Autumn Budget 2026

PRIVATE CLIENT, WEALTH AND INHERITANCE PLANNING

John Healy has delivered his first Budget as Chancellor, and the overall impression is of a cautious and stable approach at a time when certainty is needed.

The Budget addressed cost of living pressures, suggesting that the Government is focused on the needs of the wider population. Alongside this, provisions were announced to support small businesses, with measures intended to encourage investment in the UK and help businesses continue to grow and operate.

The Chancellor’s speech contained no major headline-grabbing changes, but a number of adjustments appear within the detailed Budget documents that have now been released. As those details are analysed, there are already some areas of interest emerging, including announcements affecting founders.

One particularly notable area was adult social care. While the independent commission on adult social care is not expected to report its findings until 2027, there has been discussion of a new National Care Service for England, under which personal care would be provided free of charge.

As with many Budget announcements, the detail will be crucial. Successive governments have struggled to address the challenges facing the care sector, and it remains to be seen what these proposals could mean in practice for individuals who require care.

WHAT DOES THE BUDGET MEAN FOR BUSINESSES?

For British businesses, the Budget appears to create further incentives for establishing and growing businesses in the UK. However, while growth may be encouraged, questions remain around business exits. More information on this area will be shared as the implications of the announcements become clearer.

WHAT DOES THE BUDGET MEAN FOR INDIVIDUALS?

For many individuals, the Budget may provide some breathing space. For some, this could mean more money in their pocket.

For high-net-worth individuals, the announcements may come as a relief. However, the need for succession planning remains unchanged, and long-term planning will continue to be important.

TAX AND HMRC COMPLIANCE

The Chancellor delivered the 2026 Budget today under the banner of “fiscal discipline”, with a clear message on tax: “I have begun by making sure that people pay the tax they owe, when they owe it, and … closing loopholes in our tax system.” Whilst the pledge of no tax rises on working people may be the dominant headline, beneath this there are several changes within the Budget, with a marked shift towards HMRC enforcement and individual compliance.

We review the key changes and what they mean for individuals and businesses below.

INCREASE IN HMRC ENFORCEMENT AND RESOURCES

A significant development includes a substantial expansion of HMRC’s enforcement and compliance capabilities.

• The government is recruiting an additional 670 HMRC compliance officers by 2029-30, building on a prior commitment to recruit 5,500 additional officers, bringing the total planned expansion to 6,170 FTE by 2029-30. The government will invest £485 million over the next five years to fund this.
• A further £70 million will be invested over the next five years in HMRC’s existing partnerships with private sector debt collection agencies.
• HMRC is also publishing a plan to modernise its approach to ensuring the wealthy meet their tax obligations

This is a deliberate and “fully funded” escalation of tax enforcement, which an emphasis on improving compliance and allowing “stronger powers to collect overdue tax from those who can clearly afford to pay, but ignore repeated contact”. With more compliance officers, resources, and a sharper focus on high-net-worth individuals, it makes it ever more important to ensure your tax matters are compliant.

HMRC’S NEW POWER TO RAID BANK ACCOUNTS

An important announcement in the Budget is the introduction of a new power for HMRC to enhance its debt management capacity, allowing HMRC to recover “lower-value tax debts” directly from bank accounts through regular instalments, due to come into force from July 2029. This will apply to individuals and companies who “can afford to pay but repeatedly fail to do so”.

Specifically, the policy will apply to established tax debts of up to £5,000 for individuals and £10,000 for companies, and only after standard collection activity has been exhausted, typically around 10 contact attempts over 9 to 12 months. It will be introduced in phases, starting with companies before extending to individuals.

Direct recovery directly from bank accounts is a significant development in HMRC enforcement, and proper safeguards around this power will be paramount. The key questions remain: how will the threshold of what one “can afford to pay” be defined in practice, and what recourse will taxpayers have if HMRC gets it wrong?

The government has indicated it will work with stakeholders to develop a “Code of Practice” setting out safeguards, with a first draft and draft legislation expected for technical consultation in Summer 2027. The consultation process will be central to how this new power is implemented.

HMRC’S INFORMATION POWERS STRENGTHENED

HMRC’s civil information and inspection powers are being modernised, with updated rules for issuing information notices and a revised definition of “computer records” to reflect how data is stored and accessed in practice. This will be introduced in the Finance Bill 2026-27.

