As agents, HMRC forwarded to us a summary of the budget delivered by the Chancellor of the Exchequer, the Rt Hon Rachel Reeves MP. We have shared it with you below. These words are the words of HMRC not NATA.
“We value the essential role employers play in the operation of the tax system. This [summary ] provides you with information on the key measures announced that may have an impact on your business, as well as information to help answer potential queries from your employees.
As well as the tax changes announced today, the government is announcing plans to consult on numerous measures. We value your feedback and insight on how we modernise the tax system and implement upcoming changes. Please check the consultations page regularly on GOV.UK to provide your views.
A variety of tax-related documents will also be published, including Tax Information and Impact Notes, consultations and calls for evidence, as well as the overview of tax legislation and rates.
Income Tax and National Insurance
Changes to tax rates for property, savings and dividend income
https://www.gov.uk/government/publications/changes-to-tax-rates-for-property-savings-dividend-income/changes-to-tax-rates-for-property-savings-dividend-income
Changes to property income
From 6 April 2027, the government will create separate tax rates for property income.
The income tax rates for property income will be 22% for basic rate, 43% for higher rate and 47% for additional rate.
The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers in their fiscal frameworks.
Changes to savings income
From 6 April 2027, the savings basic rate will increase to 22%.
Savings on the higher rate will increase to 42% and the savings additional rate will increase to 47%.
Changes to dividends rates
From 6 April 2026, the rates for individuals will increase by 2% to 10.75% for the dividend ordinary rate and 35.75% for the dividend higher rate.
The additional rate will remain unchanged at 39.35%.
The way customers report and pay tax on dividends, rental income and savings interest will remain the same, it is only the rate of tax charged that will change. Customers therefore don’t need to take any action or call HMRC.
Salary sacrifice reform for pension contributions
https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029/changes-to-salary-sacrifice-for-pensions-from-april-2029
From April 2029, the amount of salary that an employee can sacrifice in return for pension contributions before attracting a National Insurance contributions (NICs) charge will be capped at £2,000 a year.
Employees can still make pension contributions above this cap using salary sacrifice but any contributions above £2,000 will be subject to employer and employee NICs, bringing them in line with all other forms of employee workplace pension contribution. Most employees making typical pension contributions and their employers will be unaffected.
Contributions through salary sacrifice, like all pension contributions, will still be exempt from Income Tax (subject to the usual limits). Employees who choose to sacrifice salary to receive Tax Free Childcare or Child Benefit can keep doing so.
Voluntary National Insurance contributions (NICs) abroad
https://www.gov.uk/government/publications/changes-to-voluntary-national-insurance-contributions-for-periods-spent-abroad/voluntary-national-insurance-contributions-for-periods-abroad-from-april-2026
From April 2026 for tax years 2026 to 2027 onwards, the option to pay voluntary Class 2 NICs for periods abroad will be removed and new Class 3 NICs applications for periods abroad will require 10 years continuous UK residency or National Insurance contributions.
These changes do not affect the ability of anyone to purchase voluntary National Insurance contributions (VNICs) for tax years prior to 2026 to 2027 and a wider review of VNICs policy is planned to ensure the system is fair and fit for purpose.
Capital Gains Tax Employee Ownership Trusts
The government will reduce the Capital Gains Tax relief available on qualifying disposals to Employee Ownership Trusts from 100% of the gain to 50%. This will take effect from 26 November 2025.
We are also implementing technical and structural fixes to close loopholes and improve the data that HMRC holds to tackle non-compliance by the wealthy.
From 6 April 2026 individuals, partnerships or trustees will need to make a claim for incorporation relief for Capital Gains Tax in their Self Assessment return.
Extend employer National Insurance contributions veteran’s relief
In April 2021, a National Insurance contributions (NICs) relief for employers that hire former members of the UK regular armed forces was introduced. The veteran’s relief was due to end on 5 April 2026 but will now be extended for a final two years, until the 2027 to 2028 tax year.
