Autumn Budget 2026: What It Means for Small Businesses and Their Owners
Chancellor John Healey's first Budget, on 28 October 2026, left income tax, National Insurance and VAT rates alone.
Landlords and savers will pay more.
Some of the changes that matter most to small businesses were only in the Budget documents, not the speech.
Budget 2026 at a Glance
🧾 Income tax and NI: No rate changes. The £12,570 Personal Allowance and the higher rate threshold stay frozen until April 2031.
🏠 Landlords and savers: From 6 April 2027, tax on property and savings income rises to 24%, 44% and 49%.
💼 Dividends and corporation tax: No change.
💷 Minimum wage: £13.21 an hour from 1 April 2027.
💻 Making Tax Digital: Starts for income over £30,000 from 6 April 2027, with no penalty points for late quarterly updates in the first year.
🛠️ Side income: The trading allowance triples to £3,000.
🚗 Mileage: 55p a mile becomes permanent, and the rate above 10,000 miles rises to 35p.
🏷️ Selling a business: The BADR lifetime limit halves to £500,000.
🏪 Business rates (England): Small shops, pubs, cafés and gyms with a rateable value up to £18,000 pay nothing.
🔢 VAT: No change to the 20% rate or the £90,000 threshold.
In Detail
How much more tax will landlords and savers pay?
What changes: From 6 April 2027, tax on rental profits and savings interest rises by 4%. Last year's Budget had already set a 2% rise for that date, and this Budget adds 2% more. The rates for 2026-27 do not change:
Taxpayer | 2026-27 (now) | 2027-28 as set by the 2025 Budget | 2027-28 after this Budget |
Basic rate | 20% | 22% | 24% |
Higher rate | 40% | 42% | 44% |
Additional rate | 45% | 47% | 49% |
Example: A higher rate taxpayer with £10,000 of rental profit pays £4,400 instead of £4,000, which is £400 more a year.
Who it affects: Landlords in England, Wales and Northern Ireland (Scotland sets its own property rates), and savers across the UK. The £1,000 / £500 Personal Savings Allowance and the £5,000 starting rate for savings do not change, so the government expects most savers to pay no more.
Do company directors pay more tax after the Budget?
No. Dividend tax stays at 10.75% and 35.75%, and the £500 dividend allowance stays. Corporation tax stays at 25%, or 19% on profits under £50,000.
What to do: For most owner-managed companies, the 2026-27 salary and dividend mix should still work in 2027-28. Look out for my annual post on the optimum directors' salary for 2027-28 (coming soon). Until then, my 2026-27 guide explains how it works.
What is the minimum wage from April 2027?
Age | Now | From 1 April 2027 |
21 and over (National Living Wage) | £12.71 | £13.21 |
18 to 20 | £10.85 | £11.27 |
16 to 17 and apprentices | £8.00 | £8.31 |
What it costs: A full-time employee on the National Living Wage will earn about £27,500 a year, around £1,000 more than now. With employer's National Insurance at 15% and minimum pension contributions, the total cost is about £31,000. The £10,500 Employment Allowance still covers the employer's National Insurance for about three such employees.
When do sole traders and landlords join Making Tax Digital?
What changes: From 6 April 2027, sole traders and landlords with qualifying income over £30,000 must keep digital records and send HMRC an update every quarter. Qualifying income is your total turnover from self-employment and property before expenses, on your 2025-26 tax return. Income over £20,000 follows from April 2028.
The good news: There will be no penalty points for late quarterly updates in 2027-28, as there are none in 2026-27 for the first group.
What to do: This is more time, not an exemption. The quarterly updates are still required, and the usual penalties for the end-of-year return still apply. If your turnover is over £30,000, choose your MTD software and start keeping digital records well before April 2027.
Foster carers who claim qualifying care relief, and some non-residents and overseas entertainers, are exempt for now.
How does the £3,000 trading allowance work?
What changes: From 6 April 2027, the trading allowance rises from £1,000 to £3,000.
Who it affects: Anyone with small side income, for example from online selling, crafts or casual work. If your gross income is no more than £3,000 a year, you generally do not need to report it or pay tax on it.
Note: The limit applies to gross income, not profit. Above £3,000, you deduct either the £3,000 allowance or your actual expenses, whichever is higher.
What are the new mileage rates?
What changes: The tax-free rate for a car or van rose from 45p to 55p a mile on 6 April 2026, as a temporary measure. It is now permanent. From 6 April 2027, the rate for miles above 10,000 a year rises from 25p to 35p.
Who it affects: Employees and directors who use their own vehicle for work, and sole traders and partners who use the simplified mileage method.
What changes for people selling a business?
