Autumn Budget 2026: what it means for your limited company

The Chancellor, John Healey, delivered the Autumn Budget on Wednesday 28 October 2026. This is what it changes for a UK limited company and the people who run it, and what it leaves alone. Every change below has the date it starts, because most Budget measures don't apply straight away.

The headline for a small company: the taxes that decide how you pay yourself didn't move. Dividend tax, Corporation Tax, employer National Insurance and the VAT threshold are all unchanged for 2027/28. The changes that do land are at the edges: a bigger first-year allowance paired with a slower writing-down allowance, higher tax on savings and property income from April 2027, a halved Business Asset Disposal Relief limit for anyone selling up, and a run of HMRC administration changes from 2027 to 2029.

The short version

Paying yourself: salary and dividends

Most directors of small companies pay themselves a small salary and take the rest as dividends. Two things decide how much tax that costs: the dividend tax rates and the National Insurance on the salary.

Before the Budget, for 2026/27, dividends above the £500 allowance were taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% above that. The Government had promised not to raise Income Tax, National Insurance or VAT for the rest of this Parliament. Dividend tax is a separate tax, so it wasn't covered by that promise.

The Budget left dividends alone. The 2027/28 rates in the Government's own tables are 10.75%, 35.75% and 39.35%, with the allowance still £500, and the Chancellor said in the speech there is "no change to tax on income from dividends". The one thing to watch is further out: the Budget confirms a rewrite of the rules on "distributions" from companies to individual shareholders, to take effect from April 2028 after a consultation in 2027. The press release describes it as preventing "complex arrangements being used to extract profits at lower tax rates". No detail is published yet, so there's nothing to act on, but a company that plans to return money to its owners through share buy-backs, capital reductions or a winding-up should expect those routes to be looked at.

Income Tax itself is unchanged: 20%, 40% and 45%, with the personal allowance at £12,570 and the basic rate band at £37,700. Those thresholds were already frozen until 5 April 2031 by last year's Budget, and nothing in this one changes that. Employee National Insurance stays at 8% and 2%, and the Government says the National Insurance thresholds will be "maintained at 2026 to 2027 levels until the 2030 to 2031 tax year". The only moving part is the Lower Earnings Limit, which rises from £129 to £133 a week (£6,916 a year) from 6 April 2027. If your salary is pitched at the LEL to earn a State Pension year, it needs to go up by £208 a year from next April.

What did go up is the tax on income that isn't earnings or dividends. From 6 April 2027, interest and rental income are taxed at 24%, 44% and 49% rather than the main rates. If you hold savings personally or let a property alongside the company, that's two percentage points more on top of the two already announced last year.

To see what a salary and dividend mix costs you, use our salary vs dividends calculator. Our guide to how to pay yourself from a limited company explains the trade-offs.

Corporation Tax

Before the Budget, companies paid 19% on profits up to £50,000, 25% on profits over £250,000, and a rate in between with marginal relief. Those limits are shared between associated companies and shortened for a short accounting period.

None of that changed. The rates and limits for 2027/28 are the same, and the Budget commits to "maintain the main rate at 25% and the small profits rate at 19%" for the financial year starting 1 April 2028, within the 2024 Corporate Tax Roadmap.

Capital allowances did change, in two directions. The main rate first-year allowance goes up from 40% to 50% for spending on or after 1 January 2027, so half the cost of a qualifying asset comes off profit in year one. The main pool writing-down allowance goes down from 14% to 12% for accounting periods beginning on or after 1 April 2027 (6 April 2027 for unincorporated businesses), with a blended rate for a period that straddles that date, so what's left in the pool, and anything bought second-hand, is written off more slowly. Full expensing for new plant and machinery stays, and so does the £1 million Annual Investment Allowance, which for most small companies is the allowance that matters: it still writes off the whole cost in the year you buy.

Two administration points for later: the Claim Notification Form for R&D relief is dropped for claims made on or after 1 April 2027, and amended Company Tax Returns must be filed online from 1 April 2028.

Our Corporation Tax calculator works out the tax on a year's profit, including marginal relief.

Director's loans

If a director owes the company money at the year-end and doesn't repay it within 9 months and 1 day, the company pays a temporary charge under section 455. It follows the dividend upper rate for the year the loan was made, which is 35.75% for loans made from 6 April 2026.

