John Healey’s first Budget left the headline rates alone and moved the burden onto income from assets, business exits and company distributions. For people who live and invest in the UK with interests abroad, the detail matters more than the headlines.

The Chancellor delivered Budget 2026 on 28 October against a tighter backdrop than in March: the OBR has cut 2027 growth to 1.0%, debt interest is running around £14 billion a year above the spring forecast, and the headroom against the stability rule has fallen to £15 billion in 2029-30. The response was not a broad-based tax rise. Income tax, National Insurance and VAT rates are untouched and corporation tax stays at 25%. Instead, the Budget raises a net £5.6 billion a year by 2029-30 from a handful of targeted choices, most of which take effect on 6 April 2027. That date is the organising principle of everything that follows.

What did not change

It is worth being precise about what was left alone, because much of our clients’ planning rests on it. The personal allowance and the income tax thresholds remain frozen as already legislated, to April 2031. Dividend rates stay where Budget 2025 put them from April 2026: 10.75%, 35.75% and 39.35%. Full expensing is retained and the Corporate Tax Roadmap is reaffirmed. There is nothing new on the foreign income and gains regime for new arrivals, nothing on the inheritance tax reforms already on the statute book (the £1 million cap on agricultural and business property relief has applied since April 2026, and unused pension funds come into the estate from 6 April 2027 as planned), and no change to SDLT rates. Pension salary sacrifice remains subject to the cap announced last year from April 2029.

Property and savings income: the second two points

Budget 2025 had already legislated a two-point increase in the rates on property and savings income from April 2027. This Budget adds another two points from the same date. From 6 April 2027 the property rates will be 24% basic, 44% higher and 49% additional, and the savings rates the same. Against today’s 20%, 40% and 45%, that is a four-point rise in one go. The property rates apply in England, Wales and Northern Ireland; the savings rates apply UK-wide. The Treasury’s own estimate is that 84% of income tax payers are unaffected, which is another way of saying that the increase is concentrated on exactly the people who hold rental property and non-ISA savings in their own names, including non-residents with UK rental income.

The savings allowances are unchanged: the Personal Savings Allowance and the starting rate for savings stay as they are, and the cash ISA limit remains at £20,000 for everyone, the planned cut to £12,000 having been dropped. For most clients the practical question is the structure in which UK property is held and financed from April 2027 onwards. Incorporation is back on the table for some portfolios, but it has to be read together with SDLT, ATED, the High Value Council Tax Surcharge from 2028 and, above all, the distributions reform described below. The answer is rarely the same twice.

Business owners: exits, founders and distributions

Three measures speak directly to owner-managers. First, the lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000 for disposals made on or after 6 April 2027. The 18% rate is unchanged, so on a £1 million qualifying gain the additional cost is up to £30,000 per individual. Where a sale is genuinely in prospect, the sequencing of the transaction relative to 5 April 2027 deserves a decision now, not next summer, and the Finance Bill clauses should be read as soon as they are published.

Second, a new Founders’ Relief will offer a 10% capital gains tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies, also from 6 April 2027. The detailed design is out for technical consultation, so the qualifying conditions, and how the relief sits alongside BADR, remain to be seen. It is a significant signal for anyone building a business in the UK, but it is not yet something to plan around.

Third, and in my view the most consequential structural change in this Budget, the government will reform the taxation of distributions to individual shareholders from April 2028, so that similar transactions are taxed consistently “regardless of legal form, company residence or transaction structure”. Capital treatment is to be protected for genuine changes of ownership, including family succession, and the relief for demergers may become more generous in some cases. Draft legislation will follow in 2027. The yield pencilled in, around £800 million a year, tells you the scope is real. Any liquidation, buy-back, reduction of capital or pre-sale reorganisation planned for 2027-28, in a UK or a non-UK company, should be mapped against this now.

Companies and international groups

For companies the picture is one of stability on the headline rate with a quieter tightening underneath. The main-rate writing-down allowance falls from 14% to 12% from April 2027, while the main-rate first-year allowance rises from 40% to 50% for expenditure from 1 January 2027: faster relief on new investment, slower relief on legacy pools. The bank surcharge is doubled to 6% from 1 January 2027 to 31 March 2028. The foreign permanent establishment exemption becomes mandatory for accounting periods beginning on or after 1 January 2027, which means UK companies can no longer use the losses of an Italian or other overseas branch against UK profits.

