November 2026 Newsletter
The Autumn Budget on 28 October brought changes to rental tax, savings tax, the Business Asset Disposal Relief limit and the minimum wage, among others. Our full Budget summary leads this newsletter, with plain-English explanations and examples. Other headline items include the second Making Tax Digital update on 7 November, the end of the Companies House identity verification transition, and the new workplace harassment rules that took effect on 30 October. If any of this applies to you, get in touch, and we will talk it through.
The Budget, 28 October 2026: what it means for you
The Budget in one minute
Chancellor John Healey’s first Budget did not raise the income tax rates on wages, pensions and business profits, or the rates of National Insurance or VAT. The biggest change for many of our clients is higher tax on rental profits and savings interest from April 2027. Landlords and people with large savings outside an ISA will pay more. Pensioners on low incomes, people with small side earnings and anyone who drives for work will pay less. If you plan to sell your business, talk to us before April 2027, when a key relief is halved. Most changes start on 6 April 2027, so there is time to plan.
If you let property
Tax on rental profit goes up. From 6 April 2027, rental profit gets its own tax rates: 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate. Today it is taxed at 20%, 40% and 45%. So you will pay 4p more tax on every £1 of rental profit: 2p was announced last year and 2p more today.
Example: you earn a £30,000 salary and make £20,000 a year profit from a flat with no mortgage. Your tax on the rent goes from £4,000 to £4,800, so £800 more each year. A higher rate taxpayer with the same rent also pays £800 more (£8,000 up to £8,800).
If you have a mortgage, the tax relief on your mortgage interest is expected to rise from 20% to 24% as well, which softens the blow. This is still to be confirmed. We will work out your figures.
What to do: talk to us before April 2027 if you are thinking of selling or transferring a property, or wondering whether owning it through a company now makes sense. That has its own costs, so it is not right for everyone. See also Making Tax Digital below.
If you have savings
From 6 April 2027, interest above your tax-free Personal Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher rate) will be taxed at 24%, 44% or 49%, up from 20%, 40% or 45%.
Example: £2,000 of interest a year (about £50,000 earning 4%). A basic rate taxpayer pays £240 instead of £200. A higher rate taxpayer pays £660 instead of £600.
The good news: the government has dropped its plan to cut the cash ISA limit to £12,000. You can still put £20,000 a year into a cash ISA, and the interest is tax-free.
What to do: use your ISA allowance, and your partner’s, before 5 April each year.
If you run a business
Small side income. From 6 April 2027, the trading allowance triples from £1,000 to £3,000. If your total takings from a small side business are £3,000 a year or less, you pay no tax on them and do not need to tell HMRC.
Example: you make £2,500 a year selling crafts, with no expenses. Today you pay £300 tax. From April 2027 you pay nothing.
Making Tax Digital. If your self-employed and rental takings (before expenses) were over £30,000 on your 2025-26 tax return, you must keep digital records and send HMRC updates every three months from 6 April 2027. Today’s news: you will not get penalty points for late updates in your first year. You still need to send them.
Paying tax during the year. From April 2029, if you make payments on account, HMRC will collect them in smaller, more regular amounts during the year, with an option to pay through PAYE. The details are still being worked out.
Equipment. The allowance to deduct the full cost of equipment up to £1 million a year is unchanged. A separate first-year allowance rises from 40% to 50% from 1 January 2027, mainly helping some larger purchases.
Shops, pubs, cafés and other high street businesses in England. From April 2027, if your premises have a rateable value up to £18,000 (up from £12,000), you pay no business rates. Partial relief will run up to £21,000 (up from £15,000). Pubs get an extra 20% off. Bills for these businesses will not rise faster than inflation for two years.
If you own a limited company
No change to Corporation Tax rates or to dividend tax (10.75%, 35.75% and 39.35%, with a £500 tax-free allowance).
Selling your business. The lifetime limit for Business Asset Disposal Relief, which taxes gains on selling a business at 18%, halves from £1 million to £500,000 for sales on or after 6 April 2027.
Example: a higher rate taxpayer sells their company for a £1 million gain. Before 6 April 2027, the tax is £179,460. After, it is £209,280, as the half above the new limit is taxed at the normal 24%. That is £29,820 more. Put simply, the most this relief can save a higher rate taxpayer is £30,000, down from £60,000.
What to do: if you might sell, talk to us now, because the timing matters. Special rules cover contracts signed before 6 April 2027 that complete later.
Coming later. A new 10% Founders’ Relief for founders of fast-growing, innovative companies is still under consultation. Some technical rules on company payouts change from April 2028. We will tell you if they affect you.
If you employ staff
Minimum wage from 1 April 2027: £13.21 an hour for workers aged 21 and over (up 3.9%), £11.27 for ages 18 to 20, and £8.31 for 16- and 17-year-olds and apprentices. A full-time worker (35 hours a week) on £13.21 will cost about £1,050 more a year: £910 in pay plus £137 in employer National Insurance, before pension contributions.
