The Autumn Budget 2026 comes against a backdrop of ongoing pressure on households and businesses from higher costs, particularly energy prices. It aims to provide short-term “breathing space” while maintaining fiscal discipline and supporting longer-term growth.
Below is a summary of the key business and personal measures most relevant to small businesses, company owners, landlords and the self‑employed.
1. Business Measures
1.1 Business Asset Disposal Relief (BADR)
From 6 April 2027, the BADR lifetime limit will reduce from £1 million to £500,000.
BADR (formerly Entrepreneurs’ Relief) was introduced in 2008 with a £1 million lifetime limit, which was then:
- increased to £2 million in 2010
- increased to £5 million later in 2010
- increased to £10 million in 2011
- cut back to £1 million from March 2020 and re‑badged as BADR.
This reduction will be a significant setback for some owners planning to sell their businesses, as less of their lifetime gains will qualify for the lower BADR rate.
1.2 New Founders’ Relief
A new Founders’ Relief is proposed from 6 April 2027, offering a 10% Capital Gains Tax (CGT) rate on up to £10 million of lifetime qualifying gains.
It is aimed at founders and significant early investors in high‑growth, innovative UK companies and is expected to require:
- at least a 25% initial shareholding
- a five‑year holding period
- UK residence conditions
- meeting strict growth and innovation tests.
The detailed rules are under consultation and may change before implementation.
1.3 Young Entrepreneurs Allowance
The Government will pilot a new Young Entrepreneurs Allowance to help young people overcome financial barriers to starting a business.
Successful applicants will receive support towards living costs in the first year of trading, particularly targeting those without other financial backing. Eligibility criteria, support levels and operational details will be announced as the pilot develops.
1.4 Gifts of Business Assets – CGT Hold‑over Relief
The Government has confirmed changes to CGT gift hold‑over relief, which allows gains on certain gifted business assets or shares to be deferred instead of taxed immediately.
From 6 April 2027, the restrictions on relief for gifts of qualifying shares and securities will be modernised to take account of:
- assets within the intangible fixed assets regime
- assets qualifying for the Substantial Shareholding Exemption.
These changes, first announced at Budget 2025, will now be legislated in Finance Bill 2026–27.
1.5 Parental Allowance for the Self‑Employed and Others
From April 2029, a new Parental Allowance will extend financial support to:
- eligible self‑employed fathers, partners and adopters in Great Britain
- some people who are recently employed or unemployed, or have broken or irregular work histories and therefore do not qualify for statutory paternity or adoption pay, provided they have sufficient work and earnings history.
This allowance will apply in England, Scotland and Wales. Detailed eligibility rules and administration will follow.
1.6 Trading Allowance
The trading allowance, originally introduced at £1,000 in April 2017, will increase to £3,000 from 6 April 2027.
This will provide greater relief for individuals with modest trading income, and fits with HMRC’s plan to raise the self‑assessment reporting threshold for gross trading income to £3,000, with income below that to be reportable via a simplified service.
1.7 Capital Allowances
The Budget confirms further changes to capital allowances on plant and machinery.
- The £1 million Annual Investment Allowance (AIA) continues, giving 100% relief on most qualifying expenditure and remaining the first port of call for many smaller businesses.
- Companies can continue to benefit from 100% full expensing on qualifying new plant and machinery.
Beyond AIA and full expensing:
- The main writing‑down allowance rate will reduce from 14% to 12% from April 2027, slowing relief for expenditure in the main pool.
- The main‑rate first‑year allowance will increase from 40% to 50% for qualifying expenditure incurred on or after 1 January 2027, allowing half of qualifying main‑rate expenditure to be deducted in year one.
1.8 Mileage Rates
For employees and the self‑employed using their own cars or vans for business:
- From 6 April 2026, the approved mileage rate increases from 45p to 55p per mile for the first 10,000 business miles.
- For mileage above 10,000 miles, the rate remains 25p per mile for 2026/27, but will increase to 35p per mile from 6 April 2027.
These higher rates provide greater tax‑free/tax‑deductible relief towards running a personal vehicle for business journeys.
1.9 National Living Wage (NLW) and National Minimum Wage (NMW)
From 1 April 2027, minimum wage rates will rise by 3.9%:
- NLW will increase to £13.21 per hour
- NMW for 18–20‑year‑olds will rise to £11.27 per hour.
For a full‑time NLW employee, this is worth around £910 more in gross pay per year, increasing wage costs for employers.
1.10 Business Rates (England)
From 1 April 2027:
- The rateable value threshold for 100% Small Business Rates Relief will increase from £12,000 to £18,000, with relief tapering to nil between £18,000 and £21,000 (up from £15,000).
- These enhanced thresholds will apply until 31 March 2029.
Additional support:
- Pubs, social clubs and most live music venues will receive an extra 20% business rates relief in 2027/28 and 2028/29, taking total relief to 35% for most such venues.
- Live music venues with a rateable value of £1 million or more will continue to receive 15% relief.
- Eligible retail, hospitality and leisure properties will benefit from a two‑year real‑terms freeze on business rates bills, with increases generally limited to CPI inflation in 2027/28 and 2028/29.
1.11 VAT and Online Marketplaces
From October 2027, the 2021 VAT rules for online marketplaces will be extended.
Under the new regime:
- Where a business is VAT‑registered or has more than £90,000 of annual sales through a particular online marketplace, the marketplace will be responsible for collecting the VAT on qualifying sales made via its platform.
- A business that is not VAT‑registered and has less than £90,000 of sales on each marketplace it uses will not have VAT collected under these extended rules.
Key points:
- The £90,000 threshold applies separately to each platform.