On VAT, online marketplaces will have to account for VAT on sales by UK businesses exceeding £90,000 per platform from 1 October 2027; from 1 April 2027 the reverse charge on cross-border services is restricted to VAT-registered customers, so an Italian provider supplying a non-registered UK business will need to register and account for UK VAT; and larger private hire operators become liable to VAT on full fares from 2 January 2028. A statutory regime for foreign sovereign investors arrives on 1 January 2029 and will bring certain UK real estate income and gains into charge. Investors in US LLCs and other reverse hybrids finally get a double tax relief mechanism, to be legislated in Finance Bill 2027-28. On the positive side, the CSOP limit doubles to £120,000 and the scheme is relaunched as EMI2 from April 2027, the R&D Claim Notification Form is abolished from April 2027, and the Advance Tax Certainty Service opens to projects of £300 million from 4 November 2026.

Trusts, estates and high-value homes

Several measures took effect on Budget day. The inheritance tax rules on liabilities relating to trust property are tightened for deaths and chargeable events from 28 October 2026, aligning them with the treatment of personal liabilities and closing arrangements that produced unintended deductions. The capital gains tax exit charge on trusts ceasing to be UK resident is eased for migrations from the same date, a welcome change for families who relocate to the UK with existing trust structures and whose trustees move with them. And the two-year rule on pension death benefits is removed, so beneficiaries are no longer taxed solely because a payment arrives more than two years after death.

The High Value Council Tax Surcharge on homes worth £2 million or more is confirmed for April 2028 in England, now with a deferral scheme, a set of discounts and exemptions, and a 100% premium on homes left empty for twelve months or more. ATED charges rise by 3.5% for 2027-28. SDLT group relief is tightened from 29 October 2026 where the vendor company has been wound up.

HMRC: more officers, more data, more powers

The compliance direction of travel is unmistakable. HMRC gains 670 further compliance officers, a published plan for the compliance of wealthy taxpayers, a power from July 2029 to recover lower-value tax debts directly from the bank accounts of those who can pay but repeatedly do not, mandatory in-year payments for self-assessment taxpayers from April 2029, direct debit for VAT and PAYE liabilities from the same date, mandatory e-invoicing for VAT invoices from April 2029, a new duty to correct identified errors from April 2028, and consultations on offshore penalties and on the tax avoidance market. For internationally mobile clients this means one thing: positions need to be documented well enough to be HMRC-defendable before they are tested, not after.

Smaller measures worth knowing

The trading allowance rises from £1,000 to £3,000 from April 2027. Tax-free mileage is now permanently 55p for the first 10,000 business miles, with the rate above that rising from 25p to 35p from April 2027. A Pension Tax Allowance from April 2027 removes income tax for pensioners whose total income does not exceed the full new State Pension, with a taper above it, and the triple lock is adjusted from April 2030. Taxpayers joining Making Tax Digital for income tax in April 2027 will have a year’s penalty easement.

What to do before April 2027

Almost everything here points to the same window. Landlords and savers should model 2027-28 at the new rates and take a structural decision in the first quarter of next year, with the 2028 distributions reform in view. Anyone with an exit in prospect should settle the sequencing question against the 5 April 2027 BADR change. Owner-managers and holding structures, UK and non-UK, should list every distribution, liquidation or reorganisation pencilled in for 2027-28 and test it against the April 2028 reform. International groups should review branch loss positions and the VAT registration exposure of non-UK service providers from April 2027. Trustees and executors should revisit liabilities secured on trust assets and pension death benefit arrangements in light of the changes already in force. Done in that order, this is an action plan rather than a scramble, and the outcome is the one we aim for in every engagement: no surprises.

This note is general information based on the HM Treasury Budget 2026 document published on 28 October 2026 (in particular paragraphs 2.36–2.54, 6.147–6.154, 6.181–6.183, 6.210–6.213, 6.234–6.262 and Table 6.1). It is not advice, and the detail of several measures will only be settled when Finance Bill 2026-27 is published. If any of this touches your position, please get in touch through the site.

Mail: angelo@vectigalistax.co.uk