What the Autumn Budget 2026 means for small business owners

On 28 October 2026, Chancellor John Healey presented the UK's Autumn Budget.

There’s quite a bit to unpack from the budget so we’ve summarised the key points relevant to UK business owners and what they could mean for you in the months and years ahead.

Making Tax Digital (MTD) for Income Tax remains on track, but the budget confirmed a soft landing for the next group joining. Sole traders and landlords with qualifying income over £30,000, who must join from April 2027, won't receive late submission penalty points for their quarterly updates in the 2027-28 tax year. You'll still need to send your quarterly updates before you can submit your tax return.

That gives you some breathing room, but the requirements themselves haven't changed. You'll still need to:

A penalty-free first year is a chance to get comfortable with the new process, not a reason to delay. If you're still keeping manual records, now is the time to make the switch.

Read more: Making Tax Digital

The budget confirmed an increase to the National Living Wage from 1 April 2027. For employees aged 21 and over, it will rise by 3.9% to £13.21 per hour.

If you employ staff on or near minimum wage, your payroll costs will rise from April 2027.

Now is a good time to build these increases into next year's budget, review your pricing where needed, and check that any hiring plans still stack up.

The lifetime limit for Business Asset Disposal Relief (BADR) will be halved from £1 million to £500,000 for qualifying disposals made on or after 6 April 2027.

BADR reduces the Capital Gains Tax you pay when you sell all or part of your business. With the limit now lower, owners planning a sale or exit could face a larger tax bill on gains above £500,000.

If you're thinking about selling, passing on or restructuring your business in the next few years, it's worth reviewing your plans and timing with your accountant.

A new Founders' Relief will give eligible founders of high-growth, innovative companies a reduced 10% rate of Capital Gains Tax on up to £10 million of lifetime gains, for qualifying disposals from 6 April 2027.

The aim is to encourage founders to scale their companies in the UK and reinvest in new British businesses when they exit. Alongside this, the government will:

The main rate writing down allowance will be cut from 14% to 12% from April 2027. This slows the rate at which you can claim tax relief on equipment and other assets that don't qualify for full expensing or the Annual Investment Allowance.

On the other hand, the main rate first-year allowance will rise from 40% to 50% for qualifying spending from 1 January 2027, giving more upfront relief on new plant and machinery.

If you're planning a larger asset purchase, the timing and how it's claimed matter more than before. It's worth talking it through before you commit.

The government is simplifying access to R&D tax reliefs. From 1 April 2027, companies will no longer need to submit a Claim Notification Form before making an R&D claim, and the Additional Information Form will be simplified from autumn 2027. Together, these should make claiming more straightforward for growing businesses that invest in innovation.

From April 2027, tax rates on savings and property income will rise by a further two percentage points across all bands. The government says most taxpayers won't be affected, but business owners with sizeable savings, rental properties or investment income alongside their business earnings may see higher bills.

The good news is the Cash ISA limit will stay at £20,000 for everyone, following a u-turn by the Chancellor. Using your full allowance is one of the simplest ways to shelter savings from tax.

Rules on company distributions will be modernised to stop complex arrangements being used to take profits out at lower tax rates. If you use anything beyond a standard salary and dividend mix, it's worth checking how this could apply to you.

Tax-free mileage rates are being permanently increased, supporting around 2 million employees and 1 million self-employed people who use their own vehicles for work. From 6 April 2027, the rate for business mileage above 10,000 miles a year will rise from 25p to 35p per mile. This applies to employees' mileage allowance payments and to self-employed people using simplified mileage rates.

Parental pay will be extended to more than 160,000 additional parents, including self-employed dads and partners who have previously missed out.

All retail, hospitality and leisure properties in England will see their business rates frozen in real terms, reduced or cut to zero. A higher Small Business Rates Relief threshold will take around 70,000 more of these businesses out of business rates entirely, and the government says half of all retail, hospitality and leisure properties will now pay nothing.

Not everyone benefits though. Vape shops and adult gaming centres will no longer qualify for certain business rates reliefs.

The budget includes support on energy costs for both businesses and households:

If you work from home, the household changes may also ease some of your running costs.

From October 2027, online marketplaces will be responsible for collecting VAT on sales by UK VAT-registered businesses, and by other UK businesses selling above a minimum threshold on each platform (£90,000 a year is proposed). Personal sales, second-hand goods and business-to-business sales are excluded.

If you sell through Amazon, Etsy, eBay or similar, this could change how VAT shows up in your payouts and how you record sales in your accounts. Expect more detail from HMRC and the platforms before the change takes effect, and make sure your bookkeeping can separate marketplace sales from direct ones.

This budget offers some breathing room in places, but it also tightens the rules around selling a business and investing in assets. The common thread is that planning ahead pays off.

You may need to:

Business owners who plan early will be in a far stronger position than those who leave it until the last minute.

Read the full rundown of Budget measures from GOV.UK.

For the detail behind each tax measure, see HMRC's Budget 2026 Overview of tax legislation and rates.