Autumn Budget 2026: What It Means for Small Business Owners, Directors and Landlords

In short, the Autumn Budget 2026 leaves the main tax rates alone but raises tax on property and savings income, halves the Business Asset Disposal Relief limit and triples the trading allowance to £3,000. 

The Chancellor, John Healey, delivered his first Budget on 28 October 2026. The headline message was stability. The main rates of income tax on earnings, National Insurance, VAT, Corporation Tax and dividend tax are all unchanged.

Underneath that, there are real changes for business owners. Landlords and savers will pay more, the relief for selling a business has been cut for most owners, although a new Founders’ Relief has been announced for a small group of qualifying founders, and the threshold freezes continue. There is some good news too, for sole traders and for businesses investing in equipment. Most tax measures still need to pass through the Finance Bill, so they are announced but not yet law.

Autumn Budget 2026 Summary: Key Tax Changes at a Glance

• Property and savings income tax rates rise to 24%, 44% and 49% from 6 April 2027
• The Business Asset Disposal Relief lifetime limit halves to £500,000 from 6 April 2027
• A new Founders’ Relief is proposed from 6 April 2027, with a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders
• The trading allowance for sole traders triples to £3,000 from 6 April 2027
• The first year allowance for equipment rises from 40% to 50% from 1 January 2027
• The National Living Wage rises to £13.21 an hour from 1 April 2027
• Income tax and most National Insurance thresholds stay frozen until April 2031

What Did Not Change in the Autumn Budget 2026?

The following stay the same: Corporation Tax at 19% and 25%, dividend tax rates, the £500 dividend allowance, employer National Insurance at 15%, the £90,000 VAT threshold, and Capital Gains Tax at 18% and 24%.

Limited Companies and Directors

For most owner managed companies, the day-to-day position is unchanged. Corporation Tax stays at 19% for profits up to £50,000 and 25% above £250,000, with marginal relief in between. Dividend tax stays at 10.75%, 35.75% and 39.35%, and the dividend allowance remains £500.

Capital Allowances 2027: First Year Allowance Rises to 50%

The first year allowance for main pool assets rises from 40% to 50% for spending from 1 January 2027. It mainly helps where full expensing does not apply, such as assets bought for leasing. The annual writing down allowance on the main pool falls from 14% to 12% from April 2027. The £1 million Annual Investment Allowance and full expensing are unchanged, so most small companies can still deduct the full cost of qualifying equipment straight away. Sole traders and partnerships cannot claim full expensing, but they can still use the Annual Investment Allowance.

Company Distribution Reform from April 2028

How profits are taken out. The government has confirmed it will reform the rules on company distributions from April 2028. This covers how distributions and capital repayments from companies are taxed. Draft legislation is due in 2027 and the detail is not yet known. If you are planning a restructure or a buyback, talk to us before committing to anything.

Selling Your Business: BADR Cut to £500,000 and New Founders’ Relief

Business Asset Disposal Relief stays at 18%, but the lifetime limit halves from £1 million to £500,000 for disposals on or after 6 April 2027. Gains above the limit are taxed at the main Capital Gains Tax rates of 18% and 24%.

A new Founders’ Relief is also planned from 6 April 2027. It would tax qualifying share disposals at 10% on up to £10 million of lifetime gains. The proposed conditions are demanding, including turnover of at least £10 million and at least 15 full time equivalent employees, so it will not apply to most owner managed companies. The consultation closes on 30 November 2026, and the rules may change before they become law.

If you are planning a sale, timing around 6 April 2027 matters. Speak to us early.

Autumn Budget 2026 for Employers: National Living Wage and Payroll Changes

Staff costs will rise again next year. From 1 April 2027:

• The National Living Wage for those aged 21 and over rises from £12.71 to £13.21 an hour
• The rate for 18 to 20 year olds rises to £11.27, and for 16 to 17 year olds and apprentices to £8.31

Employer National Insurance stays at 15%, the £5,000 secondary threshold is unchanged and the Employment Allowance stays at £10,500.

