What the Budget means for employers, sole traders, employees, hospitality and construction businesses

Open the one that fits: what changed, what didn't, and what I would be doing about it this week. The full picture follows underneath.

Employers

What changed

  • National Living Wage £13.21 from 1 April 2027 (21 and over), £11.27 for 18 to 20, with the 16 to 17 and apprentice rates up by the same 3.9%. About £910 a year per full-time worker before employer NI, roughly £1,050 after it.
  • Employer NI, the £5,000 threshold and the £10,500 Employment Allowance are unchanged and now confirmed through 2027/28.
  • Payrolling of company car, van, fuel and private medical benefits becomes mandatory from 6 April 2027; everything else (bar loans and accommodation) from April 2028. The July P11D is on its way out.
  • Tax-free mileage: 55p is permanent, and 35p applies above 10,000 miles from 6 April 2027. Update expenses policies.
  • Share options: the CSOP limit doubles to £120,000 per employee from April 2027 (badged "EMI 2"), and EMI grants no longer need notifying within 92 days, just on the year-end return.
  • Non-compete clauses are to be legislated out of use as a barrier to hiring; detail promised early 2027. Agency workers must be paid for cancelled shifts from April 2027. Parental pay reaches 160,000 more parents, including the self-employed.

What didn't happen

No employer NI relief of any kind. The salary-sacrifice pension cap of £2,000 from April 2029 was not mentioned, so assume it stands.

What I'd do this week

Re-cost April 2027 payroll at £13.21 and check the Employment Allowance is being claimed. If you provide cars, vans or medical cover, ask your payroll software whether it will payroll those benefits from April; some still won't.

Sole traders and the self-employed

What changed

  • The trading allowance triples from £1,000 to £3,000 from 6 April 2027, and the Self Assessment reporting threshold moves with it: side income under £3,000 a year needs no return.
  • Mileage under simplified expenses: 55p permanent, 35p above 10,000 miles from April 2027. A van doing 20,000 business miles claims £1,000 more a year.
  • Self-employed fathers and partners qualify for paid parental leave for the first time.
  • Making Tax Digital still arrives for the £30,000 band on 6 April 2027, but no penalty points for late quarterly updates in 2027/28.
  • From April 2029 Self Assessment moves to smaller, more regular in-year payments, with the option to pay through PAYE if you also have a job. From 2029 HMRC can take smaller debts straight from bank accounts if you ignore demands.
  • Selling up: the Business Asset Disposal Relief limit halves to £500,000 from 6 April 2027. On a £1m gain that is up to £30,000 more tax after April than before. Landlords: rental profits taxed at 24/44/49% from the same date.
  • Class 4 stays at 6% and 2%; voluntary Class 2 is £3.80 a week. The 5p fuel duty cut lasts until 30 June 2027, then about 7.6p goes back on.
  • Starting or scaling up: a Young Entrepreneurs Allowance covers a year's living costs for young founders, British Business Bank funding for women-led businesses doubles to £200m with a new scale-up programme, and the new Founders' Relief gives qualifying high-growth founders a 10% CGT rate on up to £10m.

What didn't happen

No change to Class 4, the VAT threshold (£90,000) or income tax rates. The commentators' NI-gap rumour came to nothing.

What I'd do this week

If 2025/26 self-employment plus rental income topped £30,000, choose MTD software now. If a sale of the business is on the cards in the next couple of years, the £500,000 limit makes the timing worth a conversation. And if you're weighing up a company, run our sole trader versus limited company calculator with the new numbers.

Employees

What changed

  • Nothing on your payslip: income tax and NI rates and thresholds are unchanged, so a 3.9% rise on £49,000 still crosses the £50,270 higher-rate line.
  • Savings interest above your £1,000 (or £500) allowance is taxed at 24%, 44% or 49% from April 2027. The cash ISA limit stays at £20,000; the planned £12,000 cap is gone.
  • First-time buyers: Your First Home (2.5% deposit, 20% interest-free loan for five years, new builds, income cap £110,000) opens for applications in February 2027. The Lifetime ISA penalty above £450,000 is already down to 20%; a First Time Buyer ISA replaces the LISA in 2029.
  • Own car for work: 55p a mile for the first 10,000 and 35p above from April 2027. If your employer pays less, claim the difference.
  • Energy: £100 paid to bands A to D this winter, electricity VAT at 0% to June 2027, gas standing charges phased out from 2027.
  • Carer's Allowance loses its cliff edge; the £2,500 cap on claiming employment expenses through Self Assessment goes in 2028.

