If you had been playing a drinking game (I can just about remember those days), throughout John Healey’s speech and you were unlucky enough (or lucky enough – depending on your outlook for drinking games), to have had the phrase “breathing space” – I would have been seriously concerned for your welfare at c1pm this afternoon.

“Breathing space” was the repeated phrase of choice used by the Chancellor, in, I can only presume was an attempt to portray empathy, feeling the inflationary pressure – much, logically in my opinion, laid at the door of the continuing impact of the Iran war (although the B word wasn’t mentioned!).

No doubt, the headwinds for the Chancellor are immense – geopolitical turbulence is placing huge pressure on the public finances, through the significant impact on interest cost as inflation increases, and through the previous decision to invest in defence.

However, rather than tackle large holes in the public finances now, he clearly decided to kick the proverbial can down the road. The result being a rather uneventful Budget with very small tinkering around the edges. It was disappointing. I, like many, wondered when the actual announcements were coming – only for the Chancellor to sit down!

There are some major events in 2027 that can’t be avoided: the public spending review and the commitment to a significant increase in the defence budget (as well as the potential impact of other government-commissioned reviews, such as the Timms review). Given that this was an uneventful, delaying Budget, this raises the question of whether there will be a Spring Budget/Statement, when these big calls will be made, or whether a general election will be called in the next twelve months.

The obvious main objective was to assist, within reason, the pressures on energy bills which the Chancellor has announced some measures for those impacted the most. However, given where the energy cap will likely rise to in the Autumn, this may not touch the sides! This assistance is mainly being funded by the announced temporary increase to the bank corporation tax surcharge/levy – by far the biggest measure in the Budget.

The below is my take on the most relevant announcements to our clients:

Increase in income tax rates for savers and landlords

It was announced that further to the previously announced increases from 6 April 2027 – the income tax rates for savings income and property income will increase to a 24% basic-rate, 44% higher-rate and 49% additional-rate. Dividend income tax rates are unaffected. Given these increases, impacted investing taxpayers will be prudent to consider the option of using limited companies to structure investments, more so than ever before.

The rates of corporation tax are unchanged.

Self-assessment tax payment changes

From April 2029, following a consultation process, those self-assessment taxpayers required to make payments on account will be required to make payments in-year, as opposed to the January and July payments they are currently used to, effectively attempting to move the tax payments to a “real time” basis. These payments will be automated and will be deducted via PAYE, where possible. This will impact cash-flow for those taxpayers, will need to be budgeted for, and is clearly the government’s attempt to get the tax cash in as quickly as possible. For me, this is hugely administratively burdensome for all involved, given what is only a small cash-flow benefit for the Treasury.

A new capital gains Founders’ Relief

A new relief for “founders and early investors” has been proposed, and a consultation process started. The new relief will apply a 10% capital gains tax rate to qualifying gains of up to £10,000,000 – sound familiar? Per the proposals, the qualifying conditions will be that: the individual held at least 25% of the ordinary share capital (per the similar Business Asset Disposal Relief tests now around voting rights and rights to profits and assets on a winding-up) at the commencement of the trade, held the shares for at least 5 years, and been UK tax resident for 5 continuous years prior to the disposal. It really begs the question why not just change Business Asset Disposal Relief?

Further restrictions to capital gains Business Asset Disposal Relief (BADR)

Coupled with the above, it was announced that the lifetime limit for BADR (and its predecessor Entrepreneurs’ Relief) will be reduced to £500,000 from 6 April 2027. This now (after the curtailment in recent years of the phased increases of the associated capital gains tax rate) firmly renders the relief largely insignificant. The maximum saving now £30,000. BADR used to be a relief that taxpayers structured business interest ownership to obtain on an exit/future disposal – oh times have changed! It will now be consigned to the history books to make way for the new Founders’ Relief!

