Autumn Budget 2026: what tax measures can the UK expect?

John Healey, the UK's new chancellor of the exchequer, will deliver his autumn Budget on Wednesday 28 October. 

In his first speech as chancellor on 7 September, Mr Healey highlighted his three goals for the Budget: to encourage investment, innovation and jobs. Having previously signalled that the Budget will deliver stability to businesses and families, Mr Healey repeated the need for fiscal discipline during his speech at the recent Labour Party conference.

With the prime minister, Andy Burnham, committing to Labour's manifesto promise not to increase the main rates of income tax, VAT or (employee) national insurance, the chancellor will need to find other avenues to raise revenue made harder by the government's high borrowing costs and lack of fiscal headroom.

Personal taxes 

Income tax and national insurance

If improving the jobs market is one of Mr Healey's goals, he could consider reversing the employer's national insurance contributions (NICs) rise and the lower NICs threshold introduced by Rachel Reeves from 6 April 2025. However, a reversal so soon could be politically awkward and too costly. He may instead introduce targeted measures, such as cutting income tax or NICs for those newly entering the job market or improving the growth and skills levy.

It would also be relatively easy to increase the effective income tax rate for carried interest by increasing the multiplier (currently 72.5%) for qualifying carried interest, thereby treating more of the portion as taxable. However, as the new regime for carried interest only took effect this April, a change so soon could undermine stability for businesses and investors.

Mandatory reporting of income tax and NICs for benefits in kind is to be introduced in phases from 6 April 2027 to 5 April 2028. Final guidance for phase 1 is due to be published at or around the Budget, to help employers prepare for this important change.

Capital gains tax 

Capital gains tax (CGT) has been a target in several recent budgets and is expected to be so again, unsurprisingly given the manifesto pledge not to increase the rates of the three main revenue-raising taxes. 

CGT rates on shares and other assets have risen steadily and could rise again. The chancellor could also further reduce (or abolish) the annual exempt amount. Businesses and individuals alike will hope for careful consideration of the impact on employee shareholders and tax-advantaged share plans such as enterprise management incentive (EMI), with appropriate exemptions built in. 

Equalising CGT rates with income tax rates has been rumoured, but there has been much industry lobbying against equalisation as it would discourage investment (one of Mr Healey's goals). He may instead choose to match the 32% rate that applied to carried interest before it was brought into the income tax regime in April 2026 but to also introduce an improved form of investors' relief or Business Asset Disposal Relief to support entrepreneurial investment.

In relation to Employee Ownership Trusts, it is possible that clarificatory guidance may be published at or around the Budget on how the significant reduction in the CGT relief available on disposals on or after 26 November 2025 operates in practice.   

Other suggestions include abolishing the favourable CGT uplift when assets are passed on upon death, introducing a CGT "exit tax" for individuals leaving the UK permanently or removing CGT relief on the disposal of a person's main home valued above a certain threshold. 

Previous Budgets show changes can have immediate effect, supported by anti-forestalling rules. Those considering disposals may want to complete them or structure their affairs in advance of the Budget to lock in current CGT rates, reliefs and allowances.

Inheritance tax

Rumours of replacing inheritance tax (IHT) with a social care levy (in the form of a flat charge on estates on death) persist, but such reform would take time and Mr Burnham made no mention of that option as part of his speech at the Labour Party conference. Instead, he indicated that he would start laying the ground now for the "national care service" and introduce it in the next Parliament, funded in part by scrapping the triple lock on state pension from April 2030. 

Smaller measures could include the introduction of a lifetime cap on tax-free gifts, or extending the potentially exempt transfer period from seven years to ten. Other suggestions include ending IHT relief on AIM shares, although the relief was only reduced from 100% to 50% earlier this year. 

Pensions

With inheritance tax treatment and salary sacrifice changes already in the pipeline, many will be hoping that no further pensions tax changes will be announced. Mr Burnham indicated at the recent Labour Party conference that the triple lock would be retained for the remainder of this Parliament. 

As the state pension is projected to soon exceed the tax-free allowance, one measure to watch is how the government will honour its pledge made by the previous chancellor, Rachel Reeves (and repeated by Mr Burnham) to keep pensioners whose only income is the state pension out of income tax for this Parliament.

Business tax

Corporation tax 

The chancellor has repeated the government's pledge to retain the 25% corporation tax rate for large companies for the remainder of this Parliament, giving businesses some certainty.

He has not ruled out raising taxes on banks (which pay both a 3% corporation tax surcharge and the bank levy). Increasing either would be straightforward, but the chancellor would need to weigh the extra revenue against the impact on the sector's growth.

Securities Transfer Tax

The planned Securities Transfer Tax, replacing stamp duty and stamp duty reserve tax on shares in 2027, should finally get a confirmed implementation date.

Gaming duty

Despite increasing gambling duties in last year's Budget, there is speculation that the chancellor may increase machine gaming duty on cash-prize machines (such as slot, fruit or quiz machines) found in betting shops and gaming centres.

Business rates

In his first week as prime minister, Mr Burnham announced a 20% cut to business rates for pubs, clubs and live music venues from April 2027. This could be extended to wider hospitality businesses such as restaurants and cafes.

Real estate taxes

Stamp duty land tax

Although he has previously supported replacing council tax and stamp duty land tax (SDLT) with an annual land-value tax or proportional property tax, Mr Burnham has ruled out any imminent sweeping changes. 

A separate measure could extend SDLT to transfers of shares in property-rich companies, closing the gap that lets property be "enveloped" into a special purpose vehicle attracting a maximum of only 0.5% stamp duty on the shares rather than SDLT (at higher rates) on a direct purchase of the property. The chancellor must weigh whether this would deter investment in an already sluggish market, and whether it would raise meaningful revenue.

Following recent media attention, the rule treating the acquisition of six or more dwellings as non-residential (and so taxed at lower SDLT rates) may be tightened to clamp down on avoidance. 

VAT on land for social housing

Following HMRC's consultation on the VAT treatment of land intended for the construction of new social housing, which closed over the summer, the government is expected to confirm the introduction of zero-rating at an earlier stage of development in specific circumstances. 

This should benefit all those involved in the social housing supply chain, speeding up delivery and increasing the number of new homes built this Parliament. 

Mansion tax

The High Value Council tax surcharge ("mansion tax") introduced in last year's Budget and taking effect in April 2028 applies to residential property in England worth £2 million or more in 2026. There are rumours the threshold could be reduced (to £1.5m) even before it takes effect. 

Osborne Clarke comment

Constrained by Labour's manifesto pledge on income tax, VAT and employee NICs, Mr Healey is expected to rely on a range of smaller tax measures to ease the current economic situation and offer businesses and individuals stability. 

With defence spending and social care both requiring long-term funding solutions, more fundamental tax reform looks likely to be deferred, with proposals perhaps reserved for Labour's manifesto at the next election. 

The raft of consultations published in July, including withholding tax treaty relief simplification, a review of the distributions framework, and extending the VAT liability rules for online marketplaces, may also hint at the government's direction of travel.