The Chancellor’s Budget had no single defining announcement. It was a collection of smaller measures, but the detail is important. For business owners, investors and entrepreneurs, that detail includes new relief for founders, higher tax rates on property income, as well as stronger VAT collection rules for online marketplaces. With several changes set to come in from April 2027, our experts have set out their summary of the key announcements below.
The Chancellor announced a further two percentage point increase in the tax rates applying to savings and property income from April 2027, while leaving rates on employment income and dividends unchanged. For our clients, this could mean higher tax bills for landlords and individuals with significant savings income, and may prompt a review of how investments and property portfolios are structured and held.
The annual £20,000 Cash ISA allowance will remain, with the Government deciding not to proceed with a reduction in the amount that can be invested. A new ‘Starter’ ISA is also planned to encourage first-time investors.
From April 2029, the Government will introduce a new First Time Buyer ISA, replacing the Lifetime ISA for new accounts. Individuals will be able to contribute up to £4,000 per year, with the Government providing a 25% bonus based on the final account balance, subject to a maximum Government bonus of £20,000. The ISA can be used towards the purchase of an eligible first home costing up to £450,000. For clients saving towards their first home, the changes provide greater flexibility, if they decide not to purchase a home and instead withdraw the cash from the ISA as there is no withdrawal charge which previously applied to the Lifetime ISA.
The Small Business Rate Relief threshold for retail, hospitality and leisure businesses will increase from £12,000 to £18,000, with the Chancellor saying around 70,000 additional businesses will consequently pay no business rates. Rates for other businesses in these sectors are expected to be frozen in real terms for two years. For clients, particularly retailers, restaurants, pubs and leisure businesses, this could represent a direct reduction in operating costs and provide additional headroom for investment, recruitment or working capital.
A new British industrial competitiveness scheme could reduce electricity bills by 25% for around 10,000 firms, according to the Chancellor. For energy-intensive clients, the potential saving could be significant. Businesses will need to establish whether they fall within the qualifying sectors and factor any support into future energy procurement, investment and budgeting decisions.
A new Founders’ Relief is proposed for qualifying founders and significant early investors. The relief would provide a 10% CGT rate on qualifying share disposals – subject to a £10 million lifetime gains limit per individual – and is intended to apply to disposals made on or after 6 April 2027. The £10 million lifetime limit is proposed to be reduced by amounts claimed under the lifetime limits for BADR and Investors’ Relief. To qualify, the company would need to satisfy a new growth and innovation test. The proposed conditions are relatively demanding and are therefore likely to restrict the number of companies whose shareholders will qualify for the relief. Once the consultation has concluded clients should await further information from the government on whether the relatively demanding conditions are watered down.
From April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) will reduce from £1 million to £500,000. BADR provides a reduced 18% CGT rate on qualifying disposals. For business owners who do not qualify for the new Founders’ Relief, this change may increase the CGT payable on an eventual disposal. Clients approaching an exit may therefore want to revisit their existing plans.
There is no income tax liability for pensioners with total income up to the value of the new State Pension from 6 April 2027, until 5 April 2030. This ensures pensioners whose total income is up to the value of the full new State Pension do not have the administrative burden of paying small amounts of income tax. HMRC publishes a full-relief income threshold of £13,037 for 2027–28. Above that, the tax reduction is withdrawn by £1 for each £3 of additional income. People with a little additional private income may receive partial protection.
There was no headline increase in corporation tax announced in the speech, with the Chancellor instead placing considerable emphasis on encouraging business investment. Full expensing for qualifying investment will be retained which is welcome, but the reduction in writing down allowances to 12% from April 2027 is disheartening. The key consideration will be whether planned capital expenditure qualifies and whether the changes affect the optimum timing of investment. Businesses contemplating substantial expenditure on plant, machinery or other assets should model the tax benefit alongside the commercial investment decision.
The Chancellor announced reforms intended to ensure that profits extracted from companies are taxed consistently, while saying that genuine commercial transactions and family businesses being passed to the next generation would be protected. This could be particularly important for our owner-managed business clients. Shareholders considering dividends, disposals, reorganisations or succession will need to understand whether the new rules affect their existing plans and how remuneration and profit extraction should be structured going forward. It is clear that the Government is seeking to limit the opportunities for extracting value as capital rather than income.
The Chancellor announced an expansion of tax-advantaged employee share arrangements, including changes described in the speech as ‘EMI 2’ which relates to increased generosity within the Company Share Option Plan. Enhanced share incentives could provide another way of recruiting, incentivising and retaining key people without relying entirely on cash remuneration. Existing share schemes may therefore be worth reviewing against the new regime.
The Government has confirmed it will proceed with reforms to extend VAT liability for sales made through online marketplaces. The measure is aimed at tackling VAT non-compliance by businesses selling via digital platforms and forms part of a broader international trend of shifting VAT collection obligations from individual sellers to platform operators. Marketplaces can already be liable for VAT on certain sales made by overseas sellers as per the existing rules. They will not apply to personal sales or to businesses selling goods to other businesses. The detail is still emerging, but the objective is to make online marketplaces responsible for accounting for VAT on a wider range of sales facilitated through their platforms, including sales by UK-based businesses. The measure is intended to reduce VAT losses, create a more level playing field between compliant and non-compliant traders, and simplify enforcement.
The Government has announced a new VAT zero rate for land sold to registered social housing providers and relevant housing associations from 1 April 2027. This is a welcome measure which has the potential to reduce VAT leakage in social housing projects and alleviate some of the practical and commercial difficulties associated with current “golden brick” arrangements, which are often used to secure a VAT-efficient outcome on land acquisitions. While further detail is awaited, the change could significantly simplify the VAT treatment of social housing developments and improve cashflow and transaction certainty for developers and registered providers alike.
The Chancellor has pledged to increase the number of HMRC compliance officers and modernise its information and inspection powers. New statutory requirements will be placed on taxpayers from 1 April 2028 to correct identified inaccuracies, although no details have been provided as to what this will look like.
From July 2029, HMRC will be able to recover lower-value unpaid tax debts through regular instalments directly from taxpayers’ bank accounts where they can afford to pay but repeatedly fail to do so. In short, HMRC’s compliance powers and resources are increasing, and now is the time to make sure your tax affairs are up to date.
The Budget contains welcome changes for internationally mobile individuals. For US LLCs and similar entities, the Government will introduce a mechanism to provide double-tax relief where this is currently unavailable, potentially removing a significant barrier for UK-resident members of US LLCs. The legislation is planned for the Finance Bill 2027-28, with the measure expected to take effect from early 2028. Separately, changes to the trust regime are intended to make it easier for individuals with existing trusts to move to the UK, including an easement to the CGT exit charge when trustees migrate. Together, these measures should reduce tax friction for internationally mobile clients and could have a particularly significant impact on US citizens living in, or considering a move to, the UK.
Other notable changes:
The implications of the Budget will vary depending on individual circumstances, business structures and future plans. Reviewing the changes early can help identify potential tax liabilities, opportunities for relief and any adjustments needed to existing plans.
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