For individuals, the Budget confirms that taxes on working people will not be increased. It includes a temporary VAT reduction on household electricity costs, an increase in the tax-free mileage allowance from 25p to 35p per mile above 10,000 business miles, and a 3.09% increase in the National Minimum Wage and National Living Wage. Self-employed individuals will gain access to paternity leave, a new £3,000 trading allowance and an entrepreneurs’ allowance to support first-year business costs.

For businesses, full expensing remains in place. A new 40% first-year allowance will provide upfront relief for certain main-rate assets, while the main rate of writing-down allowance will reduce from 18% to 14%. The Budget also confirms a £500,000 limit for Business Asset Disposal Relief, a new Founders’ Relief at 10% on qualifying gains up to £10 million, an increase in the pension tax allowance, and an expanded Enterprise Management Incentives regime through EMI II.

Other measures include an additional two percent on tax applying to savings interest and rental income, a further 3% banking surcharge from January 2027 to April 2028, and a move towards more regular self-assessment payments from 2029.

HMRC will be given more powers, including debt collection from bank accounts for debts over £5k for individuals and £10k for businesses and there will be a requirement for VAT and PAYE liabilities being paid by direct debit from 2029, in addition to more regular payments on account for self-assessment individuals.

Their team have broken down the impact on how it will impact you or your business below. You can also read reaction to the Chancellor's announcements by Lorraine Nelson, Partner & Head of Tax at BDO NI here.

Capital Taxes

• The Main and Lower Rate of Capital Gains Tax stay at 24% and 18% respectively, and the Annual Exemption remains frozen at £3k per person into 2028.
• For business owners, the existing Business Asset Disposal Relief (BADR) lifetime allowance has been halved to £500k from April 2027, providing limited relief for owners considering an exit before April 2027.
• A new ‘Founder Relief’ has been announced, alongside a consultation, designed to encourage ‘founders and early investors” to scale their companies providing a reduced 10% rate of Capital Gains Tax on up to £10 million of qualifying lifetime gains after 6 April 2027; with the Government targeting high-growth, innovative companies. This relief will be heavily restricted, with numerous conditions required to be met for the individual including:
• Own a minimum of 25% of the shares in a ‘trading’ business for a minimum of 5 years;
• Have turnover exceeding £10 million and employ a minimum 15 full time equivalent staff;
• Meet at least two of three growth and innovation conditions: a 25% increase in turnover or employee headcount, and spending at least £1.5million on qualifying research & development.
• As announced in the last Chancellors’ Budget, from April 2027 pensions and certain employment death benefits will no longer be exempt from Inheritance Tax.  The new Chancellor has not rowed back on this policy, and used Budget 2026 to provide HMRC with the means to collect these taxes by levying a tax charge on beneficiaries at their marginal rate of income tax for the year the lump sum was paid.

Indirect Taxes

• The temporary VAT cut on electricity bills is to be extended until 1 July 2027.  The previous cut did not extend to Northern Ireland due to Brexit implications, and the same is expected with this cut – however, Stormont may provide support separately.
• VAT will be leading the way for the next phase of Making Tax Digital, with the introduction of e-invoicing from 1 April 2029.  The recent Irish budget made announcements on e-invoicing to comply with EU-wide rules which will be mandatory from July 2030.  Early preparation and ensuring you are operating with the correct software for your business will assist when the implementation of e-invoicing arrives.
• There are also amendments to the VAT Act for VAT in the digital age under Pillar 3, relating to distance sales of goods to consumers in NI from the EU.
• Online marketplaces will be required to collect VAT on qualifying sales by UK businesses on their platforms, from October 2027. For those operating in the e-commerce space, the normal VAT registration rules apply, however the collection of the VAT from customers may change therefore consideration of the impact on the rules on cash flow will be important, along with early contact with the online marketplace.
• Any land sold to a registered provider of social housing as defined in existing VAT legislation, will be zero rated. This will reduce the complexities of structuring and potential cash flow implications of ‘golden brick’ developments.
• From April 2027, the reverse charge will only apply where the UK recipient is VAT registered. For supplies made to non-VAT registered businesses, the overseas supplier will be required to charge UK VAT.
• Some VAT rate changes to Energy Saving Materials will revert to reduced 5% rate from April 2027, and will now include heat batteries installed in residential accommodation or charity premises. Following some debate in the Courts, HMRC will confirm that electricity supplied for public EV charging points will be standard rated at 20%, and not at the reduced rate.
• From April 2029, taxpayers will be required to set up direct debits for VAT liabilities, subject to some clearly defined exceptions.
• There have been amendments to SDLT group relief rules on the winding up of a vendor.
• Plans are in place to abolish Stamp Duty and Stamp Duty reserve tax in 2027 and replace these with Securities transfer tax.
• Plastic packaging tax has increased in line with CPI from 1 April 2027.

