This year’s Budget came with intense speculation—heightened further when the Office for Budgetary Responsibility accidentally released parts of their report ahead of Rachel Reeves’ announcement in Parliament.
While the main rates of Income Tax, National Insurance and VAT remain unchanged, the government has introduced a wide range of measures aimed at strengthening public finances. Below, we break down the most important changes for individuals, landlords, business owners and investors.
At Bidwell Accountancy Ltd, we help clients across Milton Keynes and the surrounding areas understand how these changes affect their tax position and financial planning.
Key Changes for Individuals: What You Need to Know
1. Personal Tax Thresholds Frozen Until 2031
The freeze on Income Tax and National Insurance thresholds will now continue until at least April 2031.
This creates “fiscal drag”, pushing more taxpayers into higher tax bands as wages rise—even though headline tax rates remain the same.
2. Higher Taxes on Dividends, Property Income & Savings
From:
April 2026 – Dividend tax rates rise by 2%.
April 2027 – Property and savings income tax rates increase by 2%.
Lower-income savers are still protected by existing allowances, but anyone with significant investments or rental income will feel the impact.
3. ISA Rule Changes
From April 2027:
The annual cash ISA limit reduces to £12,000.
The overall ISA limit remains £20,000.
Savers aged 65+ can continue to use the full £20,000 cash ISA allowance.
4. Two-Child Limit for Universal Credit Removed
From April 2026, the two-child limit will be abolished—expected to lift 450,000 children out of poverty.
5. Salary Sacrifice Pension Contributions Capped
From 2029:
Only the first £2,000 of pension contributions through salary sacrifice will be exempt from NICs.
Higher earners contributing more than £2,000 per year will see additional NIC charges.
6. New High-Value Property Council Tax Surcharge (from 2028)
For properties worth:
£2m–£2.5m – £2,500 surcharge
£5m+ – up to £7,500 surcharge
Collected by councils but paid to central government.
7. New Taxes Affecting EV Owners, Online Retail & Gambling
Electric Vehicle Excise Duty (eVED): From 2028, EVs pay 3p per mile; hybrids pay 1.5p.
Low-value import tax relief scrapped: Customs duties will now apply to items under £135, levelling competition for UK retailers.
Remote Gaming Duty increases to 40% in April 2026; Bingo Duty abolished.
Tax Changes Affecting Businesses
1. Business Rates Relief Extended
From April 2026:
Permanent lower rates for 750,000 retail, hospitality and leisure businesses.
A £4.3bn support package to ease rises after revaluations.
Film studios continue to receive 40% rates relief until 2034.
2. Corporation Tax & Investment Reliefs
Corporation Tax stays at 25% for this Parliament.
Writing-down allowances reduce to 14% from April 2026.
New 40% First Year Allowance from January 2026, covering:
Most leased assets
Unincorporated business spending
3. Reduced Benefits for Employee Ownership Trusts
Relief on gains when selling to an EOT reduces from 100% to 50%, lowering the tax advantages of this exit route.
4. VAT, Import & Compliance Updates
Removal of low-value consignment relief benefits UK high-street businesses.
HMRC will tighten compliance across VAT, imports and offshore arrangements.
5. Minimum Wage Increases (from April 2026)
National Living Wage rises to £12.71 (4.1% increase).
18–20 NMW increases to £10.85 (8.5% increase).
16–17 and Apprentices: £8.00 per hour (6% increase).
What These Changes Mean for You
For Employees
You may find:
Threshold freezes push you into a higher tax band.
Dividend or rental income becomes less tax-efficient.
Salary sacrifice may be less beneficial for contributions over £2,000.
For Higher Earners, Landlords & Investors
Expect:
Higher taxes on investment returns.
Possible council tax surcharges on high-value homes.
Reduced pension tax advantages.
More pressure to review investment and wealth-planning strategies.
For Small Businesses & Company Directors
Certainty around Corporation Tax is helpful, but reduced allowances mean planning capital investments more carefully.
High-street businesses benefit from permanent rates relief.
Import rule changes may rebalance competition with overseas sellers.
Owners considering Employee Ownership Trusts should revisit exit strategies.
Wider Economic Impact
Government forecasts show:
£26 billion additional annual revenue by 2029–30.
Tax as a share of GDP reaching 38% by 2030–31—one of the highest on record.
Support measures will continue for energy bills, rail fares and low-income households, but overall the trend points to a higher long-term tax burden.
What to Watch Over the Coming Years
Phased rollouts: Many changes take effect between 2026 and 2029.
Tax-planning adjustments: Salary, dividend, and pension strategies may need reviewing.
Business investment timing: Reduced allowances could change the best time to buy equipment or invest in assets.
Increased HMRC compliance activity: Expect more checks on VAT, imports and offshore arrangements.
👋 Need Professional Advice? Let Bidwell Accountancy Help
Whether you're:
an individual concerned about tax increases,
a landlord or investor reviewing your portfolio, or
a business owner planning for the next financial year—
Bidwell Accountancy Ltd in Milton Keynes is here to help you navigate these changes with clear, practical tax advice.
📞 Call us: 01908 380391
🌐 E-Mail: info@bidwellaccountancy.com
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