The October Budget 2026 is here. This year’s Budget comes a month earlier than last year’s Budget. held on the 26 November. It is also the earliest Budget since 2021, when it was held on the 27 October.
Higher Tax Rates for Landlords
The Chancellor announced a further two-percentage-point increase in tax rates on property income from April 2027. This concerns taxable rental income, rather than the total rent you receive.
Your final tax bill depends on the following:
- Your rental income and allowable expenses
- Your other earnings and tax band
- Any tax reliefs you can claim
- Whether you own the property personally or through a limited company
Previous government plans already introduced property income tax rates of 22%, 42% and 47% from April 2027. Therefore, the government needs to clarify whether this announcement adds another increase to those previously announced rates.
In the meantime, landlords should review their expected rental profits and consider how much money they set aside for tax.
Savings Interest Could Face Higher Tax
The Chancellor also announced a further two-percentage-point increase in tax rates on savings income from April 2027. However, this does not mean the government will tax your savings balance. Instead, the change concerns taxable interest that your savings earn.
For example: You might earn interest on money held in an ordinary savings account.
You will not necessarily pay more tax on savings, as your position depends on:
- How much interest your savings earn
- Your other sources of income
- Your Personal Savings Allowance
- Whether you hold your savings in an ISA
Trading Allowance to Increase from £1,000 to £3,000
The Chancellor announced plans to increase the trading allowance from £1,000 to £3,000.
This could help people who:
- Freelance alongside their main job
- Provide gardening, cleaning or other services
- Sell products as a business
- Run a small business in their spare time
Under the current rules, eligible individuals can receive up to £1,000 in gross trading income without paying Income Tax on it.
Business Rates Relief for Small Businesses
The Chancellor announced plans to increase the small business rates relief threshold from £12,000 to £18,000. He said this could remove business rates bills for around 70,000 businesses. The announcement specifically targets businesses within retail, hospitality and leisure.
For example: The changes could benefit qualifying shops, cafés, restaurants, pubs and salons.
Business rates depend on your premises’ rateable value, rather than your business turnover. Rateable value broadly reflects the estimated annual rental value of a property. Your property’s location and the number of premises you occupy may also affect eligibility.
Read more: Business Rates for Pubs and Venues
National Minimum Wage to Increase by 3.9%
The Chancellor announced a 3.9% increase in the National Minimum Wage and National Living Wage. According to the Budget speech, the increase will benefit around 2.3 million lower-paid workers. The announcement also includes a 3.9% rise for workers aged 18 to 20.
The following table shows the current hourly rates alongside illustrative figures. The estimates apply a 3.9% increase to each existing rate.
| Age or Category | Current Hourly Rate | Illustrative New Rate |
|---|---|---|
| 21 and over | £12.71 | £13.21 |
| 18 to 20 | £10.85 | £11.27 |
| Under 18 | £8.00 | £8.31 |
| Apprentice rate | £8.00 | £8.31 |
These figures provide estimates, not the official 2027/28 minimum wage rates.
Paid Parental Leave for Self-Employed Fathers and Partners
The Chancellor announced plans to extend paid parental leave to self-employed fathers and partners. Currently, many self-employed parents face financial challenges when taking time away from their businesses.
Changes to Self Assessment Payments
The Chancellor outlined plans to reform Self Assessment payments from 2029. The government wants to introduce smaller, more regular payments instead of larger bills.
For sole traders and landlords, this could make budgeting for tax easier. However, the speech did not confirm that taxpayers must make monthly payments.
Changes for Business Owners Planning to Sell
The Chancellor announced plans to reduce the lifetime limit for Business Asset Disposal Relief. The proposed limit would fall from £1 million to £500,000. This relief can reduce Capital Gains Tax when qualifying business owners sell their businesses.
The government also announced a separate founders’ relief. This proposal could offer qualifying founders a 10% tax rate on lifetime gains up to £10 million.
Support for Household Energy Bills
Alongside business tax changes, the Chancellor announced several measures to ease rising household costs. One of the main announcements involves a £100 household energy payment. The government plans to provide this payment to around 20 million households in England.
The proposed payment will support households in council tax bands A to D. The government intends to pay the money directly into eligible households’ bank accounts this winter.
Electricity VAT Cut Extension
The Chancellor also extended the temporary VAT reduction on electricity. The zero VAT rate had previously been due to end in March 2027. However, it will now continue until July 2027. The Chancellor said this extension would reduce the annual energy price cap by £50.
Fuel Duty Cut Extension
The Chancellor announced another extension of the existing 5p fuel duty cut. The reduction will now continue until July 2027. The Chancellor announced another extension of the existing 5p fuel duty cut. The reduction will now continue until July 2027.
Cash ISA Allowance to Remain at £20,000
The Chancellor confirmed that the planned reduction in the cash ISA allowance would not proceed. Instead, the annual cash ISA limit will remain at £20,000.
The Chancellor also announced plans for a new Starter ISA. This would aim to make investing more accessible.
New Support for First-Time Buyers
The Chancellor announced plans to introduce a First Time Buyer ISA to replace the Lifetime ISA. He also outlined changes to the existing Lifetime ISA withdrawal penalty.
Additionally, the government announced the Your First Home scheme. This proposed scheme would support eligible first-time buyers through government-backed equity loans. The Chancellor outlined plans for a 2.5% deposit and a potential equity loan worth 20% of a qualifying new-build home’s value.
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This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.