AAT’s overview of the autumn budget 2026

“Devolution and tackling youth unemployment are central to the Government’s ambitions. The Budget needed to go further on both”.

Chancellor John Healey delivered his first Budget against a mixed outlook on the economy. GDP is expected to expand 1.2% this year, but only 1% next year; a sharp drop on previous expectations largely driven by war in the Middle East.

AAT’s view

Many of our priority areas, as detailed in our Budget representation (PDF), were absent from today’s statement. The Government chose to wait for the outcome of the Milburn review to address issues relating to skills, education and employment. It also avoided many of the tax measures that businesses most feared and provided some relief by not significantly raising business taxes.

One welcome aspect is confirmation that taxpayers joining Making Tax Digital (MTD) next April will not receive penalty points for late quarterly submissions during that tax year. This breathing space will help AAT members guide clients through the transition and build confidence in meeting their new obligations.

Looking further ahead, from 2029 some Self Assessment taxpayers will make more regular in-year Income Tax payments, while those with VAT and PAYE liabilities will need a Direct Debit in place. Once again, AAT members will be on the front line, helping individuals and businesses understand the detail, prepare early and manage change with confidence.

Sarah Beale, CEO of AAT said:

“Devolution and tackling youth unemployment are central to the Government’s ambitions. Today’s Budget needed to go further on both.

At AAT, we know talent is everywhere, but opportunity isn’t. More than 40% of people still don’t know you can become an accountant without a degree.

The Milburn review and the Government’s devolution plans must turn ambition into action: champion proven vocational routes and give local areas the power to build the skills their employers need.

Accounting and finance offer accessible, rewarding careers in every sector and every part of the country. Get this right and we can help more young people into work, strengthen the workforce and drive growth in every postcode”.

Budget overview

Tax measures were notable for what they left out rather than what they included. The Chancellor avoided broad-based increases to the main taxes impacting workers. Instead he relied on a limited number of targeted revenue-raising measures while maintaining support through select tax reliefs and cost-of-living interventions.

The Budget confirmed a major programme of fiscal devolution. The roadmap (PDF) published alongside it should enable local leaders to retain a greater share of locally raised revenues such as business rates and elements of income tax receipts.

Key points for AAT members

MTD: Taxpayers joining MTD for Income Tax in April 2027 will not receive penalty points for late submission of their first four quarterly updates for the tax year 2027-28. The Government is also delaying the roll-out to several taxpayer groups until further notice.

Business rates: The threshold at which businesses in Retail, Hospitality and Leisure start paying business rates will increase from £12,000 to £18,000 rateable value (excluding adult games centres and vape shops), lifting 70,000 businesses out of paying business rates altogether. Other businesses in those sectors will have their rates frozen. Local authorities will retain all business rates by the end of the decade.

Income Tax Self-Assessment: The Government will require Income Tax Self-Assessment taxpayers who make payments on account to make more regular in-year payments towards their final tax bill from April 2029.

VAT and PAYE return liabilities: The Government will require taxpayers to set up a direct debit instruction for these from April 2029.

Online marketplaces: Online marketplaces will be responsible for collecting VAT on sales by UK VAT-registered businesses and any other UK business with a minimum annual sales threshold per platform of £90,000.

New Pension Tax Allowance: The Government will introduce a new tax-free allowance to ensure those on the State Pension will not pay income tax.

Corporation Tax: The Government will introduce greater upfront relief for new investment, increasing the main rate first-year allowance from 40-50%, while reducing the main writing down allowance from 14-12%.

Better Regulation Executive: The Government is establishing a new Better Regulation Executive, which will set the direction and drive implementation of the Government’s vision for a streamlined and regulatory system.

Artificial Intelligence: The Government will invest in upskilling the civil service, and the Budget includes £120 million for the AI Security Institute, £165 million for a new National AI Biosecurity Initiative, £40 million for a National Agentic Security Unit, and £140 million for the Sovereign AI Unit to help UK AI firms scale and grow.

Women-led scale ups: A new programme will test how best to overcome barriers to fundraising and investment for women founders, which could include peer learning, investor networks and practical support on finance and governance.

Minimum Wage: The National Living Wage will increase by 3.9% to £13.21 per hour. The National Minimum Wage will increase by the same 3.9% to £11.27 per hour for 18 to 20-year-olds, and again by the same 3.9% to £8.31 per hour for 16 to 17-year-olds and eligible apprentices.

This increase is identical despite Labour’s pledge to equalise the rate for all adults, and much below the 8.5% rise set out last year.

Bank Surcharge: Banks will pay 6% on their profits, rather than 3%, for 15 months starting in January 2027.

Young Entrepreneurs Allowance: The Government will introduce a Young Entrepreneurs Allowance in England, providing successful applicants with support towards their living costs during the first year of running their business.

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.