UK Budget 2026: six updates for accountants and bookkeepers

The Chancellor has delivered his Autumn Budget, and it comes at a tough time for small businesses.

Our latest Xero Small Business Insights (XSBI) data, out this week, shows small business sales grew just 4.0% year-on-year in the three months to September. Some sectors are doing much worse than the headline figures suggest. Agriculture sales fell 6.2% year-on-year and hospitality (+0.7%) and retail (+0.8%) are barely ahead of where they were a year ago. 

High fuel prices and above-target inflation are squeezing household budgets, so many of your clients are under real pressure.

On top of that, they will be facing changes to Making Tax Digital filing penalties, eInvoicing updates and new tax and payment arrangements over the next year. They’ll be looking to you to help explain what today’s announcements mean for them and how to navigate the challenges coming. Here are six updates from the Budget that accountants and bookkeepers should know about.

1. Making Tax Digital: a first-year penalty easement and deferred groups

Taxpayers joining Making Tax Digital (MTD) for Income Tax in April 2027 will not receive penalty points for late submission of their first four quarterly updates for the 2027-28 tax year.  These will be the sole traders and landlords with a qualifying gross income of more than £30,000 joining the next wave of MTD for IT. The government is also deferring the rollout to several taxpayer groups until further notice. You can see the groups that the government plans to exempt here.

• This gives some clients a little more breathing space, but it is not a reason to pause preparation. Accountants and bookkeepers can help clients understand whether and when they are expected to join, get the right records and processes in place, and distinguish the first-year easement from ongoing requirements. Further clarity on the groups affected by the deferral will matter.

2. eInvoicing: a longer runway, with detail still to come

From 1 April 2029, VAT invoices will need to be issued in a specified electronic format. The government has published an implementation roadmap and says it will provide full details of the policy and technical design by April 2028. It has also opened a consultation on potential future uses of structured invoice data.

• The timeline gives businesses and their advisers time to prepare, but the technical details will shape what implementation means in practice. Accountants and bookkeepers will be central to helping clients understand the change and assess its implications for their invoicing processes. Clear guidance and workable systems will be essential if e-invoicing is to deliver benefits without creating unnecessary work.
• We will continue to push the government to ensure accountants and bookkeepers are a key part of this rollout and have everything they need to support small businesses through the transition.

3. Higher rates on property and savings income

From 6 April 2027, income-tax rates on property income and savings income will each rise by a further 2 percentage points. The basic, higher and additional rates will be 24%, 44% and 49%. The property-income rates apply in England, Wales and Northern Ireland, while the savings-income rates apply across the UK.

• This will be relevant to clients with taxable income from these sources. Accountants and bookkeepers can help them understand the changes and consider them in their wider tax and cash-flow planning. The different UK-wide coverage for savings income and regional coverage for property income is also worth keeping in view when advising clients.

4. Payments on Account: smaller, more regular contributions

From April 2029, taxpayers who already make Payments on Account will make smaller, more regular contributions towards their tax bill during the year, bringing payments closer to when income is earned. The aim is to help people budget and reduce the risk of large unexpected bills, overdue tax and debt.

• Accountants and bookkeepers will be important in helping clients understand how the new arrangements affect their planning. The government has said it will continue working with stakeholders and affected taxpayers on implementation, so clear communication about the final process will be important.

5. A simpler route to claim employment expense relief

The government plans to make it easier for around 160,000 employees to claim tax relief on employment expenses by removing the need to use Income Tax Self Assessment solely to make those claims.

For employees who file a return only for this reason, that could remove an unnecessary administrative step. Accountants and bookkeepers can help affected clients understand what is changing and what route will be available instead, once the details are confirmed.

6. Capital allowances: a bigger first-year allowance, lower writing-down rate

For expenditure incurred from 1 January 2027, the main rate first-year allowance will increase to 50%. At the same time, the main rate writing-down allowance will fall to 12%, from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.

For clients considering investment, the timing and type of expenditure will matter. Accountants and bookkeepers can help explain how the two changes interact with a client’s plans and cash flow, and when further advice may be needed.

There were also a host of other changes like additional business rates relief for retail, hospitality and leisure businesses, support for new founders, increase in minimum wage (and more) which might also impact your clients. Plus the measures announced last week to reduce some of the admin burden on small businesses. 

Final thoughts

One thing is clear, the role of accountants and bookkeepers has never been more important. There is a lot of change announced in today’s Budget and we know so much of the burden will fall on accountants and bookkeepers. Small businesses need advisors who can make sense of it all for them, and I know this industry will step up for them again like you’ve done with MTD for IT this year and countless other changes..

We’ll keep sharing updates as more detail emerges, and we will continue to push the government to make these changes in the right way and to ensure accountants and bookkeepers have a voice at the table.