The Autumn Budget 2026, delivered on 28 October 2026, leaves income tax and Class 4 National Insurance rates unchanged for the self-employed. The changes are a much larger Trading Allowance from 6 April 2027, a higher simplified mileage rate, a softer start to Making Tax Digital for the April 2027 group, and inflation rises to a few Class 2 and Class 3 figures. For every other measure, see our Autumn Budget 2026 summary.
What changed at a glance
| Measure | Before | After | From |
|---|---|---|---|
| Trading Allowance | £1,000 | up from £1,000 to £3,000 | 6 April 2027 |
| Simplified mileage rate above 10,000 business miles | 25p | 35p | 6 April 2027 |
| Class 2 Small Profits Threshold | £7,105 | £7,355 | 6 April 2027 |
| Voluntary Class 2 / Class 3 a week | £3.65 / £18.40 | £3.80 / £19.05 | 6 April 2027 |
| MTD penalty points, April 2027 joiners | from the first late update | none for the first four quarterly updates of 2027-28 | 6 April 2027 |
| Main-pool writing-down allowance | 14% | 12% | 6 April 2027 |
| Income tax and Class 4 rates | 20% / 40% / 45% and 6% / 2% | unchanged | 2027-28 |
Trading Allowance up from £1,000 to £3,000
From 6 April 2027 the Trading Allowance goes up from £1,000 to £3,000, and it covers miscellaneous income as well as trading income. If your gross takings from a side business are within the allowance, you will not have to declare or pay tax on them. If they are higher, you can deduct the allowance instead of your actual expenses, which helps when your costs are low. The separate £1,000 property allowance is not part of the change. Try it in the trading allowance calculator.
National Insurance: rates unchanged, a few figures uprated
Class 4 stays 6% on profits between the Lower and Upper Profits Limits and 2% above, and those limits stay frozen. From 6 April 2027 the Class 2 Small Profits Threshold rises from £7,105 to £7,355. Below it, you can pay voluntary Class 2 to protect your State Pension record, at £3.80 a week (up from £3.65). Voluntary Class 3 rises to £19.05 a week. The self-employment tax calculator shows your income tax and NI on this year’s profits.
Making Tax Digital: an easier first year
The next wave of Making Tax Digital for Income Tax still starts on 6 April 2027 for sole traders and landlords whose qualifying income on their 2025-26 return is over £30,000. Budget 2026 adds two things:
- No late-submission penalty points on your first four quarterly updates for 2027-28 if you join in April 2027. You still have to send the updates before you can file your tax return, and penalties for missing the tax return deadline still apply.
- Exemptions until further notice for people eligible for qualifying care relief (foster carers and shared lives carers), non-UK resident foreign entertainers and sportspeople, and expected non-resident customers.
Check where you stand with the MTD checker.
Mileage and capital allowances
If you use simplified expenses for a car or van, the 55p rate for the first 10,000 business miles is made permanent and the rate above 10,000 miles rises from 25p to 35p from 6 April 2027. See the mileage allowance calculator.
If you claim capital allowances, the main-pool writing-down allowance falls from 14% to 12% from 6 April 2027 for income tax.
Other changes
- Savings. Interest outside an ISA above your Personal Savings Allowance is taxed at 24%, 44% or 49% from 6 April 2027.
- Selling your business. The Business Asset Disposal Relief lifetime limit falls from £1 million to £500,000 for disposals from 6 April 2027. See the BADR calculator.
- VAT. HMRC’s table keeps the VAT registration threshold at £90,000 from April 2027.
What to do now
- If you have a small side income, check whether it will fall inside the £3,000 allowance from 2027-28 with the trading allowance calculator.
- If your 2025-26 qualifying income is over £30,000, prepare for MTD from 6 April 2027: pick software and sign up. The MTD checker tells you when you are in.
- If your profits are below the Small Profits Threshold, decide whether paying voluntary Class 2 at £3.80 a week is worth it for your State Pension.
Summary
For the self-employed, Budget 2026 triples the Trading Allowance to £3,000 from 6 April 2027, raises simplified mileage above 10,000 miles to 35p and gives the April 2027 Making Tax Digital group a year without penalty points for late quarterly updates. Income tax and Class 4 NI rates are unchanged for 2027-28.