UK tax briefing: Budget 2026 — what matters for taxpayers and businesses

The headline picture

The main rate of Corporation Tax stays at 25%, and the small profits rate stays at 19%. For many limited companies that means no surprise jump in the headline rate — but the Budget still changes how investment is relieved, how Self Assessment will be paid in future, and how Capital Gains Tax works for business owners.

Alongside the rates, HM Treasury published a wide Overview of Tax Legislation and Rates (OOTLAR). The detail lives there. This briefing picks out the items that usually change behaviour for Glasgow and UK clients: cashflow, filing rhythm, and the cost of plant and machinery.

Corporation tax and capital allowances

Corporation Tax rates for the financial year beginning 1 April 2028 remain 25% (main rate) and 19% (small profits rate). Stability at the headline level is welcome, but capital allowances are moving.

From 1 January 2027 the main-rate first-year allowance rises to 50% for qualifying expenditure. From 1 April 2027 for Corporation Tax (and 6 April 2027 for Income Tax) the main-rate writing-down allowance falls to 12%. In plain terms: investing sooner can unlock a stronger first-year relief, while slower writing-down allowances make timing and cashflow planning more important.

There is also a consultation on Corporate Tax Simplification for Business Investment. That is not law yet — but it is a signal that HMRC and the Treasury want clearer rules for companies that reinvest profits.

Self Assessment, PAYE expenses and cashflow

From April 2029, Self Assessment taxpayers who make Payments on Account will move to more regular in-year payments towards their final bill. Payments are intended to be automated, and some eligible taxpayers will be able to pay through PAYE. The policy aim is fewer large, unexpected January and July bills — and lower tax debt. The detailed design is still being worked through, so directors and sole traders should plan for change rather than wait for a surprise.

From April 2028, the £2,500 threshold that often forced employees into Self Assessment solely to claim unreimbursed employment expenses is due to be removed. More claims should be possible through PAYE, with stronger evidence checks. If your only reason for filing Self Assessment is employment expenses, speak to an adviser before that change lands.

Separately, from 6 April 2027 the Trading Allowance is due to rise from £1,000 to £3,000, with the Self Assessment trading income reporting threshold also increasing to £3,000. That helps small side incomes — it does not replace proper bookkeeping when a trade is growing.

Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax remains one of the biggest operational changes for landlords and self-employed taxpayers. For those required to join in April 2027, Budget 2026 confirmed a penalty easement: late submission penalty points will not apply to quarterly updates for the 2027–28 tax year. Quarterly updates will still be required before a return can be filed.

Certain groups are exempt from MTD for Income Tax until further notice, including those eligible for qualifying care relief and some non-resident customers. If you are unsure whether MTD applies to you, check your income sources now — software, bank feeds and a clean chart of accounts take longer to set up than most people expect.

Capital Gains Tax for founders and business owners

A new Capital Gains Tax Founders’ Relief is being developed, with a technical consultation open until 30 November 2026. The government intends the relief to apply to qualifying disposals from 6 April 2027, subject to legislation. At the same time, Business Asset Disposal Relief is subject to a lifetime-limit reduction announced at the Budget.

Owner-managers thinking about an exit, share sale or restructuring in 2027 or later should not assume old CGT planning still holds. Timelines, lifetime limits and eligibility tests all need a fresh look with current figures.

Practical next steps this month

Review investment plans against the January 2027 and April 2027 capital-allowance dates. Update your 13-week cashflow if Payments on Account are material. Confirm whether MTD for Income Tax will apply from April 2027, and choose software early. If you may sell a business or founder shares, diary the Founders’ Relief consultation close (30 November 2026) and ask for a CGT scenario before year-end planning freezes.

This briefing is general information based on published Budget 2026 materials. It is not personal tax advice. Formal advice starts when we agree the facts of your return, company or disposal.