Company cars and health insurance. From 6 April 2027, company cars, vans, fuel and private medical cover must go through your payroll each month, instead of a P11D form after the year end. Other benefits follow in April 2028. Talk to your payroll provider or us now.
If you are retired or saving for retirement
New Pension Tax Allowance. From 6 April 2027, if you are over State Pension age and your total income is no more than £13,037, you pay no income tax.
Example: with income of exactly £13,037 you would have paid £93.40. Now you pay nothing. Between £13,037 and about £13,319 you get part of the allowance: with income of £13,200, your tax falls from £126.00 to £86.93. Above about £13,319, there is no saving.
State Pension. The triple lock continues until April 2029. A changed version starts from April 2030.
Reminder: pensions and inheritance tax. This was announced last year and is now law. From 6 April 2027, most unused pension funds will count towards your estate for inheritance tax. If you have not checked your will and pension nominations recently, now is a good time.
Everyone
Tax-free allowance and tax bands stay the same in 2027-28: you pay no income tax on the first £12,570, and the higher rate starts at £50,270.
Energy and fuel. Homes in council tax bands A to D in England get a £100 energy payment in 2027. The VAT cut on household electricity and the 5p fuel duty cut both run to 30 June 2027.
What did not change
Income tax, National Insurance and VAT rates. Capital Gains Tax rates (18% and 24%) and the £3,000 tax-free amount. Inheritance tax thresholds (£325,000, plus £175,000 for a home left to children or grandchildren).
Key dates
- 31 January 2027: deadline to file your 2025-26 tax return and pay what you owe.
- Before 5 April 2027: use this year’s ISA allowance; talk to us about any business sale; get ready for Making Tax Digital and payrolling.
- 1 April 2027: new minimum wage rates; new business rates relief.
- 6 April 2027: most changes in this summary start, including higher tax on rent and savings, the Pension Tax Allowance, Making Tax Digital for incomes over £30,000 and the lower Business Asset Disposal Relief limit.
- 30 June 2027: fuel duty cut and 0% VAT on household electricity end.
MTD for Income Tax: No Penalty Points This Year, and the April 2027 Group
The second quarterly update (6 July to 5 October) is due on 7 November. The Budget confirmed that HMRC will not apply penalty points for late quarterly updates during 2026-27. You must still send all four updates before you can submit your Final Declaration. HMRC: send quarterly updates
If your qualifying income from self-employment and property was over £30,000 in 2025-26, you must use MTD from 6 April 2027. For 2026-27 income over £20,000, the start date is 6 April 2028. HMRC writes to those affected after reviewing their Self Assessment return. If you expect to join in April 2027, now is the time to choose software and move your records onto it. HMRC: check if you’re eligible
Self Assessment: The 30 December Option
If you owe less than £3,000 and already pay tax through PAYE, as an employee or pensioner, you can have your 2025-26 bill collected through your tax code over 2027-28 instead of paying a lump sum in January. To do this, you must file your online return by 30 December 2026. You cannot make a part payment to get under the £3,000 limit. HMRC: pay through your tax code
Watch out for scams. Fraudsters target taxpayers in the run-up to January. HMRC will not ask for personal or financial details by text or email, and will not leave voicemails threatening arrest. Forward suspicious texts to 60599 and emails to phishing@hmrc.gov.uk. HMRC: check if an email is genuine
If you would like us to file this in time, please send us your records in November.
Companies House: Identity Verification Transition Ends This Month
The 12-month transition for existing directors and people with significant control (PSCs) to verify their identity, which began on 18 November 2025, ends this month. Existing directors give their personal code with the company’s next confirmation statement, and a company with an unverified director cannot file one. Companies House: when you need to verify
This is already being enforced: in September 2026 the Insolvency Service secured its first prosecutions of directors who had acted while unverified. Verification is free through GOV.UK One Login. If you are unsure whether everyone on your company’s register has verified, please get in touch. Insolvency Service: first prosecutions
Christmas Parties and Gifts: Getting the Tax Right
A Christmas party can be tax-free for staff if it costs £150 or less per head and meets HMRC’s conditions. Gifts can be tax-free under the separate £50 trivial benefits rule.
The annual party exemption. There is no tax or National Insurance charge on an annual event open to all staff (or all staff at one location) where the cost per head is £150 or less. HMRC: annual functions (EIM21690)
- The cost per head includes VAT, plus any transport or overnight accommodation, divided by everyone who attends, including guests.
- The £150 is a limit, not an allowance. Go £1 over and the whole cost per head becomes taxable, not just the excess.
- If you hold two or more annual events, add their per-head costs together. Only the combination that fits within £150 is exempt.
- A one-off event, such as an anniversary celebration, does not qualify.
