fuel duty has been frozen for around 16 years, and the temporary 5p cut was due to be reversed in two stages, in January and March 2027. The Chancellor has instead kept the 5p reduction until July 2027. For households, sole traders and rural communities that rely on the car, this gives some short-term relief. Budgets should still allow for higher fuel costs once the reduction ends.

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What do the changes mean for pensioners and those with small amounts of business income?

From April 2027, anyone whose total income is no more than the standard State Pension of £13,036 will not pay income tax. The additional allowance is worth up to £93 a year and is tapered, so only people with total income of £13,319 or less will benefit.

The trading allowance, which currently lets people earn up to £1,000 of small-scale additional income tax-free, will rise to £3,000 from April 2027. This should help people testing a new business idea or earning modest income alongside employment.

How will Business Asset Disposal Relief changes affect business owners?

The Chancellor had already ruled out changes to the main rates of Capital Gains Tax, but business owners have not escaped. Business Asset Disposal Relief currently taxes the first £1 million of lifetime gains on selling a business or shares in a family company at 18%, rather than the main rate of 24%. That saves up to £60,000 per person, or £120,000 for a couple.

From 6 April 2027, the relief will apply only to the first £500,000 of lifetime gains, halving its maximum value to £30,000 per person. This is a blow for business owners who are considering selling their businesses in the future.

The Chancellor has proposed a new Founders Relief, which would tax up to £10 million of chargeable gains at just 10%, but the qualifications for this relief are complex and would rule out many of our family-owned businesses. The company must meet at least two of the following three conditions in the ten years before it is sold.

Firstly, its turnover must show 25% compounded growth over three consecutive periods. Secondly, it must grow its full-time employees by a compounded 25% over the same period. Finally, to qualify the business must have incurred qualifying R & D expenditure of £1.5 million.

Many family-owned businesses would struggle to meet these demanding conditions, potentially putting the new relief out of reach. However, the proposals are subject to consultation, so the rules may change. We hope this will lead to simpler requirements that make the relief more accessible to family-owned businesses.

What is changing for Self-Assessment payments?

Self-Assessment taxpayers currently make two payments on account, in January and July. From 2029, they will be required to make smaller, more regular payments during the year in which the income is earned. How often these payments will be made has not yet been decided, but the change will affect cash-flow planning for the self-employed.

Planning ahead

The overall picture is one of stability for earned income but rising tax on wealth, savings and business sales. Individuals, families and business owners should look at their income, assets and exit plans together, particularly where significant decisions fall around April 2027.

Armstrong Watson is hosting a live webinar on Tuesday, 3rd November, at 9.30am. Join us to hear from our specialists in tax, financial services and accounting who will be examining the announcements and their impact.

To register for the webinar please visit https://armstrongwatson.info/47JlHMY.