This means HMRC will have a broader basis to demand information from taxpayers and third parties during compliance checks. Businesses and individuals should take these stronger powers seriously, as the consequences of non-compliance with information notices can be significant.

The government will also introduce new requirements for taxpayers to correct tax returns and documents where inaccuracies are identified. These will be introduced through legislation in Finance Bill 2026-27.

CRACKDOWN ON AVOIDANCE, PROMOTERS AND FRAUD

• The Budget suggests that multiple measures will be introduced in an effort to reduce tax avoidance:
• Amendments to the Promoters of Tax Avoidance Schemes (POTAS) legislation will be introduced in the Finance Bill 2026-27 to make the regime more effective.
• A new targeted civil penalty for deliberate conduct intended to evade UK excise duty before an excise duty point arises, introduced in the Finance Bill 2026-27.
• A consultation on tackling the promotion and use of tax avoidance will be published shortly.
• The framework for publishing details of deliberate tax defaulters will be strengthened, with changes expected next year.
• The government will introduce mandatory software standards for Electronic Point of Sale and Mobile Point of Sale systems to tackle electronic sales suppression (i.e. till fraud). HMRC will engage with stakeholders and publish a technical consultation in summer 2027, setting out detailed implementation proposals.
• The government will also review its approach to persistent non-compliance by larger businesses, including through the Special Measures regime.
• Strengthening the existing framework of publishing details of deliberate defaulters.

For anyone who has historically used tax planning arrangements, these changes are a sign that HMRC’s scrutiny of tax planning arrangements is intensifying. The strengthening of the deliberate defaulter’s publication regime is also notable, as there can be significant reputational consequences for those named. This is an opportune moment to consider whether making a disclosure to HMRC would be sensible to minimise the penalties in play.

VAT: ONLINE MARKETPLACES

A notable change for businesses selling online is the extension of VAT liability rules to online marketplaces, applying from October 2027. Under the new rules, online marketplaces will become responsible for collecting the VAT charged on sales by certain UK businesses via their platforms.

If your UK business is VAT-registered, or has total sales over £90,000 on any platform, the online marketplace will collect VAT on relevant sales made through it. If your business sells through more than one marketplace but your total sales per platform are below £90,000 and you are not VAT-registered, the new rules will not apply. For businesses operating through online marketplaces, it will be important to review your VAT position ahead of October 2027.

The change is designed to tackle VAT evasion and support fair competition. The rules will not apply to sales of second-hand goods or personal sales (such as individuals occasionally selling their own clothes or household items).

SELF-ASSESSMENT: SMALLER, MORE REGULAR PAYMENTS

The Chancellor announced a reform to the administration of self-assessment income tax, moving towards smaller, more regular, payments rather than larger, less frequent, bills. The aim is to bring self-assessed taxpayers in line with the majority of taxpayers and to make payments more manageable. This may have practical cash flow implications for self-employed individuals, particularly those with variable income.

RATES AND RELIEFS

On business rates, the key changes include:

• The government will introduce a General Anti-Avoidance Rule (GAAR) for business rates in England as soon as possible, following a consultation on design and delivery.
• From April 2027, the government will reimburse local authorities for external legal costs incurred in unsuccessful cases that challenge business rates avoidance and test a point of law.

Other general changes to rates and reliefs include:

• Income from property and savings will be taxed 2% higher from April 2027.
• Business Asset Disposal Relief lifetime limit is reduced from £1 million to £500,000.
• The main rate first-year allowance increases from 40% to 50% for expenditure on or after 1 January 2027.
• The writing down allowance rate reduces from 14% to 12%.
• A new Founders’ Relief offers a 10% CGT rate on lifetime gains up to £10 million for founders of qualifying businesses.
• The Cash ISA annual allowance will now remain at £20,000 (the previously planned cut to £12,000 is no longer proceeding).
• A first time buyer ISA is being introduced.
• Notably, there is no change to tax on income from dividends or employment, which is consistent with Labour Government’s pledge.

CONCLUSION

Taken together, the measures announced today amount to a deliberate and well-funded shift in the relationship between HMRC and the taxpayer. More compliance officers, direct debt recovery from bank accounts, modernised information powers, AI-driven risk profiling of the wealthy, and a renewed offensive against avoidance. This Budget strengthens HMRC to be more pro-active, targeted, and effective. Proactive engagement with your tax position as an individual or business will be essential to navigate these changes.

BUSINESS OWNERS

The Chancellor’s Budget on 28 October 2026 left headline tax rates unchanged, but it contains several measures that will materially affect the position of business owners – particularly those planning a sale, restructuring their shareholding, or investing in growth. The changes to Business Asset Disposal Relief and the introduction of Founders’ Relief together reshape the CGT landscape for company disposals from April 2027. A further reform to how distributions are taxed is signalled for April 2028. Owners who act now will be better placed than those who wait.

SELLING: BUSINESS ASSET DISPOSAL RELIEF

The lifetime limit on Business Asset Disposal Relief (BADR) falls from £1 million to £500,000 for disposals on or after 6 April 2027. The rate stays at 18%, against 24% on the rest of a gain, so the relief now saves a maximum of £30,000 over a lifetime, against £60,000 before.

The Chancellor said the change leaves three in four claimants untouched. The remaining quarter – those with gains above £500,000 – carry the cost. For those owners the arithmetic is straightforward. A seller with a £3 million gain who qualifies for BADR will pay £690,000 in CGT after April 2027, against £660,000 now. The additional cost is capped at £30,000 per person however large the gain.

Timing matters more than it usually does. For a share sale, the disposal date is normally the date of unconditional exchange, not completion. A sale that exchanges before 6 April 2027 keeps the £1 million limit, so owners with a deal in prospect and gains above £500,000 have a reason to look carefully at the timetable now. Anyone who has already claimed BADR on an earlier disposal should check how much of the lifetime limit remains.

FOUNDERS’ RELIEF: WHO WILL ACTUALLY QUALIFY

Founders’ Relief charges CGT at 10% on up to £10 million of lifetime gains, for qualifying disposals from 6 April 2027. Against the 24% rate, that is worth up to £1.4 million per person. It is, however, a proposal rather than enacted law: the Treasury has published a technical consultation, closing on 30 November 2026, with legislation to follow as amendments to Finance Bill 2026-27. The detail may change before it reaches the statute book.

• The individual conditions require the founder to have held 25% of the ordinary share capital — with matching voting rights and rights to profits and assets — when the trade, or preparation for it, began. The meaning of “preparation for trade” is not yet defined in the consultation documents, and it remains to be seen whether HMRC’s existing approach to pre-trading activities will apply or whether a new definition will emerge. This is a point to watch in the final legislation. The founder must then hold the shares for five years and be UK resident under the Statutory Residence Test for five continuous tax years before the sale. The 25% can be held through the holding company of a trading group, and later dilution does not count against the founder – though the mechanism by which dilution is disregarded, and whether any limits apply, is subject to the final legislation.
• The company conditions are harder to meet. The company must be a UK trading company with a substantial UK presence for the five prior accounting periods, still carrying on the trade it started with, and it must have turnover of at least £10 million and 15 qualifying full-time employees in the period before sale. Directors, contractors and agency staff do not count towards the 15. In addition, the company must pass two of three growth tests: 25% compound turnover growth over three consecutive periods starting from £10 million, 25% compound headcount growth starting from 15 staff, or £1.5 million of qualifying R&D expenditure with relief claimed in the three years before sale.

This is a relief for scale-ups, and most of the owners who use BADR will not meet it. Turnover below £10 million rules a company out entirely. The 25% condition on day one excludes any equal split between five or more founders and any co-founder who joined after trading began.

Two further points will catch people out. A company that changed its business after the founder’s shares were issued risks failing the same-trade condition, and start-ups pivot often. A founder who relies on the R&D test also depends on HMRC never successfully challenging the company’s R&D claim: if it does, the relief is withdrawn and the tax becomes payable with interest. The consultation proposes a statutory right for founders to request the supporting information from the company, which suggests the Treasury is aware of the problem.

Residence is a particular trap for internationally mobile founders and their families. A founder who was non-resident under the Statutory Residence Test in any of the five tax years before sale fails the residence condition. US taxpayers face an additional layer of complexity: the 10% UK charge does not resolve the US liability, and the IRS will normally tax the difference between the UK rate and the applicable US capital gains tax rate. The treaty position and foreign tax credit mechanics require specific advice in each case.

The £10 million lifetime cap is shared with BADR and Investors’ Relief, so any claim under those reliefs from April 2027 reduces the headroom available for Founders’ Relief. The interaction between BADR and Founders’ Relief on the same disposal – and whether they can be claimed together – is a point the final legislation will need to address clearly, and one that every qualifying founder will want to understand before proceeding.

The fiscal arithmetic tells its own story. On government costings, Founders’ Relief costs approximately £285 million and the BADR reduction raises approximately £280 million by 2030/31. The cut is borne by owners of ordinary businesses; the relief flows to the few with scale. Anyone who believes they may qualify should respond to the consultation before 30 November 2026, particularly on the 25% test and the same-trade condition.

TAKING MONEY OUT: DISTRIBUTIONS REFORM FROM APRIL 2028

Nothing changes yet, but the direction is clear. The government intends to reform how company distributions are taxed from April 2028, with draft legislation and a technical consultation to follow in 2027. The framework factsheet identifies three objectives: taxing extracted profits as income where that is appropriate, bringing payments and loans from overseas companies into line with UK ones, and tightening the rules on share buybacks, demergers and similar reorganisations.

The gap the Treasury wants to close is between income tax on a distribution – up to 39.35% for an additional rate taxpayer – and CGT at 24% where the same value is taken as a capital receipt. Capital reduction demergers, a widely used mechanism for separating businesses and assets, are the obvious target.

The buyback proposals are of particular relevance to succession planning. As currently proposed in the factsheet, and subject to the 2027 consultation, capital treatment on a company buying back a departing shareholder’s shares would require:

• a holding of at least 5% for two years, with the shareholder working in the business throughout
• a complete exit, including resignation from any directorship, with no retained shareholding
• a market-value consideration, with tranche payments permitted if the exit completes within two years
• five years rather than two for the holding and working periods where the shareholder is connected to the remaining owners or directors

The definition of “connected” in this context will matter significantly for family businesses and is not yet settled – it is one of the key points to watch in the 2027 consultation. A shareholder who takes capital treatment and becomes a director or shareholder again within five years would see the relief withdrawn.

Families planning a parent’s exit by buyback, or a division of a business between siblings with different ambitions, should model the proposed new conditions now. Any transaction planned from 2027 onwards should be drafted with the reform in mind, even though the detail remains subject to consultation.

INVESTING: CAPITAL ALLOWANCES, SHARE OPTIONS AND R&D

Capital allowances move in both directions. The main rate first-year allowance rises from 40% to 50% for expenditure incurred on or after 1 January 2027. 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. These figures relate to the main rate pool; businesses with significant long-life assets or integral features should note that the special rate pool has its own writing-down allowance, which is unaffected by this change. Spending covered by the annual investment allowance is unaffected in any event, since that already gives 100% relief. Businesses with large main pools, or with regular capital expenditure above the allowance, should model the cash tax effect before committing to capital plans and consider whether purchases can be deferred until January.

The Company Share Option Plan is renamed Enterprise Management Incentives 2 (EMI 2) from 6 April 2027. The individual limit doubles from £60,000 to £120,000, options can be exercised for up to 15 years rather than 10, and the interaction between EMI and EMI 2 limits is removed, so an employee can hold the full allocation under both schemes. The practical benefit falls primarily to businesses that are too large, or operate in excluded sectors, to use EMI. Companies considering option grants this winter should ask whether it is worth waiting until April.

For R&D claimants, the Claim Notification Form is removed from 1 April 2027 and the Additional Information Form is simplified from autumn 2027. The reduction in administrative burden is welcome. However, R&D claims now carry a second consequence for owners: where a founder relies on the innovation test for Founders’ Relief, a failed or successfully challenged R&D claim will cost them the relief as well as the R&D benefit itself.

RUNNING COSTS AND SMALLER CHANGES

The National Living Wage rises 3.9% from 1 April 2027, to £13.21 for workers aged 21 and over, with the 18 to 20 rate at £11.27. Payroll budgets for the next financial year should be built from those figures.

Retail, hospitality and leisure businesses in England receive the most direct support. Business rates are frozen in real terms for two years, and from April 2027 the Small Business Rate Relief thresholds rise to £18,000 for full relief (from £12,000) and £21,000 for tapered relief (from £15,000). The government estimates that around 70,000 more high street businesses will pay no rates as a result.

The Budget confirmed that non-compete clauses will be restricted across the whole economy. A consultation is due shortly and the government’s detailed position is expected in early 2027. Anyone who relies on non-competes to protect a team or a client list should review what other protections are in place.

Smaller items, all from 6 April 2027 unless stated:

• the income tax trading allowance rises from £1,000 to £3,000
• the 55p approved mileage rate for the first 10,000 business miles becomes permanent, and the rate above that rises from 25p to 35p
• online marketplaces become liable for VAT on sales by UK businesses with annual sales of at least £90,000 on the platform, from 1 October 2027

Owners with investment or let property held outside the company face a rise of two percentage points on savings and property income from 6 April 2027, to 24%, 44% and 49%. Rental portfolios held personally become more expensive to own, which adds to the case for reviewing how they are structured.

WHAT HAS NOT CHANGED

The CGT rates remain at 18% and 24%, and the annual exempt amount is retained. Corporation tax stays at 25%. There are no changes to income tax rates, National Insurance or VAT. Business Property Relief remains at 100% on the first £2.5 million and 50% above that threshold, with an effective rate of 20% on the excess – unchanged from April 2026. The residence-based IHT rules and the four-year foreign income and gains regime are also unchanged.

One point worth noting for owners with intangible assets: the 2025 proposal to bring intangibles within the holdover relief restriction is proceeding. This is relevant to any business disposal or restructuring that involves goodwill or other intangibles and should be factored into planning accordingly.

This Budget does not transform the landscape for business owners, but it contains several measures that require attention now. The BADR change and the Founders’ Relief consultation both have April 2027 in view, but the decisions that will determine whether owners benefit – on timing, structure, and eligibility – need to be made well before then. The distributions reform is further away, but the direction is set and transactions being planned today should already take account of where the rules are heading.

PROPERTY AND INVESTMENT

The Chancellor’s 2026 Budget includes several measures of interest to developers, investors, landlords, occupiers, housebuilders and first-time buyers. Set out below are some of the key announcements.

• Higher tax rates on property income: From April 2027, income tax rates on property income will increase by a further two percentage points (on top of the two percentage point increase announced by the previous Labour Government). Landlords and property investors will want to consider the potential impact on investment returns and ownership structures, particularly where properties are held personally rather than through a corporate vehicle.
• Biodiversity Net Gain exemption for smaller brownfield schemes: Smaller housing developments on brownfield land will be exempt from Biodiversity Net Gain requirements, reducing costs and planning burdens for qualifying schemes and potentially improving development viability.
• Business rates support for retail, hospitality and leisure occupiers: Qualifying retail, hospitality and leisure properties in England will benefit from business rates reductions, freezes or, in some cases, complete relief (with the Small Business Rates Relief threshold increasing from £12,000 to £18,000). The measures are intended to support occupiers and high streets across England.At the same time, vape shops and adult gaming centres will no longer benefit from certain business rates reliefs, as the Government seeks to focus support on other high street uses.
• Lifetime ISA reforms and New First Time Buyer ISA: The withdrawal charge on Lifetime ISAs will be reduced to 20% for first-time buyers purchasing properties above the current £450,000 cap, providing greater flexibility for buyers in higher-value markets. The Government has also announced a new First Time Buyer ISA, aimed at helping prospective purchasers save for a deposit and supporting home ownership.

WHAT DOES THIS MEAN FOR THE MARKET?

While many of the Budget measures are aimed at easing cost pressures on households and businesses, several announcements have direct implications for the property sector. The most significant are likely to be the proposed increase in the taxation of property income, the easing of Biodiversity Net Gain requirements for certain developments and the package of business rates measures for retail, hospitality and leisure occupiers.

As always, the detail will matter, and many of these proposals will need to be worked through before their practical impact becomes clear.

EMPLOYMENT

The Budget provided a further update on the government’s proposed reforms to non-compete clauses. While there had been expectations of more immediate change, the announcement instead confirmed that a further consultation will be launched in early 2027 before any legislation is introduced.

As a result, employers are unlikely to see significant changes in the near term and existing restrictive covenant arrangements remain in place for now. For some businesses, this will provide welcome certainty when protecting client relationships, confidential information and intellectual property. For others, particularly growing businesses seeking greater flexibility in recruitment, the delay may be frustrating.

In the meantime, organisations should take the opportunity to review their post-termination restrictions and wider employment protections, ensuring they remain fit for purpose and aligned with broader succession, retention and growth strategies.

FAMILY LAW

The Chancellor’s Budget on 28 October 2026 contained relatively few measures directly targeted at family law, but several announcements are of practical relevance to those advising on financial remedy proceedings – particularly in cases involving trust structures, entrepreneurial wealth, and employment settlements, which constitute the backbone of our work.

INHERITANCE TAX (IHT) AND TRUST LIABILITIES – IMMEDIATE EFFECT

The most significant measure for family practitioners is the amendment to the inheritance tax rules concerning liabilities in trust arrangements, which takes effect today for all deaths and other chargeable events occurring on or after 28 October 2026.

The government has amended the IHT rules to clarify when liabilities relating to trust property may reduce the value of assets for IHT purposes, to align the treatment of those liabilities with the treatment of personal liabilities, and to strengthen the existing anti-avoidance provisions in this area. Although the legislation is in draft, which may leave many estates and trusts in limbo whilst they see if it passes unamended in the next Finance Act.

It is also worth noting what this measure does not address: there is no announcement in this Budget concerning the IHT treatment of gifts. Those who were anticipating clarification on lifetime transfers or gifts with reservation of benefit in the family context will need to look elsewhere.

TERMINATION PAYMENTS – A POINT TO WATCH IN EMPLOYMENT-RELATED CASES

The Budget also clarifies the tax treatment of termination payments, again with effect from 28 October 2026. Whilst this is presented as a technical clarification rather than a substantive change, it is of practical relevance in financial remedy proceedings where a redundancy payment, a settlement agreement, or a departure from employment forms part of the asset picture. The net value of any such payment will need to be assessed on the basis of the clarified rules, and practitioners should ensure that any termination payment forming part of a client’s financial disclosure is reviewed accordingly.

ENTREPRENEURS AND BUSINESS OWNERS – SIGNIFICANT MEASURES IN THIS BUDGET

For those of us who regularly advise entrepreneurs and business owners going through separation – a significant part of our practice at Kingsley Napley – this Budget contains a number of measures that will be directly relevant to the financial landscape of our clients’ cases, even if they do not target family law specifically.

The government is introducing a new Capital Gain Tax (CGT) Founders’ Relief from 6 April 2027, offering a reduced 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies. Whilst this may look attractive, the actual detail is such that it is going to be incredibly difficult to claim. The government’s one estimate is only 600 people a year will benefit. Alongside this, the Business Assets Disposal Relief lifetime limit is being reduced from £1 million to £500,000 from 6 April 2027. The EMI2 scheme (formerly CSOP) is being expanded, doubling the value of tax-advantaged options employees can hold from £60,000 to £120,000 from 6 April 2027.

These measures will affect the value of business interests and share options that frequently appear in the asset schedules of cases involving entrepreneurial clients. The introduction of Founders’ Relief in particular may significantly affect the CGT position on a disposal of business interests as part of a financial remedy settlement, and practitioners should be alive to this when advising clients who hold qualifying stakes in high-growth companies.

WHAT IS NOT IN THIS BUDGET

Two points of absence are worth flagging for family practitioners:

• CGT on matrimonial transfers: there are no changes to the existing CGT rules on transfers between spouses and civil partners, including the no-gain/no-loss treatment and the extended period following separation. The position remains as it was.
• Pension death benefits: the Budget does contain several pension-related measures, including the removal of the two-year rule for lump sum death benefits and changes to the collection of tax on excess lump sum death benefits, all taking effect from 28 October 2026. Whilst these are primarily succession planning measures, they are worth noting in cases where pension death benefits form part of the financial picture – for example, in cases involving older parties or those with serious health conditions. However, there are no changes to the broader pension sharing or pension attachment framework that applies in financial remedy proceedings.

This Budget does not transform the family law landscape, but it contains several measures that practitioners – particularly those advising on complex, high-value, or entrepreneurially-focused cases – will need to factor into their advice immediately. The IHT trust liability change is in force today. The entrepreneur-focused CGT and share scheme measures take effect from April 2027 but will already be relevant to how business interests are valued and structured in settlements being negotiated now.

IMMIGRATION

In some budgets gone by you could barely find the word “immigration”, “visa” or “migration” anywhere to be seen. So whilst it is good to see mention of some new initiatives in the 2026 Budget, it does not go anywhere near far enough.

WHAT WAS INCLUDED?

The budget includes references to the following changes in key work visa categories:

Skilled Worker. There are a few proposed changes for Skilled Worker visas:

Up to 6 months visa curtailment period. Where the “most” highly skilled sponsored workers’ jobs end, they will have an extended visa curtailment period of up to 6 months to help them find a new job in the UK. This change will be implemented in 2027. The definition of who is a highly skilled sponsored worker is not clear but the inference is it will include high earner Skilled Worker visa holders and possibly those in the little used Scale-up category. The precise period (of up to 6 months) will also depend on how long the person has been in their job. Visa curtailment periods have recently reduced to around 3 weeks in some cases and so this could benefit some individuals. The Chancellor also mentioned reform of non-compete clauses in employment contracts to help start-ups and scaleups recruit.

Regional Skilled Worker salary thresholds. In perhaps a nod to the new PM’s emphasis on local policies and regional devolution, the budget mentions reform of visa salary thresholds to “ensure that visa criteria better reflect labour market conditions across the UK, supporting employers across the entire country.” It has long been felt that Skilled Worker sponsors in the higher salary level London and the South East have an advantage in being able to meet minimum salary levels compared to those in the regions. Reform will seek to redress the balance.

Other changes to Skilled Worker salary thresholds: From spring 2027 the Migration Advisory Committee’s recommendations on salary requirements will be implemented, including:

• reducing occupation-specific minimum salary thresholds from the median to the 25th percentile of wages;
• uprating the general threshold based on 2026 wage data;
• annually updating salary thresholds using the latest ONS wage inflation data (ASHE); and
• levelling new entrant discounts into a single figure for those studying, recently graduated, or in professional training; removing the PhD discount.
• Global Talent – expansion of the UKRI endorsement pathway: From spring 2027 UKRI “will work with organisations in regions across the UK to identify additional R&D-intensive businesses in Industrial Strategy sectors who could act as host organisations on the endorsed funder pathway of the Global Talent visa route”. See below for more views on this scheme.
• High Potential Individual: The list of eligible universities is extended to the top 150 global universities (up from the top 100), with a proportional increase to the cap under the scheme (currently a maximum of 8,000 applicants per year).
• Graduate route: Pre-budget policy announcements confirmed a reduction of Graduate visas from 2 years to 18 months (whilst retaining the 3-year period for PhD graduates). Today’s budget confirms 2-year visas will be issued to those graduating from “high compliance universities where there are strong labour market outcomes.”

PRIORITY INDUSTRIES HIGHLIGHTED IN THE BUDGET AND LEVERAGING THE UK IMMIGRATION SYSTEM

According to the budget, “The government is committed to the UK being a leading destination for global talent and responding where issues emerge” and “To strengthen the UK’s position as the best place in the world to build an innovative business, the government will introduce reforms to make the UK’s migration system the most pro-business in Europe for high-skill workers.”

Reading those assertions against the policy changes may make you stop and ask if you have missed something. Afterall, eventually in spring 2027 implementing the MAC’s December 2025 Skilled Worker salary recommendations; flagging 2-year Graduate visas whilst many will get 18-months; extending the High Potential Individual visa when it only normally lasts 2 years and does not lead to settlement; and seeking to extend the UKRI endorsed funder pathway do not amount to much.

The regional salary thresholds policy is interesting and longer visa curtailment periods welcome. The April 2024 change which set median going rates for Skilled Worker applications drastically increased many of the going rates and so reversing it would be welcome. Time will tell whether the government will stick with the MAC’s recommendation in December 2025 for the general threshold to stay at £41,700 – it could well be higher based on the latest data. Regular annual updates to salary thresholds would be welcome in order to avoid jolting jumps as were seen in April 2024. Based on 25th percentile going rates, the MAC recommended the new entrant salary discount should be in place for between 6-9 years depending on the level of the general threshold (up from the current 4 years). The MAC also recommended salary levels for Skilled Worker applications sponsored on the basis of a Temporary Shortage List role and we will need to wait to see which level is chosen.

All this together cannot credibly amount to evidence of the government being “committed to the UK being a leading destination” and making the UK “the most pro-business in Europe for high-skill workers”.

As trailed in the FT last week, a return of the Investor visa was not going to make it into this budget. There is still hope for HNW individuals that this is still being investigated and worked out for future implementation, as the UK continues to cry out for suitable options for this vital wealth-creating bracket

As expected the budget was slanted to the UK’s top priorities including defence, AI and tech, and energy. These are highly specialised industries in which top talent will primarily not be based in the UK. They are industries in which the UK is largely going to need to play catch up with other countries. The UK needs to accelerate its development in these areas as much as possible. It will not be possible to do that unless the UK can attract the right people here to make the right decisions and execute world leading plans. As has often been the case, it is a lost opportunity to not use the immigration system as a means to do this.

Immigration lawyers will be scratching their heads to remember ways in which the UK has tried to attract the necessary international talent to meet its priorities. A few recent examples come to mind though:

• In August this year the government expanded the Global Talent route – “An expansion of the Global Talent visa…will give more than 100 of the UK’s most innovative companies the ability to support some of the world’s best scientists and engineers to come to live and work in the UK, unlocking a wave of international talent.“ This is the only recently introduced scheme on which much was made of in the budget – with a desire to expand it. On the face of it that sounds like a step in the right direction. But when you look at the eligibility criteria you do not see an easy way for world leaders to start working in the UK. Instead, as is the way, you see complicated criteria including that as well being awarded a grant from an endorsed funder, you must have at least 1-year left on your contract, spend at least half your time working on the grant and have either a “one-off grant” or a renewable award with regular peer review. It is no wonder they are trying to find more ways of expanding the scheme.
  The press release at the time referred to the initiative being possible “thanks to the country’s premier visa route for research talent” That “premier visa route” being Global Talent – where refusal rates have always been notoriously high. A key endorsing body is Tech Nation for digital tech applicants – surely a top priority at the moment for the UK. But a recent freedom of information request indicated that refusal rates may be at a staggering and completely off-putting 90%.
• Another way the UK has attempted to attract the right businesses/talent to the UK that immigration lawyers may remember is the OfI Fast Track Referral for a UK Expansion Worker Sponsor Licence announced in June 2026 during London Tech Week as part of new so called “concierge services”. Again, complicated qualifying criteria ensues – the overseas business must be receiving ongoing support from the OfI, operating in one of the Industrial Strategy’s 8 priority sectors, and which has received at least £1 million venture capital or institutional investment/committed at least £2 million capital investment for UK expansion/is part of a government-recognised high-growth programme (for example, the Global Entrepreneur Programme). If successful, what do you get out of this “fast track” scheme? You get your sponsor licence hopefully approved within around 10 days instead of the ludicrously uncompetitive 6 months it has generally been taking. Even then the Home Office cannot help itself to put people off using the scheme in adding that “Applications referred by OfI to Home Office for fast-tracking that are later identified by the Home Office as complex will not be processed within 10 working days and will be subject to standard timelines.”
• Also in June 2026 the government threw into the mix a second “concierge service” – namely to offer lower visa application fees in some circumstances. The context to that being the fact the UK is one of if not the most expensive visa systems in the world – an off putting factor for leading businesses and individuals looking for their preferred base. Reimbursing visa fees is better than nothing but yet again involves complicated qualifying criteria. The business must have a sponsor licence and be in one of the three priority sectors from the UK’s Industrial Strategy – Clean Energy, Life Sciences, and Digital and Technologies. It must also meet the convoluted definition of being a scale-up, based on an average annualised growth rate exceeding 20% in either employment or turnover over a continuous three-year period starting with at least 10 employees at the beginning of this period. If successful the business could ask for up to £25,000 reimbursement per year – not even enough to cover a family of 4 applying for Skilled Worker and dependant visas.

This is not enough and not good enough – it’s too complicated, of little to no benefit and will not affect business and personal decisions for world leading talent to move to the UK. The UK needs to really do more to signpost the UK as an easy and welcoming place to move for the right crucial people and businesses aligned with the country’s top priorities. The policies in today’s budget are nice to haves, but do not touch the sides of what is required.

EARNED SETTLEMENT

Unfortunately, even if there were adequate policies and initiatives in the budget to attract top talent, it would be set against the dark and gloomy background of the earned settlement proposals. The latest comments in the press indicate the new rules/policy announcement should arrive in November, perhaps becoming law in February next year.

Uncertainty surrounding earned settlement (let alone future earned citizenship proposals) must already be having an impact on the choices international talent and businesses are making about whether the UK is the best choice for them. As and when the rules come in, this will make it even worse assuming the UK becomes an outlier against the common 5-year settlement period.

The relatively tiny tweaks contained in the latest Budget will be hard to spot in the likely huge haystack of earned settlement rules.