Because the dividend upper rate didn't move, the s455 rate stays at 35.75% for loans made in 2027/28. The Budget also drops a proposal that would have made companies report payments to their participators in more detail: the Government "will not implement the new reporting requirements at this time".

The s455 calculator shows whether your company owes the charge.

Employing people

Before the Budget, employers paid National Insurance at 15% on salaries above £5,000 a year, and Employment Allowance cut up to £10,500 a year off the bill. Employment Allowance isn't available to a company whose only employee paid above that threshold is a director.

The Budget changes neither the rate, the £5,000 threshold nor the £10,500 allowance, and holds the thresholds at today's levels until 2030/31. The costs that do rise for employers come from elsewhere:

• The National Living Wage goes up 3.9% to £13.21 an hour from 1 April 2027 (£11.27 for 18 to 20 year olds, £8.31 for 16 to 17 year olds and apprentices).
• Payrolling of benefits in kind becomes mandatory from 6 April 2027 for company cars and vans, car and van fuel, and medical benefits, and from 6 April 2028 for most other benefits. P11D forms for those benefits go, and the tax is collected through payroll each month instead.
• Mileage payments for staff using their own car rise from 25p to 35p a mile above 10,000 business miles a year from 6 April 2027. The 55p rate for the first 10,000 miles is made permanent.
• Every employer must have a Direct Debit mandate in place for PAYE by April 2029 (you can still pay another way before the due date).

Employee share options get more room: the EMI2 (formerly CSOP) individual limit doubles to £120,000 from 6 April 2027, EMI grants are notified through the end-of-year return rather than separately, and the window to exercise after a disqualifying event extends to 180 days.

VAT

The VAT registration threshold was £90,000 of taxable turnover over any rolling 12 months, and you could deregister below £88,000.

Both stay the same for 2027/28, as do the 20%, 5% and 0% rates. Three dated changes are worth knowing:

• From April 2027, the reverse charge on services bought from overseas applies only to VAT-registered businesses. A company below the threshold buying software or services from an overseas supplier will be charged UK VAT by that supplier, and can't reclaim it.
• From October 2027, online marketplaces collect VAT on sales by UK VAT-registered businesses, and by any other UK business selling more than £90,000 a year through that platform. Personal sales, second-hand goods and business-to-business sales are outside it.
• From April 2029, HMRC regulations will require electronic VAT invoices. The scope and exemptions come later; a consultation on digital reporting runs to 20 January 2027.

Every VAT-registered business also needs a Direct Debit mandate in place by April 2029.

Our guide on when you have to register for VAT explains the rolling 12-month test.

Making Tax Digital and HMRC deadlines

The Budget documents don't change the Making Tax Digital for Income Tax timetable: sole traders and landlords with more than £30,000 of that income join from April 2027, and more than £20,000 from April 2028. Three small groups (people eligible for qualifying care relief, non-resident entertainers and sportspeople, and people expected to be non-resident) are exempt until further notice. What's new for everyone else is an easement: anyone joining in April 2027 gets no late-submission penalty points on their 2027/28 quarterly updates. A director with rental or self-employed income alongside the company should still plan for quarterly updates from next April.

Two payment changes come later. From April 2029, Self Assessment taxpayers who make payments on account will move to smaller, more regular in-year payments, collected automatically (by Direct Debit, for example) by default, with an option to pay through PAYE instead; the details are to be set out next year. And from July 2029 HMRC expects to recover lower-value tax debts by regular deductions from the bank accounts of people who "can afford to pay but repeatedly fail to do so", with a code of practice on safeguards and draft legislation both due for consultation in summer 2027.

Selling up: Business Asset Disposal Relief and Founders' Relief

If you sell or wind up a trading company, Business Asset Disposal Relief taxes qualifying gains at 18% instead of 24%. The lifetime limit on those gains halves from £1 million to £500,000 for disposals on or after 6 April 2027. The Chancellor said that means "no change for 3 in 4 claimants"; for a bigger exit, the extra 6% applies to everything above £500,000. If a sale is already in progress, the date of the disposal decides which limit applies. Exchanging an unconditional contract before 6 April 2027 and completing after it doesn't lock in the £1 million limit: HMRC's anti-forestalling rule applies the £500,000 cap unless the parties can show the timing wasn't chosen for the tax advantage.

Alongside it comes a new Founders' Relief: a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for "founders of, and significant early investors in, high-growth, innovative UK companies", for disposals on or after 6 April 2027. Who qualifies is out for consultation until 30 November 2026, so don't plan around it yet.

