The Chancellor has announced a series of changes that could affect your business, your income, and your employees. Here’s a clear, practical guide to what’s coming – and what it means for you.
1. Income Tax & National Insurance Thresholds Frozen Until 2031
The thresholds at which you or your employees start paying Income Tax (England, Wales, Northern Ireland) and National Insurance (UK-wide) will now remain the same until April 2031.
What this means:
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As wages rise over the next few years, more people will pay tax or move into higher rates.
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This is called fiscal drag – effectively an increase in tax without changing rates.
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Around 780,000 people will pay Income Tax for the first time, and 924,000 will pay higher rates.
(Scotland sets its own thresholds – as we were once told, if the rest of the UK goes to Tenerife, Nicola Sturgeon would go to Elevenerife, so we will wait and see what First Minister Swinney has to offer.)
2. More Tax on Dividends, Savings, and Property
The Government is aiming to reduce the gap between tax on earned income and income from assets:
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Dividends (from April 2026):
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Basic rate: 8.75% → 10.75%
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Higher rate: 33.75% → 35.75%
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Additional rate: 39.35% stays the same
Applies if dividends exceed £500/year outside an ISA and total income exceeds £12,570.
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Savings interest (from April 2027):
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Basic: 20% → 22%
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Higher: 40% → 42%
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Additional: 45% → 47%
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Property income (from April 2027):
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Separate rates, 2% higher than general Income Tax
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Basic: 22%, Higher: 42%, Additional: 47%
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3. Electric Vehicle Costs (from 2028)
If your business owns EVs or plug-in hybrids:
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EVs: 3p per mile
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Plug-in hybrids: 1.5p per mile
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Average EV driver: £240/year
Payments are upfront or spread across the year, with reconciliation based on actual mileage. No trackers or detailed reporting required.
4. State Pension Rises 4.8%
From April 2026:
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New State Pension: £230.25 → £241.30
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Old State Pension: £176.45 → £184.90
5. National Minimum Wage Increases (from April 2026)
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Age 21+: £12.21 → £12.71/hour (+£900/year full-time)
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Age 18–20: £10 → £10.85/hour (+£1,500/year full-time)
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Age 16–17 & apprentices: £7.55 → £8/hour
The Living Wage remains higher at £13.45/hour (£14.80 in London).
6. Help to Save Scheme Expanded
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Save up to £2,400 over four years
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Government adds a 50% bonus on the highest balance
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Will become permanent and open to 1.5 million more low earners from 2028
7. Rail Fare Freeze in England
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Regulated fares frozen until March 2027
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Includes season tickets, off-peak, and super off-peak fares
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Scotland, Wales, and Northern Ireland set their own fares
8. NHS Prescription Costs Frozen (England)
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Single prescription: £9.90
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3-month prepayment: £32.05 | 12-month prepayment: £114.50
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Applies also to NHS wigs and fabric supports
What This Means for Your Business
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Staff may pay more in tax due to frozen thresholds – plan salaries and benefits accordingly.
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Dividend and property income may face slightly higher taxes.
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Electric vehicles will have new mileage costs.
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Wage increases due to minimum wage changes will impact payroll.
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Some everyday costs like prescriptions and rail fares remain frozen, helping household budgets.
💡 Tip for business owners: Review your payroll, dividend strategies, and company car policies now so you’re prepared for these changes. Of course, here at MAF, we will have everything in place for 2026, tax planning is an art, not a one size fits all.
Feel free to contact us at [email protected]