Unused pension funds on death and inheritance tax

These changes will proceed as previously proposed and legislated for in Finance Act 2026. Many were hoping for changes here – but there were no such announcements today. Clients will need to review the impact of a potentially, significant increase to their inheritance tax exposure at midnight on 5 April 2027.

National Living Wage increase

A 3.9% increase on current rates effective from April 2027 was announced. As ever, employers will need to factor this increase into their budgets and projections.

Capital allowances changes

The rate of the Writing Down Allowance has been further cut from 14% to 12% from April 2027. This further elongates the tax relief on expenditure not qualifying for the Annual Investment Allowance (most of our clients will have almost all expenditure covered by AIA) or Full Expensing (namely second-hand plant and machinery and cars). There was an increase on the rate of relief for the First-Year Allowance from 40% to 50% – but given the availability of the AIA, this isn’t of too much relevance to SME clients.

Business rates

An increase to the Small Business Rate Relief was announced for retail, hospitality and leisure businesses (excluding adult gaming centres and vape shops!) from £12,000 to £18,000 – which is obviously very helpful, but the whole business rates regime (and arguably property taxation in general) needs a radical overhaul.

Cash ISA limit

It has been announced that the annual cash ISA limit will stay at £20,000, reversing the previous proposal of reducing the limit to £12,000 for under 65s. A welcome move given the administrative complexity the previous proposal to reduce the limit was creating.

E-invoicing

The government is pressing ahead with its e-invoicing agenda – many have called for a delay here; however, I personally think that it is fundamentally required to bring the UK tax system into the 21st century and enable the UK to keep pace with other jurisdictions that have been operating such systems for years. Delaying such things results in the vast issues the government has had with the implementation of Making Tax Digital – it took too long and, now that it has been implemented, provides none of the benefits it was originally set out to deliver through innovation. The government has published an “implementation roadmap”, with rollout set to begin from April 2029.

Research & Development (R&D) tax reliefs

It was announced that the Claim Notification Form process will be abolished for claims made on or after 1 April 2027. This is very welcome as it was clearly a significant blocker to new claimants. The reliefs have been given a bad name due to some bad actors in the sector, and HMRC reacted aggressively to all claims taking a “sledgehammer to crack a nut” approach, and the Claim Notification Form process was part of this. Its abolition is practical and pragmatic.

Widening of approved employee share incentivisation schemes

The previously announced increasing of relevant thresholds is proceeding, which paves the way to more use of these useful schemes for key employee incentivisation and succession planning.

Further increase to Approved Mileage Allowance Payments (AMAP)

The AMAP rate for business mileage in excess of 10,000 miles will increase from 25p to 35p from 6 April 2027. This further to the previous increase for the AMAP rate for business mileage up to 10,000 miles. All is useful given the cost of car travel is only going one way! Employers should review their internal expenses policy around business mileage reimbursement.

Increase to the Trading Allowance

The Trading Allowance is often overlooked, but can be useful for taxpayers with earning lower amounts of income – income up to the allowance being tax-free. This is currently £1,000 and is being increased to £3,000. This is sensible as it enables earnings at a more reasonable level be earnt tax-free, whilst also removing an unnecessary admin burden for HMRC and those taxpayers. The ‘juice isn’t worth the squeeze’ between £1,000 – £3,000.

High Value Council Tax Surcharge

This is being enacted as previously proposed from April 2028. There were rumours that the £2,000,000 value threshold would be reduced, however, these were unfounded.

Extension of temporary 0% VAT rate for domestic electricity

The previously announced temporary 0% rate shortly after Andy Burnham commenced his premiership continues until 30 June 2027.

Fuel Duty cut extension

The current temporary cut will stay in place until 30 June 2027, at which point it will rise by RPI (although, given the geopolitical uncertainty, it remains to be seen whether that rise will go ahead as planned).

If you’d like to discuss how any of these changes could affect you or your business, RRL are here to help.

This is your headline summary of today’s Budget announcements, giving you the key points you need to know now.

Keep an eye out tomorrow for our full, in-depth analysis covering every detail from today’s Budget.