Mandatory Payrolling of Benefits from April 2027

From 6 April 2027, company cars, vans, fuel and private medical cover must be taxed through payroll rather than reported on a P11D. Most other benefits follow from April 2028. If you provide any of these, your payroll needs setting up before next April.

Mileage. The 55p rate for the first 10,000 business miles is now permanent, and the rate above 10,000 miles rises from 25p to 35p from April 2027.

Sole Traders and the Self-Employed

The trading allowance rises from £1,000 to £3,000 from 6 April 2027. If you have a small side income below that level, you will not need to report it or pay tax on it.

Making Tax Digital for Income Tax continues as planned. It applies from April 2027 if your qualifying income is over £30,000, and from April 2028 if it is over £20,000. The good news is that anyone joining in April 2027 will not receive penalty points for late quarterly updates during 2027/28.

Further ahead, payments on account will move to smaller, more frequent payments during the year from April 2029. The design is still being consulted on.

Landlords and Savers

This is where the Budget bites hardest. From 6 April 2027, tax on property income and savings interest rises to 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate. Last year’s Budget had already set these at 22%, 42% and 47%, so the rates have now gone up twice. The property rates apply in England, Wales and Northern Ireland. The savings rates apply across the UK.

The Personal Savings Allowance (£1,000 for basic rate and £500 for higher rate taxpayers) and the £5,000 starting rate for savings are unchanged. The planned cut to the cash ISA limit has been scrapped, so the full £20,000 allowance remains available.

If you hold rental property personally, it is worth reviewing your after-tax returns now. For some landlords, the question of whether to hold property through a company will look different from April 2027. It is not right for everyone, and the costs of moving property can be high, so get advice first.

Selling or Passing On Your Business

Business Asset Disposal Relief still taxes qualifying gains at 18%, but the lifetime limit falls from £1 million to £500,000 for disposals on or after 6 April 2027. If you are close to selling your business or retiring, timing could make a significant difference to your tax bill.

A new Founders’ Relief has been proposed, with a 10% rate on up to £10 million of gains. It is still under consultation and is aimed at larger, growing companies, with suggested conditions including turnover of £10 million and at least 15 employees. Most owner-managed businesses will not qualify.

On Inheritance Tax, the nil rate bands stay frozen until 2031, 100% relief for business and agricultural property is capped at £2.5 million per person, and unused pension funds come into Inheritance Tax from April 2027. If your succession plan is more than a couple of years old, it needs a fresh look.

Notes for Construction and Physiotherapy Businesses

There are no new Construction Industry Scheme changes, and the April 2026 reforms remain in force. The higher first-year allowance mainly helps plant hire firms buying equipment to hire out. The planned ban on cash retentions is coming through separate late payment legislation, not the Budget.

Most physio services are VAT exempt, so many clinics are not VAT registered. From April 2027, overseas suppliers will have to charge UK VAT to businesses that are not registered, which could add 20% to the cost of some overseas software. The increase in small business rates relief is aimed at retail, hospitality and leisure, so most clinics will see no change.

Key Dates

What to Do Now

1. Review how you take money out of your company, and keep an eye on the distribution changes coming in 2028.
2. If you are thinking of selling or retiring, discuss the timing with us before 6 April 2027.
3. Plan equipment purchases around the new allowances.
4. Set up payroll for benefits in kind before April 2027.
5. Landlords: recalculate after-tax returns at the new rates.
6. Sole traders: check whether you fall into the April 2027 MTD group and get your software in place.

How Julian Hobbs & Co Can Help

We track every change that affects our clients and build it into their tax planning, forecasts and management accounts as it happens. Our clients receive a plain-English video walkthrough with their management accounts, so they always know where they stand. If you want to understand what the Budget means for you specifically, book a call with Julian Hobbs & Co.

FAQs: Frequently Asked Questions