Corporate Taxes

Capital allowances:

• Full expensing will remain but there are some capital allowance rate changes.
• First year allowances will increase from 40% to 50% for expenditure incurred on or after 01 January 2027.
• The main rate writing‑down allowance for plant and machinery will be reduced from 14% to 12% to take effect from 01 April 2027 for Corporation Tax.

Research and Development (R&D) administration:

• For R&D claims made on or after 1 April 2027, the requirement to submit a R&D claim notification form will be removed.
• From Autumn 2027, the information required in the R&D Additional Information will be simplified.

Pillar Two

• The UK’s Permanent Establishment exemption will become mandatory for accounting periods beginning on or after 1 January 2027. This may impact global groups were there are loss making or low taxed overseas Pes and could impact Pillar Two calculations.
• There have been a number of UK regime’s that overlap with Global Pillar Two rules, which are to be simplified to reduce duplication for UK entities, which include the Controlled Foreign Companies (CFC) and Anti-Hybrid rules.

Income Taxes

• From April 2027, a new Pension Tax Allowance will be available to pensioners with income up to and including the full annual value of the new State Pension (£13,036.40 for 2027/28), ensuring they pay no income tax. Pensioners with income above this threshold may still benefit from a reduction in their income tax liability. The allowance will gradually decrease as income rises and will eventually be withdrawn completely. For every £3 of income above the full annual value of the new State Pension, the Pension Tax Allowance will reduce by £1.
• From 6 April 2027, self-employed individuals can benefit from an increased trading allowance of £3,000 (up from £1,000). The trading income reporting threshold for Self Assessment will also increase to £3,000.
• On top of the increases announced in the previous Budget, from 6 April 2027 there will be a further 2% increase on the income tax rates for property and savings income. Basic, higher and additional rates of tax on interest and property income will increase to 24%, 44% and 49% respectively. The 0% starting savings rates of £1,000 for basis rate taxpayers, and £500 for higher rate tax payers will remain.
• From April 2029, Income Tax Self Assessment taxpayers who make Payments on Account will be required to make automated, more regular payments towards their final income tax bill.
• The cash ISA limit will remain at £20,000, reversing the reduction announced in the last Budget, and retaining the existing scope for tax-free saving.  

Employment Taxes

• The National Living Wage (NLW) and National Minimum Wage (NMW) rates will increase by 3.9% from 1 April 2027. The NLW for workers aged 21 and over will rise to £13.21 an hour. The NMW will increase to £11.27 for 18 to 20-year-olds and £8.31 for 16 to 17-year-olds and eligible apprentices. Employer’s should review any deductions and salary sacrifice schemes in advance of April, to ensure continued compliance.
• Announcement of a permanent increase to the standard Approved Mileage Allowance Payment of 55p per mile up to 10,000 miles and an increase in the higher AMAP from 25p to 35p per mile for mileage over 10,000 miles.
• Employee Share Incentives:  the government has continued to modernise tax advantaged employee share schemes (namely, Enterprise Management Incentives, EMI and Company Share Option Plans, now EMI2) dramatically increasing the eligibility of the schemes to UK businesses to enable employee attraction, retention and incentivisation.
• New benchmark scale rates for subsistence expenses without requiring receipts to be checked will be updated to £20 for periods of travel over 5-hours, £60 for over 10-hours and £75 for over 24-hours from April 2028. 
• From April 2029, the Government will introduce automated payment of PAYE liabilities by Direct Debit.

What does this mean for you and your business?

Contact their Tax Team to discuss how these announcements could affect you and your business.

Contact us.