The Budget: what actually changed for you

I promised before the Budget that I’d write this up for people running businesses rather than for tax specialists. Here it is.

Only the bits that change something for an owner-managed company, a sole trader or a landlord.

Start with what didn’t happen

The headline rates of income tax, National Insurance and VAT were all left alone.

Corporation tax stays at 25 per cent, with the 19 per cent small profits rate and marginal relief between £50,000 and £250,000 untouched.

Dividend rates didn’t move either. They’re 10.75 per cent and 35.75 per cent, with a £500 allowance, exactly as they’ve been since April. The 2p rise everyone remembers already landed; it wasn’t repeated.

Capital gains tax main rates stay at 18 and 24 per cent with a £3,000 annual exemption. Inheritance tax keeps the £325,000 nil rate band and the £175,000 residence band, and the seven-year rule, taper relief and the gifting exemptions were all left as they are.

No stamp duty overhaul. No land value tax. No change to the VAT registration threshold.

If you’ve been bracing for a hit on dividends or on the way you take money out of your company, it didn’t come.

Landlords: this is the one that matters

From 6 April 2027 rental profits get their own set of tax rates, and they sit four points above the ordinary ones.

24 per cent instead of 20. 44 instead of 40. 49 instead of 45.

Two of those points were announced last year. The Chancellor added two more on Wednesday. Savings interest moves the same way.

The arithmetic is simple enough to do in your head. Every £10,000 of rental profit costs you another £400 a year, whatever band you’re in.

So a landlord with four properties and £28,000 of profit after mortgage interest and costs pays roughly £1,120 a year more from April 2027 than for the same portfolio today.

Companies aren’t affected. Property held in a limited company still pays corporation tax at 19 or 25 per cent. That gap has been widening for years and it just widened again.

Before anyone reaches for the phone: moving property you already own into a company triggers capital gains tax and usually stamp duty, and those costs land now against a saving that arrives a bit at a time. Worth the numbers on a real portfolio. Almost never worth it for one flat.

Selling your business got more expensive

Business Asset Disposal Relief has been halved. From 6 April 2027 it covers the first £500,000 of qualifying gains in your lifetime instead of the first £1m.

The relief rate stays at 18 per cent against the 24 per cent you’d otherwise pay, so what it saves you is capped at £30,000.

Put it in cash terms. On a £1m exit, the tax goes from £180,000 to £210,000. Thirty grand.

Disposals completed before 6 April 2027 keep the £1m limit, with transitional rules for contracts already signed. If selling or winding up is in your next eighteen months, that date now matters.

A new Founders’ Relief arrives at the same time, 10 per cent on up to £10m of gains, but the conditions are tight and it’s aimed at high-growth companies with outside investors. It won’t help most trading businesses.

Equipment, vans and cars

The Annual Investment Allowance is still £1m and full expensing stays, so most of our clients still write off everything they buy in the year they buy it.

What’s changed is the writing down allowance on the main pool, down from 14 per cent to 12 per cent from April 2027. That only bites on spending the allowances don’t cover, and the obvious one is cars. Cars have never qualified for the Annual Investment Allowance, so a car bought through the company gets relief a slice at a time, and those slices just got thinner.

Pulling the other way, the first year allowance on main rate assets rises from 40 to 50 per cent for anything bought from 1 January 2027.

On mileage, the rate above 10,000 business miles rises from 25p to 35p from April 2027. The first 10,000 miles stays at 55p, and that 55p is now permanent rather than temporary. If you do 20,000 business miles a year in your own car, that’s another £1,000 a year you can take out of the company tax free.

If you employ people

The National Living Wage goes to £13.20 an hour from April 2027, up from £12.71. The 18 to 20 rate goes to £11.27.

For one full-time person on the floor that’s about £955 more in wages plus £143 of employer National Insurance. Call it £1,100 a head.

Employer NI itself is unchanged at 15 per cent with the £5,000 threshold, and the Employment Allowance stays at £10,500.

One to diarise: payrolling benefits in kind becomes compulsory from April 2027 for company cars, vans, fuel and medical cover, everything else from April 2028. If you’re still doing P11Ds in July, that stops.

Business rates

Better news if you have a shop, a workshop or a yard.

From April 2027 the rateable value for full small business rates relief rises from £12,000 to £18,000, and the upper end of the tapered relief for retail, hospitality and leisure goes from £15,000 to £21,000. Around 70,000 more businesses come out of rates altogether.

Other retail, hospitality and leisure properties get a two-year freeze, and pubs, clubs and live music venues a further 20 per cent off. Worth pulling up your rateable value and seeing which side of £18,000 you land on.

Sole traders, MTD and the rest

Making Tax Digital thresholds are unchanged. £30,000 from April 2027, £20,000 from April 2028. If you join in 2027 there are no late submission penalty points on your quarterly updates for that first year, which is a sensible bit of grace.

The trading allowance triples to £3,000 from April 2027, so small side income stops needing a return.

Unused pensions still come into inheritance tax on 6 April 2027. No reprieve, no softening. If you’ve been waiting to see whether that would be reversed before looking at your death benefit nominations, stop waiting.

Nothing at all on CIS. The scheme, the 20 and 30 per cent deduction rates and gross payment status are all as they were.

Where I got it wrong

I said corporation tax would stay at 25 per cent and that a land value tax looked unlikely. Both right, and neither was a brave call.

I thought another go at capital gains tax on residential property was the obvious target. It wasn’t touched. I flagged business and agricultural property relief as being under scrutiny too, and they were left alone this time.

What I didn’t see was the second 2p on property income, or Business Asset Disposal Relief being halved. The money came from landlords and from people selling businesses, not from the places most of us were watching.

Which is roughly the argument I made before the Budget. Don’t restructure on a rumour, because the rumours were wrong again.

What I’d do now

If you own rental property, work out what four extra points costs you on last year’s figures. It’s a two-minute job and it tells you whether this is an irritation or a problem.

If selling or retiring is anywhere in your three-year plan, get the timing looked at against 6 April 2027 before you do anything else.

If you have a pension you weren’t planning to spend, look at the nominations now rather than in March 2027.

If you employ anyone on or near the wage floor, put the April 2027 numbers into next year’s budget while you’re still setting prices.

And if you were holding off on buying equipment until you knew what was coming, nothing here is a reason to wait.