The Chancellor, John Healey, has delivered the Autumn Budget 2026, announcing a range of tax changes and measures affecting businesses, employers and the self-employed.
While the Government has avoided widespread increases to the main business tax rates, there are several important changes that small business owners should be aware of. These include changes to Capital Gains Tax relief, increases in the National Minimum Wage, additional business rates support and new requirements for tax reporting.
Business Asset Disposal Relief – Important Changes for Business Owners
One of the most significant announcements concerns Business Asset Disposal Relief (BADR), which can reduce the Capital Gains Tax payable when business owners sell their business or shares in their company.
From 6 April 2027, the lifetime limit for qualifying gains will be reduced from £1 million to £500,000.
The reduced Capital Gains Tax rate of 18% will continue to apply to qualifying gains within the available lifetime allowance. Gains exceeding that limit will generally be subject to the normal Capital Gains Tax rates.
For business owners considering retirement or selling their company, this could result in a substantially higher tax bill.
Our advice: If you are considering selling your business, retiring or transferring your shares, it is worth reviewing your plans well before April 2027.
National Minimum Wage – Higher Employment Costs
The National Minimum Wage and National Living Wage will increase from 1 April 2027.
The new hourly rates will be:
- £13.21 for employees aged 21 and over.
- £11.27 for employees aged 18 to 20.
- £8.31 for employees aged 16 to 17 and eligible apprentices.
For a full-time employee aged 21 or over working 37.5 hours per week, the minimum annual salary will increase to approximately £25,760.
Although the headline rates of employers’ National Insurance have not been increased in this Budget, higher wages will also increase associated employment costs, including employer pension contributions.
Our advice: Businesses employing staff should review their wage budgets and consider the impact on profitability and cash flow.
Business Rates – Additional Relief for High Street Businesses
There is some welcome news for businesses operating in the retail, hospitality and leisure sectors.
From April 2027, the Government will increase the rateable value thresholds for Small Business Rate Relief for qualifying properties in England.
The threshold for 100% relief will increase from £12,000 to £18,000, with tapered relief available for qualifying properties with rateable values up to £21,000.
Qualifying businesses will also benefit from a two-year real-terms freeze on business rates bills.
Additional relief will be available for pubs, social clubs and qualifying live music venues.
These changes could provide meaningful savings for smaller shops, cafés, restaurants, salons and other qualifying high street businesses.
Corporation Tax and Business Investment
The existing structure remains in place, with a 19% small profits rate and a 25% main rate, subject to the usual thresholds, marginal relief and associated-company rules.
Full expensing will also continue for qualifying capital expenditure by companies, allowing businesses to obtain immediate tax relief on certain investments in plant and machinery.
Self-Employed Trading Allowance Increased
From 6 April 2027, the Income Tax trading allowance will increase from £1,000 to £3,000.
This will benefit individuals earning relatively small amounts from self-employment or other qualifying trading activities.
The change may be particularly helpful for people running small side businesses or undertaking occasional freelance work.
It is important to remember that the trading allowance is an alternative to deducting actual business expenses, rather than an additional allowance available on top of those expenses.
New Capital Gains Tax Relief for Entrepreneurs
The Chancellor has also announced a new Founders’ Relief, intended to encourage entrepreneurs to establish and grow innovative businesses in the UK.
From April 2027, qualifying founders of eligible high-growth businesses will be able to benefit from a reduced Capital Gains Tax rate of 10% on up to £10 million of lifetime gains.
This relief is aimed at a particular category of growing businesses and will not automatically apply to all company directors or shareholders.
The detailed eligibility conditions will be important in determining who can benefit.
VAT and Electronic Invoicing
There has been no increase in the standard rate of VAT, which remains at 20%.
However, the Government has confirmed plans to introduce mandatory electronic VAT invoicing from 1 April 2029.
Businesses will be required to issue VAT invoices in a specified electronic format, with further technical guidance expected before implementation.
Although the change is some years away, it represents another significant development in the move towards digital tax administration.
Businesses using modern accounting software should be well placed to adapt, although changes to existing invoicing procedures may be necessary.
Changes to Self Assessment Tax Payments
Another important announcement concerns the timing of Income Tax payments.
From April 2029, taxpayers who currently make Self Assessment payments on account will be required to make more regular payments towards their annual tax liabilities.
The intention is to bring tax payments closer to the period in which income is earned.
For sole traders and partners, this could mean a change to the way tax payments are budgeted throughout the year.
Further details will be needed before the full implications can be assessed.
Property Income – Higher Tax Rates for Landlords
Individuals receiving rental income will also be affected by an increase in the Income Tax rates applicable to property income.
From April 2027, these rates will rise by two percentage points across the relevant tax bands.
This could increase the tax burden on individuals who own residential or commercial investment properties personally.
Landlords should review their expected tax liabilities and consider the effect on the net income generated by their properties.
What Should Small Business Owners Do Now?
Although many of the changes will not take effect until April 2027 or later, there are several matters worth considering now.
Business owners approaching retirement should review the Capital Gains Tax implications of any planned sale. Employers should update their wage forecasts, while businesses occupying commercial premises should check their entitlement to business rates relief.
It is also sensible to review planned capital expenditure, future tax payments and the suitability of existing accounting systems.
Taking advice early can help businesses understand the financial impact of the changes and avoid unexpected tax liabilities.
Although some announcements will benefit smaller businesses, others could increase costs or create additional tax liabilities.
Disclaimer: This article provides general information based on announcements made in the Autumn Budget on 28 October 2026. Some measures remain subject to legislation, consultation or further HMRC guidance. Professional advice should be obtained before making financial or tax planning decisions.