The Chancellor's Budget on 28 October ran to hundreds of pages, but for most sole traders only a handful of lines actually change the plot. Your income tax rates aren't going up. Your mileage claims are worth more, side hustles get more breathing room, and Making Tax Digital is still on its way.
I've read it so you don't have to. Here's what's worth knowing, and what (if anything) you need to do about it.
The changes that matter for sole traders
Your income tax rates aren't changing
Tax on your trading profits stays exactly where it is. The personal allowance (£12,570) and the basic rate band stay frozen until April 2031, as already planned. That's no nasty surprise, but it does mean more of your income gets taxed as your profits grow.
Good news if you drive for work
The 55p per mile rate for your first 10,000 business miles is now permanent. From April 2027, the rate for miles above that rises from 25p to 35p. These rates apply to simplified mileage for the self-employed too.
If you do 15,000 business miles a year, that's £7,250 you can claim instead of £6,750, so £500 more. Keep logging those journeys, because they're now worth more.
Side hustles get more breathing room
From April 2027 the trading allowance rises from £1,000 to £3,000. If you have a small sideline, you may be able to earn up to £3,000 from it without paying tax or filing a return just for that income.
One catch: it's £3,000 of sales, not profit. You can't claim both the allowance and your actual expenses against the same income.
Savings and rental income will cost more
From April 2027, tax on savings interest and on rental income (in England, Wales and Northern Ireland) rises to 24% for basic rate taxpayers and 44% for higher rate. The Personal Savings Allowance stays at £1,000 for basic rate and £500 for higher rate taxpayers.
If you rent out a property or have healthy savings, this is a chapter worth reading carefully before April.
Making Tax Digital: still coming, a little gentler
MTD for Income Tax reaches people with qualifying income over £30,000 from April 2027, and over £20,000 from April 2028. If you're joining in 2027, there are no late-submission penalty points on your quarterly updates in the first year.
The updates still need doing, though. If you're not sure whether you're in, now is a good time to find out. (My MTD Readiness Check is a good place to start.)
A change to how you pay your tax (from 2029)
Further out, HMRC plans to move anyone making payments on account onto more regular, automated payments through the year, instead of the big January and July bills. Some people may be able to pay through PAYE.
Your total tax shouldn't change, but your cash flow will. That's exactly the kind of thing worth planning well ahead.
If you employ staff
The National Living Wage rises to £13.21 an hour for those aged 21 and over from April 2027, a 3.9% increase. Remember to allow for the extra employer National Insurance and pension costs on top.
Selling online?
From October 2027, online marketplaces will collect VAT on certain sales by UK businesses. This covers VAT-registered sellers, and others selling £90,000 or more a year on a single platform. The detail is still being worked out.
A few other bits worth knowing
- Business rates: qualifying retail, hospitality and leisure premises in England get more Small Business Rates Relief from April 2027, with full relief up to £18,000 rateable value (up from £12,000).
- E-invoicing: from April 2029, VAT invoices are planned to be sent as structured digital data rather than emailed PDFs.
- New parents: a new allowance is proposed from April 2029 for eligible self-employed parents who don't qualify for statutory pay.
- Starting out young: a Young Entrepreneurs Allowance will be piloted in England to help eligible young people with living costs in their first year of self-employment.
- At home: a £100 Household Energy Payment arrives from January 2027 for council tax bands A to D in England, and there's no VAT on household electricity until the end of June 2027.
So what does it mean for your story?
For most sole traders, this Budget is less a plot twist and more a few new footnotes. The useful part is working out which of these changes actually touch your business, and whether anything is worth doing differently before April 2027.
That's where I come in. Your numbers tell a story, and I help you read it: not just filing the return, but spotting what the figures are quietly telling you.
If you'd like to talk through what the Budget means for you, book a free 30-minute discovery call. No jargon, no pressure, just a proper conversation about where your numbers are at.
Book your call here →This post is a general summary of the Budget announcements of 28 October 2026 and isn't personal tax advice. Many of the measures are still subject to consultation and legislation.