- Personal sales, B2B sales and second‑hand goods are excluded.
- The changes do not alter VAT registration thresholds; they simply shift collection to platforms in some cases.
- HMRC will publish further guidance on accounting requirements before the rules take effect.
1.12 Company Distributions and Business Restructurings
The Government plans to reform the tax treatment of company distributions to provide more consistent treatment of similar transactions.
This could affect common transactions in owner‑managed companies, including business restructurings and ownership transfers, though the Government has indicated it intends to protect genuine commercial transactions, including family successions.
The detailed rules are still in development; businesses contemplating restructurings or succession plans should seek tax advice once further detail is available.
1.13 Companies House – Profit and Loss Account Filing
The Government has paused plans that would have required small companies and micro‑entities to file their profit and loss (P&L) accounts at Companies House from April 2028.
For now:
- Small companies can continue to file abridged and “filleted” accounts, omitting P&L details from public filings.
However, other reforms proceed, including:
- A requirement for all companies to file accounts using commercial software from 1 April 2028.
- Smaller companies should therefore continue preparing for software‑only filing.
2. Personal Measures
2.1 Higher Tax Rates for Savings Income
Budget 2025 announced a 2% increase to tax rates on savings income; this Budget goes further.
From 6 April 2027, the tax rates on savings and property income for all UK taxpayers will rise by 4 percentage points, to:
- 24% for basic rate taxpayers
- 44% for higher rate taxpayers
- 49% for additional rate taxpayers.
This will affect interest and similar income outside tax‑advantaged wrappers such as ISAs.
2.2 New Property Income Tax Rates
For taxpayers in England, Wales and Northern Ireland, property income tax rates will increase from 6 April 2027, but by 2% rather than 4% as originally proposed.
The new rates will be:
- 24% for basic rate taxpayers
- 44% for higher rate taxpayers
- 49% for additional rate taxpayers.
Rates for Scottish taxpayers will be set separately by the Scottish Government.
2.3 Dividend Tax Rates – Reminder
From April 2026, dividend tax rates increase by 2 percentage points in the basic and higher rate bands, with the additional rate unchanged.
The resulting rates on dividends will be:
- 10.75% for basic rate taxpayers
- 35.75% for higher rate taxpayers
- 39.35% for additional rate taxpayers.
This is particularly relevant for owner‑managers extracting profits from their companies.
2.4 Self‑Assessment – Payments on Account (POAs)
Following consultation on “Timely Payments” for Income Tax Self Assessment:
- From April 2029, taxpayers who currently make Self‑Assessment payments on account will move towards smaller, more regular payments during the year.
- HMRC plans to use automated in‑year payments, such as Direct Debit.
- Taxpayers with PAYE income will be able to have additional tax collected through their payslip.
This marks a shift away from large twice‑yearly payments towards more real‑time collection.
2.5 Employee Share Schemes
To support recruitment and retention, the Budget announces further changes to tax‑advantaged employee share schemes.
- The Company Share Option Plan (CSOP) is being renamed EMI2 (Enterprise Management Incentive).
- From 6 April 2027, the maximum tax‑advantaged options an employee can hold under EMI2 will double from £60,000 to £120,000.
- The exercise period for EMI2 options while retaining tax advantages will increase from 10 to 15 years.
- The existing interaction between EMI and EMI2 limits will be removed.
These changes follow the expansion of the existing EMI scheme from April 2026, when company eligibility limits increased to businesses with gross assets up to £120 million and fewer than 500 employees.
2.6 New Pension Tax Allowance
From April 2027, a new Pension Tax Allowance will apply for people of State Pension age.
Its purpose is to ensure that those whose only income is the State Pension:
- do not pay tax, and
- do not need to file a Self‑Assessment return solely because the State Pension exceeds the standard Personal Allowance.
For 2027/28:
- The full new State Pension will be £13,036.40.
- The Personal Allowance remains £12,570.
- The Pension Tax Allowance will be worth up to £94, applied automatically by HMRC.
- It will taper for those with slightly higher incomes and will be fully withdrawn once total income reaches £13,319.
2.7 Individual Savings Accounts (ISAs)
The Government has reversed the previous plan to reduce the cash ISA limit to £12,000 for most savers.
Instead:
- The overall ISA allowance remains at £20,000, preserving scope for tax‑free cash savings.
- A new Starter ISA will be introduced (start date to be confirmed) to encourage first‑time investors into stocks and shares.
- The problem with Lifetime ISAs (LISAs) – where first‑time buyers faced a penalty if buying a home above £450,000 – will be addressed.
- A new First Time Buyer ISA will replace the LISA for new savers, designed to avoid this penalty trap.
3. Energy, Fuel and Cost‑of‑Living Measures
3.1 Residential Energy Costs
From 2027, standing charges on household gas bills will be abolished, with electricity standing charges to follow “as soon as possible” thereafter.
- Standing charges are fixed daily amounts payable regardless of usage and currently cost around £108 per year for a typical household.
- These fixed costs will instead be recovered through the unit price of gas, meaning lower‑usage households are likely to benefit.
- The Government estimates that around 60% of households could save an average of £45 per year, though high‑consumption households may not gain.
This change currently applies only to household energy bills, not to business energy customers.
However, it may still be relevant to business owners and self‑employed individuals working from home with domestic energy supplies, depending on usage patterns.
Additional measures:
- The temporary 0% VAT rate on residential electricity is extended until 30 June 2027.
- Households in council tax bands A–D will receive a £100 rebate this winter (date to be confirmed).
3.2 Fuel Duty
The temporary 5p cut in fuel duty, first introduced in 2022, will be extended until 30 June 2027.
This will be of interest to motorists and businesses reliant on road transport.