What Did Budget 2026 Change for Professional Practices? The Measures That Matter

What stays the same for practices?

Start with what did not move, because that is where most of a practice’s tax sits. The Budget overview keeps the Corporation Tax main rate at 25% and the small profits rate at 19% for the financial year beginning 1 April 2028 (Overview of tax legislation and rates, paragraph 1.38). Annex A shows employer National Insurance at 15% above a secondary threshold of £96 a week in 2027 to 2028, the Employment Allowance at £10,500, the main Capital Gains Tax rates at 18% and 24%, the Business Asset Disposal Relief rate at 18% and the Annual Investment Allowance at £1 million (Annex A, rates and allowances). The remaining National Insurance limits and thresholds are held at 2026 to 2027 levels until 2030 to 2031 (paragraph 2.1).

Our pre-Budget post on the Autumn Budget 2026 set out what practices should plan for. Most of it holds. The partners’ Self Assessment payment due on 31 January 2027 is untouched, and so is the rate of employer National Insurance that practices have been paying since April 2025.

Selling a practice? The Business Asset Disposal Relief limit is halved

The lifetime limit on gains that qualify for the relief falls from £1,000,000 to £500,000 for qualifying disposals on or after 6 April 2027, with special provisions for contracts entered into before that date but not completed (paragraph 1.33). The rate stays at 18%, and gains above the limit are taxed at the main rates. The Budget document says three quarters of claimants will still get relief on their entire gain (Budget 2026, section 3.9). A new Founders’ Relief, a 10% rate on up to £10 million of lifetime gains, is written for high growth companies and few practices will qualify.

Our post on selling a practice or buying into a partnership after Budget 2026 works through the numbers, including a £1 million gain that costs £30,000 more from April 2027, and what it means for buyers using partner buy-in finance or practice acquisition finance.

Buying equipment? The capital allowances changed

The main rate first year allowance rises from 40% to 50% for expenditure incurred on or after 1 January 2027, and the main rate writing down allowance falls from 14% to 12% from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax (paragraph 1.42 and Annex A). The 40% allowance was introduced from 1 January 2026, and HMRC’s note on it says it is available to all businesses, not just companies, excludes cars and second hand assets, and is mainly useful where the £1 million Annual Investment Allowance or other first year allowances are not available.

For most practices the practical point is that the Annual Investment Allowance already gives 100% relief in the year of purchase on up to £1 million of qualifying spending, and that did not change. A dental surgery buying a scanner, a vet buying an ultrasound unit or an optician buying an OCT machine will usually claim the whole cost through the allowance whether the purchase is in December 2026 or January 2027, so the first year allowance change is rarely a reason to shift a purchase. The writing down allowance cut matters more, because it slows the relief on the pool of older spending that was never claimed in full.

How the kit is paid for is a separate decision. Our guide to hire purchase, leasing or a loan for practice equipment explains which routes let the practice claim capital allowances and which do not, and practice equipment finance sets out the options. Lenders on our panel publish equipment and asset finance over 3 years at 8% to 16% a year, an indicative published range from October 2026.

Employing staff? Wages rise 3.9% in April 2027

The National Living Wage rises to £13.21 an hour on 1 April 2027, up 50p or 3.9%, with the 18 to 20 rate at £11.27 and the 16 to 17 and apprentice rates at £8.31 (GOV.UK, LPC recommendations). The Budget document puts the rise at £910 a year in gross pay for a full time worker (section 4.5). With employer National Insurance held at 15% and the threshold frozen, every pound of the rise carries 15p of National Insurance on top, and practices with a pay structure usually find the rise ripples up through the grades above the minimum.

Employers that do more than half their work in the public sector, which usually includes GP practices on NHS contracts, cannot claim the Employment Allowance, and our post on what Budget 2026 means for GP practices covers that and a VAT change on the supply of a deputy for a medical practitioner from 1 May 2027. Where a staffing step up runs ahead of the fee income it will earn, practice recruitment finance spreads the cost.

Partners and sole practitioners? Tax timing, property income and debt collection

• In year tax payments from April 2029. Self Assessment taxpayers who make payments on account will have to make more regular in year payments towards their final bill. Payments will be automated and eligible taxpayers will be able to choose to pay through PAYE (paragraph 2.31). The government says the detail will follow next year. For a partnership it means the end of the two big January and July payments, and a transition year to plan for.
• Property and savings income. The income tax rates on savings income and on property income rise to 24%, 44% and 49% from 6 April 2027 (paragraphs 1.1 and 1.2). A partner who owns the practice premises personally and is paid rent should ask their accountant how the rent is taxed.
• Making Tax Digital. Sole traders and landlords who join Making Tax Digital for Income Tax in April 2027 will not get late submission penalty points on quarterly updates for 2027 to 2028, though the updates still have to be sent before the return (paragraph 2.36). Our post on Making Tax Digital for accountancy practices has the thresholds.
• Mileage. The rate for business miles above 10,000 rises from 25p to 35p from 6 April 2027 (paragraph 2.7).
• Debt collection. HMRC will be given the power to recover established lower value tax debts through regular deductions from bank accounts where a taxpayer repeatedly fails to engage, expected from 2029 to 2030 (paragraph 2.45). Our post on the NAO tax debt report explains why HMRC is pushing harder on arrears.

VAT and administration? E-invoicing from April 2029

The government will legislate to let HMRC require VAT invoices in a prescribed electronic format, with the changes taking effect from April 2029 (paragraph 1.58). Law firms, accountancy practices, architects, surveyors and engineering consultancies that charge VAT on fees have two and a half years to move to software that can issue and receive them, and the cost of that sits alongside the practice management and case management systems many firms are already replacing. Practice IT and software finance spreads that cost over the life of the system.

Practices that are mostly VAT exempt, such as GP and dental practices, are less affected by e-invoicing but should read the VAT change on deputies for a medical practitioner above.

What does Budget 2026 mean for practice funding, and what is the next step?

The bill that has not changed is the one due first. Partners’ Self Assessment payments fall due on 31 January 2027, with the second payment on account on 31 July, and the wage rise follows on 1 April. Lenders on our panel publish tax, VAT and PII funding at 8.9% to 22% a year, an indicative published range from October 2026, and tax and VAT funding, partners’ tax funding and our guide to funding Corporation Tax, VAT and partners’ tax explain how it works. The tax bill funding calculator shows the monthly cost of spreading a bill, and what practice finance costs sets out every published range. Our managing cash flow page brings the options together.

• Selling or buying in, model the sale under both lifetime limits and decide whether 6 April 2027 matters to you.
• Buying equipment, check with your accountant whether the Annual Investment Allowance already covers it before you let the first year allowance set the date.
• Employing staff, cost the April 2027 rise across every grade with 15% National Insurance on top.
• Partners, confirm what is due on 31 January 2027 and ask what the 2029 change to in year payments means for your drawings.

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Published 29 October 2026. Figures and dates are taken from the sources named and were correct on that date. This article is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.