Quickest Budget 2026 round-up for freelancers
Last Updated on 6 November 2026
There wasn’t much new in the Budget speech on 28th October 2026.
There were certainly no big changes to the tax system.
However there were some bits – clarifications and declarations of intent – which might be of interest to freelancers who read this blog.
Trading Allowance Increase
The sole trader trading allowance is tripling to £3,000 per tax year from 6th April 2027. See my separate blog post on this >
Mileage Allowance Increase
The mileage allowance for your tax records is now permanently £0.55p per mile for the first 10,000 miles of business journeys per year. This was already the case as a one off for 2026-27.
Above 10,000 miles the rate goes up to £0.35p per year from April 2027.
Making Tax Digital (MTD)
MTD quarterly reporting penalties will be waived if your first compulsory MTD reporting year is 2027-28. This refers to people who had a sole trader (and/or landlord) turnover of more than £30,000 in the tax year 2025-26.
MTD quarterly reporting penalties will NOT be waived in 2027-28 for people who were already using MTD in 2026-27!
Paternity Pay for Dads/Adopters
Paternity allowance payments will be extended from April 2029 for sole traders (although not in Northern Ireland).
The details are to be announced, but it will probably be two weeks of paternity pay, based on having made some national insurance contributions, and possibly at the same weekly rate as maternity allowance, which is around £194 in 2026.
It looks like the baby will have to be born or adopted on or after 6th April 2029 for fathers to get anything.
VAT Registered or Running a Payroll?
From April 2029 Direct Debits will have to be set up for any businesses that are VAT-registered or running a PAYE payroll.
VAT bills and PAYE tax and NI bills can be paid manually at the moment, but HMRC wants the ability to collect outstanding VAT or PAYE payments by direct debit too.
Speaking as someone whose business is VAT registered, and has always paid VAT by direct debit, I don’t have a big problem with this.
Sole Trader income tax: ONE TO WATCH CLOSELY!
HMRC is still considering how to make ‘payments on account’ happen more frequently through the tax year.
At the moment sole traders (and others) either pay income tax once a year by the end of January, or twice a year in January and July if your annual tax bill is likely to be over £1000. (See my earlier blog post on payments on account >)
It’s a way of spreading payments and avoiding one massive bill a year.
The new system would make this work monthly, presumably based on MTD data which is reported quarterly by higher-earning sole traders.
This would bring sole trader tax payments more in line with the PAYE system for employees, where people pay tax as they go along.
This seems reasonable, until you remember that the PAYE system works appallingly for many PAYE freelancers who jump quickly from job to job. The likelihood of being under- or more likely over-taxed is enormous.
Spot anything else from the Budget? Got any comments? Let me know below…
Image credit: Peggy und Marco Lachmann-Anke from Pixabay
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Posted on 02 November 2026
