THE BUSINESS OWNER’S AUTUMN BUDGET 2026. What changed. What it means. What happens next.

The Autumn Statement arrives against a backdrop of economic uncertainty, wage inflation, pressure on margins and continued questions around business-owner taxation and wealth creation.

The Government has repeatedly talked about wealth creation and long-term business investment. Today’s announcements therefore need to be judged against that ambition.

There is some encouragement for investment and entrepreneurship, but this sits alongside rising employment costs and changes affecting business disposals, investment income and personal wealth.

For business owners, the important question is not simply what changed today, but what those changes mean for the decisions you make next.

DOES THE BUDGET ENCOURAGE GROWTH?

There is some support for businesses prepared to invest.

The Chancellor maintained full expensing for qualifying capital expenditure and increased the main first-year allowance from 40% to 50%. The 50% first-year allowance applies to qualifying expenditure from 1 January 2027. The main writing-down allowance will fall from 14% to 12% from 1 April 2027 for corporation tax and 6 April 2027 for income tax.

There is also targeted support elsewhere. The small business rates relief threshold for retail, hospitality and leisure businesses will increase from £12,000 to £18,000, with tapered relief up to £21,000. Pubs, clubs and live music venues will receive a 20% reduction in business rates from April 2027. For Scotland, these changes await the Scottish Government Budget.

For energy-intensive businesses, the British Industrial Competitiveness Scheme is intended to reduce electricity bills by up to 25% for eligible manufacturers from April 2027. This will apply to approximately 10,000 businesses.

Entrepreneurship also receives support. An enhanced trading allowance has been announced, raising the amount people can earn from a trading income tax-free from £1,000 to £3,000, from 6 April 2027.

Further announcements include a new young entrepreneurs allowance which will cover a year of living costs for young founders who turn their ideas into a business. The Chancellor also announced a new scale-up programme for female founders

These measures create incentives to invest, but they cannot provide certainty over demand, financing costs, skills or the wider cost base. Owners still need to decide whether committing capital today will generate the return they need tomorrow.

HAS THE COST OF EMPLOYING PEOPLE CHANGED?

Yes, and for many businesses this may prove more significant than some of the headline tax announcements.

The National Living Wage and National Minimum Wage will rise by 3.9%, taking the National Living Wage for employees aged 21 and over to £13.21 per hour.

The increased Approved Mileage Allowance Payment rate of 55p per mile for the first 10,000 business miles will become permanent. With the rate for over 10,000 business miles set at 35p per mile, this applies from 6 April 2027.

These changes come on top of an employment cost base that has already increased. Employer National Insurance remains at 15% above the £5,000 secondary threshold, although eligible businesses can offset up to £10,500 through Employment Allowance.

From April 2027, businesses will also begin moving to mandatory payrolling of Benefits in Kind, including company cars, fuel benefits and private medical insurance.

There was better news for businesses looking to retain key people. The Company Share Option Plan limit will increase from £60,000 to £120,000 and become known as EMI2, giving growing businesses greater flexibility where they have moved beyond EMI or do not qualify for it.

The wider point is that recruitment increasingly needs to be viewed as an investment decision. Salary is only one part of the real economic cost of employing someone.

WHAT DOES IT MEAN FOR OWNER-MANAGED TAX PLANNING?

The Chancellor is not proceeding with the proposed new reporting requirements at this time, offering some reduction in the compliance burden. However, HMRC is also receiving greater resources and powers to pursue non-compliance and unpaid tax.

For business owners, keeping tax affairs accurate and addressing liabilities early will become increasingly important.

There are also several significant changes to consider.

Business Asset Disposal Relief

The lifetime Business Asset Disposal Relief (BADR) threshold will reduce from £1 million to £500,000 from 6 April 2027.

For qualifying owners, that could mean a maximum additional CGT liability of £30,000 per seller.

With the existing £1 million allowance remaining until April 2027, owners already considering a disposal should review whether the timing of a transaction matters.

Innovation and investment

The requirement to pre-notify potential R&D tax relief claims will be removed from April 2027.

The Government has also announced proposed Founders’ Relief, offering a 10% rate on qualifying lifetime gains of up to £10 million for founders of certain businesses. The proposal remains under consultation, and the qualifying criteria are currently stringent.

A £10m alcohol duty relief package has been announced, targeted at small British brewers and cider makers.

Corporation Tax remains at 25%, while the increase in first-year allowances reinforces the Government’s intention to encourage investment.

VAT

Several VAT changes take effect in 2027.

Online marketplaces will be required to collect VAT on sales by UK VAT-registered businesses, as well as other businesses exceeding £90,000 of annual sales on an individual platform, with effect from October 2027. Changes to the reverse charge for overseas services could affect UK businesses that are not VAT registered.

There are also specific changes affecting qualifying land sold for social housing and the VAT treatment of medical deputies.

Businesses affected by these measures should review contracts, pricing, systems and transaction structures ahead of implementation.

WHAT DOES THE BUDGET MEAN FOR PERSONAL WEALTH AND FAMILY SECURITY?

For many entrepreneurs, the business is simultaneously their main source of income, largest asset, pension substitute and potential inheritance. That makes personal and business planning increasingly difficult to separate.

The government is increasing all the rates of income tax applied to savings and property income by 2 percentage points.

• The savings basic rate will be 24%
• The savings higher rate will be 44%
• The savings additional rate will be 49%

These rates will apply across the UK and take effect from 6 April 2027. This increase comes on top of an existing 2% percentage point increase announced previously. Effectively, that translates to a 4% percentage point increase in tax on savings and property income.

*The savings rates apply UK-wide, while the new property income rates apply in England, Wales and Northern Ireland.

Taxpayers who already make Payments on Account will make smaller, more regular contributions throughout the year. The Government also plans to reform how certain payments from companies to shareholders are taxed from April 2028. Draft legislation is expected in 2027, so the detailed implications remain to be confirmed.

The proposed reduction in the annual cash ISA allowance has been abandoned, leaving the £20,000 allowance intact.

Owners also need to consider changes that were already scheduled. Inheritance Tax thresholds remain frozen until 5 April 2031, while unused pension funds are due to come within the scope of IHT from April 2027.

These changes reinforce an important point: tax planning cannot be considered in isolation from business planning and personal wealth.

A valuable company can create significant wealth, but it can also leave a family exposed if that wealth is concentrated in the business, difficult to access or accompanied by an unexpected tax liability.

THE BIGGER PICTURE: DON’T PLAN TAX IN ISOLATION

Today’s Statement contains measures designed to encourage investment and entrepreneurship. It also increases certain costs and changes some of the assumptions owners may previously have made about business exits, investment income and personal wealth.

For business owners, the response should not simply be to react to each individual tax measure.

It should be to ask: what do I want my business to become, what do I ultimately want from it, and are the decisions I’m making today moving both the business and me towards those goals?

That is the bigger planning opportunity arising from this Autumn Statement.

WHAT DOES TODAY’S STATEMENT MEAN FOR YOU?

Whether you’re reviewing growth plans, employment costs, succession, personal tax or family wealth, our specialists can help you understand the implications and identify where action may be needed.

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