Autumn Budget 2026 Briefing

Corporation Tax

The corporation tax main rate of 25% remains unchanged for companies with taxable profits above £250,000. Companies with profits up to £50,000 continue to benefit from the small profits rate of 19%, with marginal relief available between these thresholds. The government has confirmed its commitment to the current structure through the forecast period.

For companies with profits in the marginal relief band (£50,001–£250,000), effective planning around profit timing, pension contributions, and allowable deductions remains an important part of your annual accounting review. ScaleUp Accounting Ltd prepares CT600 returns for limited companies across all profit levels.

Income Tax & National Insurance

The freeze on income tax thresholds continues through 2026/27, a policy first announced in 2021. The personal allowance remains at £12,570 and the higher rate threshold at £50,270. With wage growth above these frozen bands, an estimated 1.4 million additional taxpayers have been pulled into higher tax brackets since the freeze began.

For sole traders and self-employed individuals, this underscores the importance of reviewing allowable business expenses, pension contributions, and the timing of income to manage effective tax rates. Class 4 National Insurance Contributions (NICs) remain at 9% on profits between £12,570 and £50,270, and 2% above this threshold.

Making Tax Digital (MTD) — April 2026 Mandatory Date

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) becomes mandatory from 6 April 2026 for sole traders and landlords with gross income above £50,000. From April 2027, the threshold reduces to £30,000. From April 2028, businesses and landlords earning above £20,000 are expected to be brought within scope.

Under MTD ITSA, qualifying taxpayers must maintain digital records using HMRC-compatible software and submit quarterly updates to HMRC, replacing the traditional annual Self Assessment return. ScaleUp Accounting Ltd supports clients through this transition using Xero, QuickBooks, FreeAgent, and Sage 50.

Capital Allowances

The 100% Annual Investment Allowance (AIA) is maintained at £1 million per year, enabling businesses to deduct the full cost of qualifying plant and machinery in the year of purchase. This allowance is particularly valuable for businesses investing in equipment, machinery, or qualifying business assets.

Full expensing (100% first-year allowance) for qualifying main-rate plant and machinery purchased by companies remains in place and is now permanent. ScaleUp Accounting Ltd can advise on which assets qualify and how to structure capital investments for maximum allowance benefit.

Action Points for UK Businesses

• 01.If you are a sole trader or landlord with income above £50,000, ensure you have MTD-compatible software in place before 6 April 2026.
• 02.Review your pension contributions before the end of the tax year — contributions reduce your taxable income and can bring profits below key thresholds.
• 03.For limited companies, review profit extraction strategies (salary, dividends, pensions) given current tax rates across the combined employer and employee charge.
• 04.If you are planning capital investments, ensure qualifying assets are purchased before your year-end to maximise Annual Investment Allowance in the current period.