Tax treatment of payments for cancelled shifts
This announcement confirms payments made for cancelled, moved or curtailed shifts, under 27BP of the Employment Rights Act 1996, are subject to Income Tax as earnings. It also allows for subsequent National Insurance contributions (NICs) regulations to be made to confirm these payments will also be subject to NICs.
The announcement will also put beyond doubt whether earnings for duties not performed (including cancelled shifts) should be treated as UK earnings or overseas earnings, make consequential amendments for Foreign Employment Relief (commonly known as Overseas Workday Relief), and prevent double relief from being available for non-UK residents on Post Employment Notice Pay (PENP).
Benefits and expenses
Publishing draft guidance and legislation to aid preparation for reporting benefits in kind in real-time
HMRC has published draft guidance and legislation to help customers prepare for reporting benefits in kind in real-time. The guidance on GOV.UK includes worked examples to help employers and software developers get ready for the changes. The mandatory reporting of Income Tax and Class 1A National Insurance contributions for most benefits in kind and taxable expenses takes effect from 6 April 2027.
Non-reimbursed employment expenses for homeworking
At Budget 2025, the government announced new Income Tax and National Insurance exemptions for the reimbursement of home working equipment and eye tests, and the provision and reimbursement of flu vaccinations. This announcement simplifies the existing rules to better reflect modern working practices. It will reduce administrative burdens for employers and provide greater clarity for employees regarding the tax treatment of common workplace health and equipment costs. This will be legislated for in Finance Bill 2025-26 and this will take effect from 6 April 2026.
Company car tax – Employee Car Ownership Schemes
As announced at Autumn Budget 2024, the government is amending the benefit in kind rules so that vehicles provided through Employee Car Ownership Schemes (ECOS) will be deemed as taxable benefits.
To allow more time for the sector to prepare for and adapt to this change in treatment, its implementation will be delayed to 6 April 2030, with transitional arrangements until April 2031.
Compliance
Informants reward scheme
We have launched a strengthened reward scheme for informants, targeting serious non-compliance involving large companies, wealthy individuals, offshore activities, and avoidance schemes.
The reward scheme will offer informants 15% to 30% of tax recovered for cases over £1.5 million, aiming to attract high-quality intelligence on serious tax non-compliance by large companies and wealthy individuals. Rewards are uncapped, taxable, and only paid after successful recovery, with the scheme expected to significantly boost tax compliance and close the tax gap.
High street non-compliance
We are committed to addressing risks which undermine legitimate businesses and have a corrosive impact on local communities. We’re taking decisive action by:
• undertaking additional enforcement activity on high streets, focusing on illicit tobacco and vaping products and more targeted criminal interventions to tackle the most serious fraud and evasion by small businesses, by deploying 350 newly recruited criminal investigators as part of a new team in HMRC’s Fraud Investigation Service
• publishing a call for evidence in 2026 on the introduction of software standards for the electronic and mobile point of sale sector to tackle electronic sales suppression and cash facilitated tax evasion
• directing up to £10 million in funding from HMRC to Border Force in 2026 to 2027 to enhance operational information gathering capabilities ahead of the introduction of the Vaping Product Duty on 1 October 2026 and to support enforcement at the border
Administration
Increases to Corporation Tax late filing penalties
The government will double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026. This will be legislated for in Finance Bill 2025-26.
Transformation and modernisation
Modernising digital outbound communication
HMRC is changing legislation so that outbound communication can be sent digitally by default. From spring 2026, HMRC will be able to operate a ‘digital by default’ model of outbound communication, where new and existing customers using our digital services will automatically receive digital letters instead of letters by post. This will be rolled out gradually, only when different services and IT systems become ready. Customers will be able to ‘opt out’ of digital communications if they need to receive information by post and digitally excluded customers will continue to receive paper communications.
Business systems integration
The government will publish a call for evidence in early 2026 to develop options to increase the uptake of business systems integration, which enables the automatic transfer of sales and purchase data into businesses’ accounting software. ”
