The 28 October Budget left most headline rates for the self-employed alone, but a few changes and some frozen thresholds matter if you plan to buy or remortgage in the next year or two. Here is the short version.
What the Budget changed for the self-employed
- Dividend tax unchanged: rates stay at 10.75%, 35.75% and 39.35%, with the £500 dividend allowance. A wider reform of how company distributions are taxed is planned from April 2028, with draft rules due in 2027.
- Thresholds stay frozen: the £12,570 personal allowance and the basic rate limit remain frozen until April 2031, so rising profits can drift into higher tax bands.
- Trading allowance up: the tax-free trading allowance rises from £1,000 to £3,000 from 6 April 2027, helpful for side income.
- Property income tax up: if you also let property, rates on property income rise to 24%, 44% and 49% from April 2027.
- Making Tax Digital moves on: sole traders and landlords with qualifying income over £30,000 join from April 2027 (over £20,000 from April 2028). For those already in, the next quarterly update is due on 7 November.
Why this matters for your mortgage
Lenders usually assess self-employed income from your last one to two years of tax calculations and tax year overviews, or company accounts if you are a director. Most take your salary plus dividends, though some can use salary plus your share of net profit, which can make a real difference if you leave profits in the company.
The Budget does not rewrite the figures lenders already hold, but it can change how you plan future pay. If your accountant suggests changing the mix of salary, dividends or retained profit, ask how that will show on your next tax return before you apply. A lower declared income one year can reduce what a lender will offer, even when the business is doing well.
Base rate is 3.75%, with the Bank of England's next decision due on Thursday 5 November. Whatever it decides, a clean, up-to-date set of figures puts you in a stronger position with lenders.
Quick tips
- Keep your tax return, tax calculations and tax year overviews to hand for the last two years.
- File your MTD quarterly updates on time: a tidy record with HMRC helps when underwriters ask questions.
- Talk to your accountant and your broker together before changing how you draw income.
- Company directors: ask whether a lender could consider your share of retained profits.
- If your income dipped in one year, explain why: some lenders will look at the trend rather than one figure.
Our free self-employed mortgages guide explains how lenders work out your income, and the Islington retained-profits case study shows how a director's borrowing was assessed. Check what you will need with our mortgage documents checklist, then get a rough figure from the borrowing calculator. Our CeMAP-qualified advisers compare lenders across the market to find one whose income rules suit how you are paid.
Sources
- GOV.UK – Increasing the trading allowance (28 October 2026)
- Accounts OS – What the Autumn Budget 2026 changes for directors and sole traders (31 October 2026)
- Crunch – Autumn Budget 2026: tax changes for you and your business (28 October 2026)
- Bank of England – Bank Rate (checked 3 November 2026)
To talk it through, contact us or start your enquiry.
Important: This guide is general information, not personal advice. Rules, rates and lender criteria change; speak to an adviser about your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage.