Budget 2026: What’s changing for the self-employed?

The self-employed have been waiting to see whether this Budget would offer any real relief from the rising costs and growing pressures of running a business.

There are some welcome changes. Higher mileage rates are being made permanent, parental pay is being extended to self-employed dads and partners, and the Government is changing the rules that can leave self-employed unpaid carers worse off for earning more. The trading allowance reporting threshold is also increasing, following a proposal first put forward by IPSE.

But there is still a long way to go. As we said in our response to the Budget, the self-employed have been short-changed. The rising cost of hiring is making businesses think twice about engaging freelancers and contractors, while an increasingly complicated tax and regulatory system adds to the cost and uncertainty of working for yourself.

Here’s what the Budget means for you and your business, including the changes we’ve campaigned for and the proposals we’ll continue to challenge.

If you use your own car or van for business journeys, the mileage rates are increasing again.

The rate for the first 10,000 business miles rose from 45p to 55p per mile in April 2026. The Budget confirms that this higher rate will stay in place. From 6 April 2027, the rate for business miles above 10,000 will also rise, from 25p to 35p per mile.

For someone driving 15,000 business miles a year, the changes could mean up to £300 in additional tax savings. The amount you save will depend on your mileage and tax position.

We’ve been calling for mileage rates to reflect the real cost of running a vehicle. Making the higher rate permanent and increasing the rate for those driving more than 10,000 business miles are welcome steps.

It won’t make fuel cheaper, and it won’t cover every cost of running a vehicle, but it is a practical change that we’ve been pushing for.

For more information, read our guides on how to claim mileage allowance when you’re self-employed and what car expenses sole traders can claim.

From 6 April 2027, the tax-free Trading Allowance will increase from £1,000 to £3,000 a year.

We were the first to propose raising the allowance to Government, calling for an increase to £5,000 in our 2024 manifesto. This is a significant step towards our proposal and a real boost for people starting out or earning extra through a side hustle. A higher allowance means they can earn more before paying tax, making it easier to try out a business idea or earn a little extra without immediately taking on the same tax burden as a larger business.

For established self-employed businesses, the impact is more limited. Their income will usually be well above £3,000, and they’ll still need to manage their tax returns and other reporting requirements as before.

We’re pleased to see the Government act on an issue we have long championed, and we’ll continue to push for a £5,000 allowance.

We’ve been calling on the Government to give the next group joining Making Tax Digital for Income Tax the same breathing room as those who joined first. As our CEO Vicks Rodwell argued recently, it makes little sense to protect one group while leaving the next facing penalties as they learn a new system, particularly when many manage their own tax affairs without an accountant.

The Budget has taken a step towards addressing this concern. Sole traders and landlords joining in April 2027 will not receive penalty points for late submission of their first four quarterly updates in the 2027/28 tax year.

This should give people more time to get used to the new reporting requirements without worrying about penalty points for missing those early deadlines. But it doesn’t change the fact that many self-employed people will now have to adapt to a more demanding way of managing their tax affairs. They’ll still need to keep digital records and submit quarterly updates.

We’ll continue to push for a system that works for the self-employed, not just HMRC.

If you pay tax through Self Assessment and make payments on account, the Chancellor announced that you'll be required to make more regular payments towards your final tax bill from April 2029.

This changes when some people will need to pay their tax, rather than simply how much they owe. Depending on your circumstances, it could mean planning for tax payments more frequently throughout the year instead of relying on the current payment schedule.

We oppose this change. Many self-employed people have irregular incomes, and spreading payments more frequently could make it harder to manage cash flow, particularly when work and earnings fluctuate throughout the year. Paying tax more often doesn’t make it easier to afford.

The Budget gives little detail on how the new system will work. We’ll be pressing the Government to reconsider plans that risk adding further pressure to the self-employed, rather than making the tax system work around the realities of running a business.

Energy costs remain a concern for people working from home and for those running small businesses from their own premises.

From January 2027, eligible households in council tax bands A to D in England will receive a £100 Household Energy Payment. Similar support is expected in the devolved nations, funded separately.

There are also plans to change gas standing charges. Ofgem has been asked to abolish domestic gas standing charges, with the aim of doing so by the end of 2027, or as soon as possible after that.

For more details, read the Government’s announcement on its plans to help with energy bills.

Self-employed fathers, partners and adopters in Great Britain are set to gain access to parental pay from April 2029.

This is a significant step forward after years of campaigning by IPSE to address the unfair gap in support for self-employed parents. We’ve consistently made the case that having your own business shouldn’t mean missing out on support available to employed parents.

But there is still more to do. We’ll continue to push for six weeks of parental pay for all dads, while campaigning to ensure self-employed mothers receive support on a par with their employed counterparts.

Find out more about IPSE’s campaign for fairer parental rights and pay.

We’ve spent the past 12 months highlighting how the Carer’s Allowance rules leave self-employed unpaid carers without the support they need. Our research found that just 8% of unpaid carers who were self-employed received the benefit, with the strict earnings limit a major barrier.

The Budget’s plan to replace the all-or-nothing earnings limit with a gradual reduction is a step towards addressing the problem we raised. From 2030/31, Carer’s Allowance in England and Wales is due to reduce by £1 for every £1 earned above the limit, rather than being lost altogether.

This should make it easier for carers to take on work without risking their entire benefit. We’ll continue to push for a support system that recognises the realities of running a business while caring for someone.

For self-employed people running eligible retail, hospitality and leisure premises in England, the Budget includes changes to business rates from April 2027.

The threshold for 100% Small Business Rates Relief will rise from a rateable value of £12,000 to £18,000. The threshold for tapered relief will rise from £15,000 to £21,000. This means some smaller premises that currently pay business rates could become eligible for full relief.

The Government has paused plans to require small companies and micro-entities to file profit and loss accounts with Companies House from April 2028. This follows a recommendation from the Small Business Regulatory Taskforce, of which IPSE was a member, that the Government accepted.

The pause means smaller companies can continue filing accounts without including their profit and loss information on the public register while the Government explores ways to simplify reporting between Companies House and HMRC.

This Budget brings some welcome changes for the self-employed, from a higher Trading Allowance and improved mileage rates to progress on parental pay and a pause on plans for more onerous Companies House reporting.

But it also leaves important challenges unresolved. More frequent tax payments risk adding pressure, while there is little in the Budget to ease the wider pressures facing the UK’s smallest businesses.

We’ll continue to press the Government to go further, with a tax system that is fairer, more predictable and better suited to the realities of working for yourself.