What didn't change

Checked against the Budget documents, each of these stays as it was:

• Dividend tax rates and the £500 allowance.
• Income Tax rates, personal allowance and bands (frozen to 5 April 2031 since last year).
• Employer National Insurance at 15% above £5,000; Employment Allowance £10,500; employee NI 8% and 2%.
• Corporation Tax at 19% and 25%, the £50,000 and £250,000 limits and marginal relief, now confirmed through the year from 1 April 2028.
• Full expensing and the £1 million Annual Investment Allowance.
• VAT registration at £90,000 and deregistration at £88,000.
• Capital Gains Tax rates of 18% and 24% and the £3,000 annual exempt amount; the BADR rate of 18%.
• The Making Tax Digital for Income Tax timetable.
• The cash ISA limit of £20,000.

What to do now

1. Leave your salary and dividend plan alone for 2027/28, unless your salary sits at the Lower Earnings Limit: raise it to £6,916 from 6 April 2027 so the year still counts for your State Pension.
2. Time big asset purchases. Spending on or after 1 January 2027 gets the 50% first-year allowance; most small companies will still be better off claiming the Annual Investment Allowance, which writes off 100%. Ask before you assume.
3. If you're planning a sale or a members' voluntary liquidation with gains above £500,000, the disposal date matters: before 6 April 2027 the £1 million BADR limit applies. Take advice on timing rather than rushing a sale for tax alone.
4. Move savings and rental income into the plan. From April 2027 interest and rents are taxed at 24%, 44% and 49% in your hands. Interest earned inside the company is taxed at Corporation Tax rates instead.
5. Get ready for payrolling benefits. If the company provides a car, van, fuel or medical cover, the tax goes through payroll from April 2027. Check your payroll software can do it.
6. Diary April 2029: Direct Debit mandates for VAT and PAYE, and e-invoicing.

Ledgers keeps your books up to date and works out your Corporation Tax as the year goes on, using the rates in force for each period. You can see the effect of a change on your own numbers rather than an example. Start your books in Ledgers for free.

Guidance only, not tax advice. Facts as at 28 October 2026, checked against GOV.UK on 30 October 2026. Sources: Budget 2026 document; Budget 2026 speech; Budget 2026: Overview of tax legislation and rates (OOTLAR) and its Annex A: rates and allowances; Capital allowances: writing-down allowance and first-year allowance; Business Asset Disposal Relief lifetime limit; Founders' Relief; Savings and property income rates; Trading allowance; Reporting company payments to participators: outcome; Direct Debit for VAT and PAYE: outcome; Timely payments in ITSA: outcome; Lower-value tax debts: outcome; Check if you're eligible for MTD for Income Tax; VAT: electronic invoicing; Maintaining Income Tax thresholds until 5 April 2031 (Budget 2025); National Living Wage from April 2027.

Frequently asked questions

Did the Autumn Budget 2026 change dividend tax?

No. The dividend rates for 2027/28 stay at 10.75%, 35.75% and 39.35%, and the dividend allowance stays at £500. The Chancellor said there is "no change to tax on income from dividends".

Did Corporation Tax change in the 2026 Budget?

No. The small profits rate stays at 19% on profits up to £50,000, the main rate at 25% over £250,000, with marginal relief in between, and the Government confirmed the same rates for the year from 1 April 2028.

What changed for capital allowances?

The main rate first-year allowance rises from 40% to 50% for spending on or after 1 January 2027, and the main pool writing-down allowance falls from 14% to 12% from 1 April 2027. Full expensing and the £1 million Annual Investment Allowance stay.

Did employer National Insurance change?

No. Employers still pay 15% above £5,000 a year, Employment Allowance stays at £10,500, and the thresholds are held at their 2026/27 levels until the 2030/31 tax year. Only the Lower Earnings Limit moves, to £133 a week from April 2027.

Did the VAT registration threshold change?

No. It stays at £90,000, with deregistration at £88,000. The Budget sets a date of April 2029 for electronic VAT invoicing and, from April 2027, overseas suppliers will charge UK VAT to businesses that aren't VAT-registered.

Tools and guides for this

• UK tax rates 2026/27Every rate and threshold in one place, with the source for each.
• Making Tax Digital for Income TaxWho's in scope, the dates, and what to do now.
• Corporation Tax calculatorMarginal relief, short and long periods, and when to pay.

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