What didn't happen

No personal allowance rise, no NI cut, no dividend change for director-shareholders. The triple lock holds this Parliament but becomes an earnings link from the next.

What I'd do this week

If you have savings earning more than £1,000 interest outside an ISA, use the £20,000 allowance before April. Check your employer's mileage rate against 55p.

Hospitality businesses: pubs, cafés, restaurants and hotels

What changed

  • Small business rate relief threshold for retail, hospitality and leisure rises from £12,000 to £18,000 rateable value from April 2027. If your RV is £18,000 or under, the bill is nil. The Treasury says half of all RHL properties will now pay nothing.
  • Above that, a two-year real-terms freeze: the 2027/28 hospitality multipliers are 39.7p (small) and 44.7p (standard), 52.5p over £500,000 RV, so bills rise with inflation and no more.
  • The extra 20% cut for eligible pubs, social clubs and live music venues from April 2027 is funded and goes ahead, on top of the freeze.
  • Alcohol duty rises with RPI on 1 February 2027 (beer at 3.5 to 8.5%: £23.61 per litre of alcohol). Small Producer Relief is widened, worth £10m across about 2,000 small brewers and cider makers.
  • Machine games duty rises to 25% only on machines with stakes over £1; pub fruit machines and seaside arcades are protected. Vape shops and adult gaming centres lose rates relief.
  • National Living Wage £13.21 from 1 April. Tariffs suspended on 100-plus imported food lines, which should ease some ingredient prices. Mayors and strategic authorities get the power to introduce an overnight visitor levy from 2028.

What didn't happen

No VAT cut, no employer NI help, no change to tronc or tips rules. The 0% electricity VAT is households only, and the 25% industrial electricity discount is for energy-intensive sectors, not kitchens. UKHospitality called it "a small step in the right direction".

What I'd do this week

Look up your rateable value on the 2026 list. Under £18,000 and you can take rates out of next year's budget; just over it and the freeze still caps the rise. Reprice for February's duty and April's wages together rather than twice. Our note on where the pressure is coming from covers the rest of the cost base.

Construction businesses: contractors, subcontractors and developers

What changed

  • Your First Home is confirmed: 2.5% to 15% deposit, 20% government equity loan interest-free for five years, new builds only, price caps set on local median values (£650,000 inner London, £500,000 outer), household income cap £110,000 (£140,000 London). Pre-registration by December, applications from February 2027, first completions April 2027; £4.7bn, aimed at 70,000 buyers.
  • £1.5bn more for around 10,000 social and affordable homes; Biodiversity Net Gain scrapped for smaller brownfield sites; land sold to housing associations zero-rated for VAT from April 2027.
  • Capital allowances: the main-rate first-year allowance rises from 40% to 50% for spend from 1 January 2027, but the writing-down allowance on the main pool falls from 14% to 12% from April 2027. The £1m Annual Investment Allowance is unchanged, so for most firms the AIA still covers kit in full and the pool change is what bites.
  • Fuel duty: the 5p cut runs to 30 June 2027, then 60.59p a litre from 1 July. Red diesel 11.65p. Mileage 35p above 10,000 miles from April 2027.
  • Business Asset Disposal Relief limit halves to £500,000 from 6 April 2027; CGT rates stay 18% and 24%. CIS, the VAT reverse charge and corporation tax are untouched.
  • Landfill tax and the aggregates levy rise with RPI from April 2027. £100m for a Local Apprenticeship Service. From April 2029 VAT and PAYE must be paid by direct debit and invoices must be electronic.
  • Data centres: a new Data Centre Covenant gives strategic projects priority grid connections and temporary self-generation in return for community, water, jobs and security commitments, part of a £700m AI package. Pipeline work for civils, M&E and groundworks firms near the sites.

What didn't happen

No CGT rate rise, no stamp duty reform, no change to CIS. The FMB's view is that Your First Home favours volume housebuilders over small firms; the caps will decide that.

What I'd do this week

Developers: hold first-time-buyer stock pricing until the local caps are published and line up a February launch. Sole-trader subbies over £30,000: MTD software now. Anyone planning an exit in 2027 or 2028: the BADR limit halving is worth up to £30,000, so talk before you agree heads of terms. Budget July 2027 for fuel.

