The Chancellor, John Healey has delivered his Autumn Budget, announcing a raft of tax changes including a rise in the bank surcharge, a new founders’ relief, increases to the national living and minimum wages, and stronger HMRC powers to recover unpaid tax.
A series of announcements were made the day before the Budget, such as making higher tax-free mileage rates permanent and increasing support for nurses, care workers, self employed builders and others who drive for work.
Proposed is locking in the 55p per mile rate for the first 10,000 business miles and increasing it above 10,000 miles from 25p to 35p per mile. These changes are expected to provide £120 a year in additional tax savings for a worker doing 6,000 business miles, with those driving 15,000 business miles receiving up to £300 in additional tax savings.
Also confirmed is the removal of import tariffs on more than 100 products in a bid to help lower import costs on the likes of baked beans, garlic, chocolate and cough drops.
Tax measures
Among the tax measures announced in the speech were:
- National living wage and national minimum wage increase
- Further freeze on fuel duty
- Extra 3% on the bank surcharge
- Launch of a new founders’ relief
- Closing of loopholes in the tax system
- HMRC given stronger powers to collect overdue tax
- Threshold for BADR in CGT be reduced to £500,000
Announcements in details
Closing loopholes
There was a commitment to closing loopholes in the tax system, including giving HMRC funding to improve compliance, as well as stronger powers to collect overdue tax from those “who can clearly afford to pay, but ignore repeated contact”. Healey also pledged to reform the administration of self-assessed income tax from 2029, bringing more of those taxpayers in line with the majority, so they “make smaller, more regular payments instead of facing large bills that are often harder to pay”.
Outdated rules
Also lined up is modernising the tax treatment of investment by foreign sovereigns, which is set to bring UK rules more in line with other nations, as well changing “outdated rules” so that people taking profits out of their companies are “taxed consistently”.
Business rates
The government had previously cut 20% off business rates for pubs, clubs and music venues from April next year but will now increase the threshold for small business rate relief for retail, hospitality, and leisure businesses from £12,000 to £18,000. Healey said this means 70,000 more businesses would be taken out of paying business rates altogether, adding that for all other companies in those sectors, he would freeze their rates in real terms, so that none face an above-inflation rise for the next two years.
Fuel duty
The fuel duty freeze continued, with the Chancellor confirming that the 5p duty discount will remain in place until July 2027. It was first introduced in 2022 and was due to last 12 months, but has been extended ever since. In May, Sir Keir Starmer’s government pushed back a proposed 3p rise – earmarked for September – until the end of this year.
Business asset disposal relief
The threshold for business asset disposal relief (BADR) in capital gains tax (CGT) is to be reduced from £1m to £500,000, while the rates on tax on income from property and savings will be increased by a further two percentage points from April 2027, with no change to tax on income from dividends and no change on tax to income from employment.
National living and minimum wages
Healey confirmed that the national living wage, which applies to people aged 21 and over, will rise by 3.9% from £12.71 to £13.21. However, the government is also set to slow the pace of pay increases for people aged between 18 to 20 who receive the national minimum wage, with pay for that group to rise by 3.9% as well, from £10.85 an hour to £11.27.
Banks
The Chancellor praised banks as making a “huge contribution to this country in the tax they pay, in the jobs, industry, and investment they support”, adding that “amid the global economic storms, I am looking to our banks to help fund breathing space for British families”. As such, banks will pay an extra 3% on the bank surcharge – meaning it now totals 6%. This will be time limited to pay for immediate support on energy bills, starting in January, and ending 15 months later.
Founders’ relief
A new relief in capital gains tax was confirmed – the founders’ relief – which will include a 10% rate on lifetime gains up to £10m for the founders of what Healey called “our most successful firms”, adding: “This is how we make Britain the place where the companies of the future are built.”
Machine games
Taxes on gambling will be raised by increasing machine games duty from 20% to 25% for higher stakes machines, while “protecting pubs and seaside arcades”, with the government set to “carve out adult gaming centres and vape shops from business rates reliefs, and extend the business rates transitional relief supplement for another two years”. He will also strengthen the requirements for online marketplaces so that sellers cannot avoid paying VAT when they sell online.
ISAs
Healey spoke of a “new approach” to encouraging people on ordinary incomes to save and to invest, confirming he will not go ahead with the cut to the tax-free amount that people can put into a cash ISA, meaning the limit will stay at £20,000 per year, tax-free. He will also work with the sector to create a new starter ISA to reward first-time investors.
Council Tax
Lined up for households in Council Tax bands A to D is a £100 energy payment, paid directly into people’s bank accounts to “deal with rising energy bills”. Healey called this a £2.6bn scheme designed to “take the pressure off in the coldest months and see people through to the spring”.
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