Gifts to staff. A gift costing £50 or less, such as a hamper or a bottle of wine, is tax-free and does not need to be reported, provided it is not cash or a cash voucher, not a reward for work or performance, and not in the employment contract. Directors of close companies are capped at £300 of trivial benefits a tax year. HMRC: trivial benefits
Payrolling Benefits in Kind: What Changes and When
From 6 April 2027, company cars, vans, fuel and private medical cover must be reported and taxed through payroll each month, replacing the P11D form filed after the year end. Other benefits in kind follow in April 2028. If you provide any of these benefits, check now that your payroll software is ready for the April 2027 changes. HMRC: preparing to report benefits in kind in real time
Employment Rights Act: What Changes on 30 October and What Comes Next
From 30 October 2026, employers must take “all reasonable steps” to prevent sexual harassment, and must not permit harassment of staff by third parties such as customers. From 1 January 2027, employees gain unfair dismissal protection after six months’ service rather than two years, and the cap on compensation is removed, subject to final commencement regulations. Now is a good time to review harassment policies, probation periods and contracts. GOV.UK: Employment Rights Act timeline
What Businesses Should Be Doing Now
- MTD sole traders and landlords: submit your second update by 7 November
- Joining MTD in April 2027: choose software and go digital now
- Thinking of selling your business: talk to us before 6 April 2027, when the Business Asset Disposal Relief lifetime limit halves from £1 million to £500,000
- Self Assessment filers: file online by 30 December to pay a bill under £3,000 through your tax code instead of in January
- Company directors and PSCs: confirm everyone has verified their identity with Companies House
- Employers: keep the party within £150 a head and gifts to £50, prepare payroll for cars and medical cover from April 2027, and review harassment policies and probation periods
Did You Know? Tax History Edition
Why the Tax Year Starts on 6 April
Until 1752, the tax year began on 25 March, which was also New Year’s Day in England. That year Britain switched from the Julian to the Gregorian calendar and dropped 11 days, and the tax year start moved with it. The Office of Tax Simplification concluded in 2021 that the reasons for the April date are “historical and now obsolete”. OTS: The UK tax year end date · National Records of Scotland: change in calendar
The Shop Tax That Lasted Four Years
In 1785, a tax was introduced on shops with an annual rent of more than £5. It proved so unpopular that it was abolished in 1789, after riots in London. Shopkeepers have been watching the business rates bill ever since. ScotlandsPeople: historical tax rolls
Diary of Main Tax Events – November and December 2026
| Date | What Is Due |
| 7 November | MTD quarterly update (6 July to 5 October period) |
| 9 November | Six-month tribunal time limit extends to breach of contract claims in Scotland |
| November | Companies House identity verification 12-month transition for existing directors ends |
| 19 November | PAYE, NIC and CIS monthly return and payment deadline (non-electronic) |
| 20 November | PAYE, NIC and CIS electronic payments must clear (22 November falls on a Sunday) |
| 30 November | Annual accounts due at Companies House for private companies with a 28 February 2026 year end; Corporation Tax return due for periods ending 30 November 2025 |
| 1 December | Corporation Tax payment due for periods ending 28 February 2026 (non-instalment payers) |
| 19 December | PAYE, NIC and CIS monthly return and payment deadline (non-electronic) |
| 22 December | PAYE, NIC and CIS monthly payment deadline (electronic) |
| 30 December | Online Self Assessment deadline to have a bill under £3,000 collected through your tax code |
| 31 December | Annual accounts due for private companies with a 31 March 2026 year end; Corporation Tax return due for periods ending 31 December 2025 |
| 1 January 2027 | Unfair dismissal qualifying period falls to six months |
| 31 January 2027 | Online Self Assessment return and payment deadline for 2025-26 |
ATED Returns: Key Submission Deadlines
If you own UK residential property through a company and it falls within the scope of the Annual Tax on Enveloped Dwellings (ATED), it is important to be aware of the deadlines for submitting your return.
Normally, an ATED return must be submitted:
- By 30 April, if the property is within the scope of ATED on 1 April at the start of the chargeable period
- Within 30 days of acquisition, if the property comes within the scope of ATED after 1 April
For newly built properties, the deadline is extended – the return must be submitted within 90 days of the earliest date on which the property either becomes a dwelling for Council Tax purposes or is first occupied.
ATED returns should only be submitted on or after 1 April for the relevant chargeable period. Submitting too early can cause processing issues, while missing deadlines may result in penalties.
If you are unsure whether your property is within the scope of ATED or which deadline applies, get in touch, and we can help you assess your position.
Before the Christmas Rush
The Budget will shape planning for the year ahead, but the deadlines above stand, whatever the Chancellor announced. November is a good month to clear them before the Christmas break and the January Self Assessment rush.
Please contact the Mercian team if you would like to talk through any of this.
This newsletter is for general guidance only and does not constitute professional advice. Please contact us to discuss your specific circumstances.
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