Updated on the afternoon of 28 October 2026, after the Budget speech. This replaces the morning's preview. Figures are taken from the Budget documents; anything still awaiting detail is marked as such.

John Healey's first Budget was built on cost-of-living relief paid for by a short-lived bank levy, with a scatter of small business measures and a longer list of things that will happen in 2027, 2028 and 2029. The OBR has growth at 1.2% this year and 1.0% next, inflation peaking at 3.8% in early 2027, and headroom rebuilt to £15bn. Everything below is from the Budget documents and the Treasury release, with Reuters and other reporting where the documents are silent. The dropdowns above are the short version; what follows is the full list and the dates.

The headline measures

  • Rates untouched. Income tax, NI, VAT, corporation tax (25%, small profits 19%) and dividend rates stay as they are. The personal allowance stays at £12,570 and thresholds frozen to April 2031.
  • Savings and property income taxed at 24%, 44% and 49% from 6 April 2027, two points on top of last year's increase. Personal savings allowance unchanged at £1,000 / £500.
  • Business rates. Small business rate relief threshold up from £12,000 to £18,000 for retail, hospitality and leisure (70,000 more properties pay nothing); a two-year real-terms freeze for the rest of those sectors; the 20% pub, club and music venue cut funded from April 2027. Vape shops and adult gaming centres excluded.
  • Wages. National Living Wage £13.21 from 1 April 2027 (up 3.9%); 18 to 20 rate £11.27; the younger and apprentice rates rise by the same 3.9%.
  • Driving. The 5p fuel duty cut runs to 30 June 2027, then duty goes to 60.59p a litre on 1 July. The 55p mileage rate is permanent and the rate above 10,000 miles rises from 25p to 35p from 6 April 2027.
  • Energy. £100 payment this winter for 20 million households in council tax bands A to D; 0% VAT on domestic electricity extended to 30 June 2027; gas standing charges to be abolished through Ofgem from 2027; the hydrogen levy on gas bills scrapped. Energy-intensive businesses get 25% off electricity from April 2027; hospitality does not qualify.
  • Founders and sellers. New Founders' Relief: 10% CGT on up to £10m of lifetime gains for qualifying high-growth companies from April 2027. Business Asset Disposal Relief lifetime limit halved from £1m to £500,000 from 6 April 2027 (rate stays 18%). The CSOP share option limit doubles to £120,000, badged "EMI 2". Trading allowance triples to £3,000. A Young Entrepreneurs Allowance covers a year's living costs for young founders, and British Business Bank funding for women-led businesses doubles to £200m alongside a new scale-up programme for female founders.
  • AI and tech. A £700m package: £120m for the AI Security Institute, £40m for a unit policing rogue AI agents, £165m for AI biosecurity, £154m for cyber defences, £60m more for the Sovereign AI Fund on top of its £500m, £30m for local AI pilots and a £25m AI and cyber challenge fund. A Data Centre Covenant gives strategic data centres priority grid connections in return for community, water, jobs and security tests, and keeps NHS and military data in the UK. £600m for AI in the civil service.
  • Banks and gambling. Bank surcharge up from 3% to 6% from 1 January 2027 to 31 March 2028, raising £1.5bn. Machine games duty up from 20% to 25% on machines with stakes over £1 from April 2027.
  • Savings. The planned £12,000 cash ISA cap is dropped: the limit stays £20,000. A First Time Buyer ISA replaces the Lifetime ISA from April 2029; the LISA withdrawal penalty for homes over £450,000 fell to 20% from 29 October. A "Starter ISA" for first-time investors is being designed.
  • HMRC. From April 2029: more regular in-year Self Assessment payments, mandatory direct debits for VAT and PAYE, and compulsory e-invoicing. From 2029 HMRC can take smaller tax debts directly from bank accounts where demands are ignored. 670 extra compliance officers. Online marketplaces collect VAT for UK sellers over £90,000 from October 2027.