What changes: From 6 April 2027, the Business Asset Disposal Relief (BADR) lifetime limit falls from £1 million to £500,000. The 18% rate stays. A new Founders' Relief (10% on gains up to £10 million) starts on the same date, but it is aimed at high-growth companies with outside investors, so it is unlikely to help most family businesses.
What to do: If you plan to sell or close your company and your gain could be more than £500,000, get advice before April 2027.
Who pays less business rates?
What changes: From 1 April 2027, retail, hospitality and leisure properties in England with a rateable value up to £18,000 (now £12,000) get 100% Small Business Rates Relief. Relief tapers to nil at £21,000 (now £15,000). Other properties in these sectors get a two-year real-terms freeze.
Who it affects: About 70,000 more shops, pubs, cafés and gyms will pay nothing. Vape shops and adult gaming centres are excluded.
What changes for capital allowances?
Most small businesses: No change. The £1 million Annual Investment Allowance still gives full relief on plant, machinery and vans in the year of purchase.
Electric cars: The 100% first-year allowance for new electric cars and charge points ends on 31 March 2027 for companies (5 April 2027 for sole traders and partnerships). If your company plans to buy an electric car, buying before that date gives full relief in the first year. After that, the car gets 12% a year.
Larger spenders: The main rate first-year allowance rises from 40% to 50% from 1 January 2027, and the writing-down allowance falls from 14% to 12% from April 2027.
What else was announced?
Cash ISA: The planned cut to £12,000 is cancelled. The limit stays at £20,000.
Lifetime ISA: The withdrawal charge falls from 25% to 20% from 29 October 2026. A new First Time Buyer ISA replaces it for new savers from April 2029.
Pensioners: From 6 April 2027, no income tax if your total income is no more than the full new State Pension.
Self-employed parents: Paternity support will extend to self-employed partners. Details are to follow.
Young entrepreneurs: A new allowance to help young people start a business. Details are to follow.
Energy: A £100 payment for households in council tax bands A to D in England, from January 2027.
Budget 2026 Changes Hidden in the Paperwork
These changes are only in the Budget documents. Some are years away, but they will change how small businesses deal with HMRC.
From | What changes | Who it affects |
28 October 2026 | Daily penalties for late Capital Gains Tax reporting on a property sale stop once the sale is on your tax return | People selling a residential property |
1 April 2027 | 0% VAT on installing energy-saving materials ends and 5% applies. Most fixed air conditioning units count as heat pumps. Check the timing of large jobs | Installers and homeowners |
6 April 2027 | Company cars, vans, fuel and medical benefits must be taxed through the payroll, not on a P11D | Employers who provide these benefits |
1 April 2028 | A legal duty to correct errors in tax returns, and HMRC Customer Correction Notices | All taxpayers |
April 2029 | Self Assessment taxpayers who make payments on account pay more often during the year | Sole traders, partners and landlords |
April 2029 | A Direct Debit must be in place for VAT and PAYE. You can still pay another way before the due date, but HMRC will use it to collect anything unpaid | VAT-registered businesses and employers |
April 2029 | HMRC can require VAT invoices in a set electronic format | VAT-registered businesses |
2029-30 | HMRC can take smaller tax debts straight from bank accounts | Anyone with tax debts |
By 2029-30 | 670 more HMRC compliance officers, and £70 million more for private debt collectors | Everyone |
Key Takeaways 📌
🏠 Landlords and savers will pay 4% more tax on their income from April 2027 than they did two years ago.
💷 Employers must budget for the National Living Wage of £13.21 an hour, which costs about £31,000 a year for each full-time employee.
🛠️ Side income up to £3,000 a year will generally be tax-free and need not be reported from April 2027.
🏷️ Business owners who plan to sell with gains of more than £500,000 should get advice before 6 April 2027.
🚗 Company cars and vans must be taxed through the payroll from April 2027.
💻 Sole traders and landlords with turnover over £30,000 must start Making Tax Digital in April 2027, with no penalty points for late quarterly updates in the first year.
Whether you are in Marple, Stockport or anywhere else in England, if you are unsure how these changes affect you, get advice before April 2027. Planning is easier before a change takes effect than after it.
Sources
Budget 2026 — Overview of tax legislation and rates (OOTLAR) - GOV.UK: https://www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/budget-2026-overview-of-tax-legislation-and-rates-ootlar
Budget 2026 — Annex A: rates and allowances - GOV.UK: https://www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances
Budget 2026 document - GOV.UK: https://www.gov.uk/government/publications/budget-2026-document
Budget 2026 tax related documents - GOV.UK: https://www.gov.uk/government/collections/budget-2026-tax-related-documents
VAT on energy-saving materials and heating equipment (VAT Notice 708/6) - GOV.UK: https://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086
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