Chancellor John Healey delivered the Autumn Budget on 28 October 2026, alongside the latest forecast from the Office for Budget Responsibility (OBR). With limited room in the public finances, this was a quieter Budget with no changes to income tax, National Insurance or VAT rates.
That does not mean nothing has changed for UK contractors. Several new rules start in April 2027, and frozen thresholds will keep shaping your take-home pay for years to come. Here is a clear look at what matters for limited company, umbrella and CIS contractors.
Key Changes at a Glance
|
Change |
Effective Date |
Who It Affects |
|
Mileage rate above 10,000 miles rises from 25p to 35p per |
6 April 2027 |
Limited company, CIS |
|
Most unused pension funds included in inheritance tax |
6 April 2027 |
All |
|
Taxable benefits reported and taxed through payroll |
April 2027 |
Limited company |
|
Business Asset Disposal Relief lifetime limit cut to £500,000 |
6 April 2027 |
Limited company |
|
Making Tax Digital threshold drops to £30,000 |
April 2027 |
CIS sole trader |
|
Salary sacrifice NI exemption capped at £2,000 a year |
6 April 2029 |
Umbrella |
What Changed
Mileage Rates
The 55p per mile rate for the first 10,000 business miles, raised earlier this year, is now permanent. From 6 April 2027, the rate for business miles above 10,000 rises from 25p to 35p per mile. This is good news for contractors who drive their own vehicle for work.
Payroll and Benefits
From April 2027, taxable benefits such as a company car or medical insurance must be reported through payroll. The income tax and National Insurance on these benefits will be collected in real time with your usual PAYE. As a result, you will not need to submit a P11D form for 2027/28, except for beneficial loans.
Pensions, Savings and Inheritance Tax
From 6 April 2027, most unused pension funds and pension death benefits will count as part of your estate for inheritance tax. From the same date, a new £2.5 million allowance applies to property that qualifies for 100% business or agricultural property relief.
Savings income will also have its own tax rates from 6 April 2027: 24% basic rate, 44% higher rate and 49% additional rate. These apply across the UK. The same rates apply to property income in England, Wales and Northern Ireland.
There was some welcome news for savers. The planned £12,000 cap on cash ISAs for under 65s has been dropped, so the full £20,000 cash ISA allowance stays in place.
Business Asset Disposal Relief
From 6 April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) falls from £1 million to £500,000. The BADR rate remains 18%. If you plan to close your company in the next few years, this is worth factoring into your timing.
Compliance and Regulation
New Joint and Several Liability rules took effect in April 2026. If an umbrella company does not pay the correct PAYE tax or National Insurance, HMRC can now recover the full amount from others in the chain, such as the recruitment agency or end client. Umbrella companies will also be regulated by the Fair Work Agency from April 2027.
For CIS sole traders, stricter compliance rules took effect on 6 April 2026. The Making Tax Digital threshold also drops from £50,000 to £30,000 from April 2027. More contractors will need to keep digital records and send quarterly updates to HMRC.
What Stayed the Same
Many key rates and thresholds did not change:
- Income tax thresholds, including the £12,570 personal allowance, frozen until April 2031
- National Insurance rates and thresholds
- Corporation tax rates (19% for profits up to £50,000 and 25% for profits over £250,000)
- Dividend tax rates (10.75% basic, 35.75% higher and 39.35% additional)
- The Annual Investment Allowance of up to £1 million
- The VAT registration threshold of £90,000
- IR35 off-payroll working rules
- Stamp Duty Land Tax for residential property
- Inheritance tax nil rate bands, frozen until April 2030
What This Means for You
For Limited Company Contractors
Dividends are still more tax-efficient than salary for most contractors, even after the April 2026 rate
rise. If you provide yourself with taxable benefits, tell your accountant now so they can be set up correctly in payroll before April 2027. If you drive a lot for work, the higher mileage rates mean you can claim more tax-free, so keep good records of every business journey.
For Umbrella Contractors
With Joint and Several Liability now in force and Fair Work Agency regulation on the way, agencies and end clients are checking their supply chains closely. Working with a compliant, accredited umbrella company protects you from disruption. If you use salary sacrifice for your pension, you still have until April 2029 to make the most of the full National Insurance savings.
For CIS Sole Trader Contractors
If you earn over £30,000, check whether you will need to follow Making Tax Digital from April 2027. Getting the right software and habits in place early will make the switch much easier. It is also a good time to review your expenses and make sure you are claiming everything you are entitled to.
Planning Considerations
With these changes in mind, consider:
- Pensions: Review your contributions and think about how the April 2027 inheritance tax change affects your estate plans.
- Benefits and mileage: Let your accountant know about any taxable benefits and keep clear mileage records.
- Business exit plans: Factor the lower BADR limit into any plans to close your company.
- Record keeping: CIS sole traders should prepare for Making Tax Digital ahead of April 2027.
Get the Full Guide
We have prepared a detailed guide covering all the Autumn Budget changes, including planning tips for limited company, umbrella and CIS contractors.
Download Guide: Autumn Budget 2026
The guide includes:
- A full breakdown of tax rates and thresholds
- Corporation tax and dividend planning tips
- Pension and inheritance tax guidance
- Action checklists for each type of contractor
- Key dates and deadlines
Questions?
If you have questions about how these changes affect your situation, our team is here to help. Brookson provides specialist accountancy, payroll, legal and financial services for UK contractors.