What was rumoured and didn't happen

  • Capital gains tax rates stay at 18% and 24%. The relief limit was halved instead.
  • The mansion tax threshold stays at £2m (£2,500 a year, £7,500 over £5m, from April 2028). No cut to £1.5m.
  • Hospitality VAT at 10%: not announced. No change to the VAT registration threshold either, still £90,000.
  • Employer National Insurance: no relief, no threshold change, no under-25 extension. 15% above £5,000 and a £10,500 Employment Allowance until 2031.
  • Stamp duty and council tax reform: nothing. The personal allowance stays frozen.
  • The triple lock survives this Parliament, but the Budget confirms it will be adjusted "from the next Parliament" so the state pension tracks earnings, saving about £15bn a year by the late 2030s. A new Pension Tax Allowance means pensioners living on the state pension alone pay no income tax as it passes the personal allowance.

Dates for the diary

  • 29 October 2026LISA withdrawal charge for homes over £450,000 cut to 20%.
  • 1 November 2026Public EV charging becomes standard-rated for VAT.
  • December 2026 to February 2027Your First Home pre-registration opens, then applications from February; first loans expected April 2027.
  • 1 January 2027Main-rate first-year allowance rises from 40% to 50%. Bank surcharge rises to 6%.
  • 1 February 2027Alcohol duty rises with RPI (beer 3.5 to 8.5% ABV: £23.61 per litre of alcohol). Small Producer Relief made more generous.
  • 1 April 2027National Living Wage £13.21. Business rates: £18,000 small business relief threshold and real-terms freeze for retail, hospitality and leisure; 20% pub cut. Machine games duty 25%. Writing-down allowance falls to 12%. Energy-intensive electricity discount starts.
  • 6 April 2027Savings and property income at 24/44/49%. Trading allowance £3,000. Mileage 35p above 10,000 miles. BADR limit £500,000. Founders' Relief. CSOP limit £120,000. Payrolling of car, van, fuel and medical benefits becomes mandatory. Making Tax Digital reaches the £30,000 band. Pension Tax Allowance begins.
  • 30 June to 1 July 20270% VAT on domestic electricity ends; 5p fuel duty cut ends and duty moves to 60.59p a litre.
  • October 2027Online marketplaces start collecting VAT for UK sellers over £90,000 per platform.
  • April 2028High Value Council Tax Surcharge starts. Payrolling of all remaining benefits. Per-mile duty on electric vehicles (3p a mile). Mayors receive a share of income tax.
  • April to July 2029Regular in-year Self Assessment payments. Mandatory direct debits for VAT and PAYE. E-invoicing compulsory. First Time Buyer ISA launches. HMRC direct recovery of smaller debts from bank accounts (July).

Autumn Budget 2026 FAQs

Did income tax, National Insurance or VAT go up?

No. The rates of income tax, employee and employer National Insurance, VAT, corporation tax and dividend tax are all unchanged, and the Chancellor repeated the pledge not to raise them. What did go up is tax on savings interest and rental income, by two points to 24%, 44% and 49% from 6 April 2027, and thresholds stay frozen until April 2031.

Does the £18,000 small business rates relief apply to my business?

It is for retail, hospitality and leisure properties in England from April 2027: a shop, café, pub, restaurant, gym or salon with a rateable value of £18,000 or less should pay no business rates at all. Other sectors keep the existing £12,000 threshold. Larger hospitality and retail premises get a two-year real-terms freeze, and eligible pubs, social clubs and live music venues get a further 20% off.

When does the 35p mileage rate start?

From 6 April 2027. The 55p rate for the first 10,000 business miles, introduced in April 2026, is now permanent, and the rate above 10,000 miles rises from 25p to 35p. Both apply to employees using their own car and to the self-employed using simplified expenses.

How Lumi Can Help

The Budget, translated for your business

Most of a Budget does not apply to you. The part that does usually needs a decision by a date. The week after a Budget, for the businesses I work with, looks like this:

  • A one-page note — the measures that touch your business, with the dates and the numbers
  • April 2027 payroll re-costed — £13.21 across your actual rota, with NI and pension on top
  • Business rates checked — your rateable value against the new £18,000 threshold and the pub cut
  • Exit timing — what the £500,000 BADR limit means if you plan to sell
Book a free 30-minute call → See packages and pricing

Updated on 28 October 2026 after the Budget speech, from the published Budget documents and HM Treasury release, with press reporting where noted. Several measures are subject to consultation or secondary legislation and may change before they take effect. General guidance for the 2026/27 tax year, not advice; take specific advice before acting and refer to HMRC guidance.