Budget 2026 (part 2)

Following on from our previous summary on 30 Oct 2026 of some of the announced measures in the budget, there are also some secondary points that might be worth noting. Please note that the dates noted are the announced dates and many measures may still require consultation and/or legislation and therefore may be subject to a further process.

1. Minimum wages: From 1 April 2027, the National Living Wage increases to £13.21 an hour, with £11.27 for 18–20-year-olds and £8.31 for under-18s and eligible apprentices. Employers should allow for the associated pension and employer-NIC costs where applicable;

2. Non-compete clauses: The government intends to reform restrictions that prevent employees moving jobs or businesses recruiting staff. Consultation and a detailed policy position are expected before legislation, with further detail in early 2027. Employers using restrictive covenants should monitor this;

3. Parental support for the self-employed: From April 2029, a new parental allowance is planned for eligible self-employed fathers, partners and adopters in Great Britain. Some people with irregular employment histories will also qualify, subject to work and earnings conditions;

4. Additional close-company reporting: Following consultation, the government will not implement the proposed additional reporting requirements for company payments to participators at this time. That is a useful administrative reprieve for small companies and their advisers;

5. A stronger obligation to correct errors: From 1 April 2028, proposed rules will introduce an explicit obligation to correct identified inaccuracies in returns and documents. HMRC will also gain a Customer Correction Notice power, requiring taxpayers to check their affairs and correct an error or explain why no correction is needed. This deserves attention in practice procedures;

6. Relief from continuing property-return penalties: For missed UK residential-property disposal returns, further late-filing penalties will stop once the disposal has been reported and the tax paid through Self-Assessment. The measure takes effect from 28 October 2026. Clients should still meet the original property-return reporting requirements;

7. Pension death benefits - removal of the two-year tax trap: Otherwise tax-free pension death benefits will no longer become taxable solely because the relevant two-year deadline was missed. The announced change applies to payments from 28 October 2026; other conditions governing tax-free treatment remain relevant;

8. Employee share-option improvements: From 6 April 2027, the CSOP individual option limit increases to £120,000, its exercise period extends to 15 years, and the EMI exercise window following disqualifying events increases to 180 days. These could matter for clients considering employee incentives or succession arrangements;

9. Child Benefit overpayments and HICBC: Proposed legislation will offset Child Benefit overpayments against HICBC paid in relation to those amounts, with retrospective effect back to January 2013 once enacted. This could be relevant when reviewing cases involving both an overpayment recovery and a tax charge;

10. Further HMRC debt-collection powers: From July 2029, the government proposes allowing HMRC to recover lower-value debts through instalments directly from bank accounts where taxpayers can afford to pay but repeatedly fail to do so. Legislation and a safeguards framework are still to follow.

Please note that all budget related commentary is only intended to be a broad general overview of some aspects of the budget and is not intended to be taken as advice. Although care is taken, errors and omissions can occur and as the facts of each case is very important, expert opinion should always be obtained before arriving at a decision. If you have any questions or would like any additional help or guidance then please do n

ot hesitate to contact us.