Autumn Budget 2026

There was a lot of tinkering in the Autumn Budget. Thankfully, not much of what was announced affects non-VAT registered sole trade businesses without a payroll scheme.

𝗧𝗿𝗮𝗱𝗶𝗻𝗴 𝗮𝗹𝗹𝗼𝘄𝗮𝗻𝗰𝗲

One of the key points if you’re self-employed, is that the trading allowance is being increased from £1,000 to £3,000 from April 2027.

The effect of the trading allowance is twofold:
1. If your income before deducting expenses between 06/04/27 and 05/04/28 is less than £3,000, you don’t need to register with HM Revenue & Customs as self-employed.
2. If your income for 2027-28 is more than £3,000, you can choose to deduct the higher of your actual expenses or £3,000 from your taxable income.

𝗡𝗼𝘁𝗲: The trading allowance for the current tax year from 06/04/26 to 05/04/27 remains at £1,000.

𝗠𝗶𝗹𝗲𝗮𝗴𝗲

Following on from the 10p increase earlier this year for business mileage up to 10,000 miles in the tax year, the Government has now increased the mileage rate by 10p per mile for mileage in excess of 10,000 miles too – but this second increase doesn’t come into effect until next tax year.

Here’s a summary of the various mileage rates and when they apply:
– If you haven’t done your 2025/26 Tax Return yet, mileage rates were 45p per mile for the first 10,000 miles and 25p per mile thereafter.
– For the current 2026/27 tax year, mileage rates are 55p per mile for the first 10,000 miles and 25p per mile thereafter.
– From 05/04/27, mileage rates will be 55p per mile for the first 10,000 miles and 35p per mile thereafter.

𝗠𝗮𝗸𝗶𝗻𝗴 𝗧𝗮𝘅 𝗗𝗶𝗴𝗶𝘁𝗮𝗹

The Government announced a “soft landing” (penalty-free) period for taxpayers joining Making Tax Digital for the first time in April 2027. This matches the 12-month soft landing period currently in place for taxpayers who were due to join in April 2026.

𝗢𝘁𝗵𝗲𝗿 𝗮𝗻𝗻𝗼𝘂𝗻𝗰𝗲𝗺𝗲𝗻𝘁𝘀

Changes were announced to capital allowances, including a reduction in the main rate of capital allowances from 14% to 12%. If you’re a sole trader using the cash basis (money in, money out) and claim business mileage (simplified expenses), the capital allowance changes won’t apply to you – but they could apply if you bought a car through your business and claim a business proportion of actual motor expenses instead of mileage.

If you’re self-employed and employ someone to help you, there are a few changes to payroll – including a new National Minimum Wage rate of £13.21 effective from 01/04/27 and the requirement to include car, van, fuel and medical benefits on employees’ payslips from 06/04/27.

Changes were also announced that could potentially affect VAT-registered businesses.

The majority of this year’s changes and complications affect limited companies and individuals with state pension, savings and property income. Self-employed people seem to have got off lightly this time.

#Budget2026#SelfEmployedUK#SoleTrader

[Image credit: John Ferguson Photography]