Autumn Budget 2026: How Will It Impact Business?

Chancellor of the Exchequer John Healey presented his first Budget on 28 October 2026, promising ‘Breathing Space now, Hope for the Future’.

For the high street, the Small Business Rate Relief threshold will rise so that a further 70,000 retail, hospitality and leisure businesses pay no business rates. The Chancellor temporarily doubled the Bank Corporation Tax Surcharge, and the lifetime limit for Business Asset Disposal Relief will be halved.

There is a further cut in the main rate Writing Down Allowance from 14% to 12% from April 2027. This funds an increase in the main rate First Year Allowance from 40% to 50% for expenditure incurred from 1 January 2027.

Mr Healey said that ‘my choice in the Budget today is to give families and businesses some breathing space now, and to begin the radical reform of energy to reduce bills in the future’.

Employment

National Insurance contributions

Employees

Employee and employer rates, and the point at which employers become liable to pay NICs on an individual employee’s earnings, remain unchanged for 2027/28 and will do so until 5 April 2031.

The self-employed

The rates of Class 4 self-employed NICs will remain at 6% and 2%.

Employer NICs relief for veterans

The government has extended the employer NICs relief for employers hiring qualifying veterans to 5 April 2028.

This means that businesses continue to pay no employer NICs up to annual earnings of the Veterans Upper Secondary Threshold of £50,270 for up to the first year of a veteran’s employment in a civilian role.

National Living Wage and National Minimum Wage

From April 2027, the National Living Wage rises in line with the recommendation of the Low Pay Commission to £13.21 per hour for those aged 21+, with increases for younger workers and apprentices with the minimum rate £8.31.

Taxable benefits for company cars

As previously announced, company car tax rates increase by 1% from 2027/28 for zero and low emission cars, with zero-emission cars taxed at 5%. Increases are published some years in advance, to provide certainty over a typical company car ownership cycle.

Benefits in Kind

As previously announced, reporting benefits in kind via payroll will become mandatory for specified benefits from April 2027.

Employee share schemes

The government will introduce legislation to make changes to the Company Share Option Plan (CSOP), referred to as “EMI2”, and Enterprise Management Incentives (EMI) schemes:

• the CSOP individual option limit will be increased to £120,000
• the interaction between the CSOP and EMI individual options limits will be removed
• the CSOP exercise period will be extended to 15 years
• the period for certain tax-advantaged and non-tax advantaged shares and share options reserved by third parties to be excepted from the disguised remuneration rules will also be extended to 15 years
• the exception for Employee Ownership Trusts (EOTs) in the EMI rules will be extended to companies arranging to be controlled by an EOT
• the EMI exercise window following disqualifying events will be extended to 180 days.

The changes will take effect from 6 April 2027.

Income Tax: certificate of sponsorship fee and immigration skills charge

The government will introduce legislation to exempt from Income Tax an employer’s payment of a fee for a certificate of sponsorship or an immigration skills charge, which employers are required to pay when sponsoring a worker under the Skilled Worker route. The changes will apply immediately.

Approved Mileage Allowance Payments and Self-Employed simplified mileage rates

The government had previously announced that Approved Mileage Allowance Payments and simplified mileage rates for business mileage up to 10,000 would be increased from 45p per mile to 55p from 6 April 2026.

The government has now announced that for business mileage above 10,000 miles the rates will be increased from 25p per mile to 35p from 6 April 2027.

Reform of Benchmark Scale Rates and Overseas Scale Rates

The government will reform and simplify Benchmark Scale Rates (BSRs) and Overseas Scale Rates (OSRs), which are used by employers to reimburse their employees for domestic and overseas travel and subsistence expenses without the need to check receipts.

BSRs will be modernised to better reflect current subsistence costs. The OSRs will be simplified replacing the more than 200 destination-specific OSRs with a simplified tiered approach that links to the updated BSRs.

This will be implemented from 6 April 2028.

Business

Corporation Tax

Corporation Tax rates will remain unchanged, as the government had committed to for the duration of the Parliament. These are 25% for companies with profits over £250,000 and 19% for companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.

A temporary increase has been announced to the rate of Corporation Tax surcharge on banking companies to 6% for 15 months. The changes will apply from 1 January 2027 to 31 March 2028.

ATED

From 1 April 2027, the Annual Tax on Enveloped Dwellings (ATED) annual charges will rise by 3.5%.

Capital allowances

The main rate Writing Down Allowance (WDA) reduces from 14% to 12% per year from April 2027.

For expenditure incurred on or after 1 January 2027, the First Year Allowance (FYA) increases from 40% to 50% for all businesses on main rate assets, including most expenditure on assets for leasing. Cars, second-hand assets and assets for leasing overseas are not eligible.

The 100% Annual Investment Allowance (AIA) continues to be available to both incorporated and unincorporated businesses with an annual limit of £1m.

The 100% FYA for zero emission cars is due to end in April 2027.

Capital Taxes

Business Asset Disposal Relief

The rate will remain at 18%. For qualifying disposals made on or after 6 April 2027, the lifetime limit will be reduced from £1 million to £500,000. There will be special provisions applied to contracts entered into before 6 April 2027 but not completed, as well as certain share reorganisations and exchanges that have not completed by 6 April 2027.

Founders’ Relief

The government is launching a consultation for a new CGT relief for founders of and significant early investors in high-growth, innovative UK companies. Founders’ Relief will take effect for qualifying disposals made on or after 6 April 2027.

The relief will apply a 10% CGT rate to qualifying disposals of shares with a lifetime limit of £10 million of gains per individual.

The consultation seeks views on how the proposed individual, company and growth and innovation qualifying conditions will work in practice.

Other Matters

VAT

The VAT registration threshold remains at £90,000.

The government has announced that from October 2027 online marketplaces will be responsible for collecting VAT on sales by UK VAT-registered businesses and any other UK businesses with a minimum annual sales threshold per platform of £90,000. The rules will not apply to non-business sales, second-hand goods or business-to-business transactions.

From April 2029, VAT invoices will be required to be issued and received in a prescribed electronic format. The government has published an implementation roadmap, setting out further details about e-invoicing and a timeline on when it will share further information and publish guidance.

Electric Vehicle Excise Duty

From 1 April 2028, the Electric Vehicle Excise Duty will apply to Battery Electricity Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs) and Hydrogen Fuel Cell Electric Vehicles (HFCEVs). The rates of tax will be 3p per mile for BEVs and HFCEVs and 1.5p per mile for PHEVs.

As always, our tax team are on hand to assist with any tax planning queries that you may have - either as a result of this year's budget announcements or on any other matter. Please contact us on tax.team@shorts.uk.com and a member of our team will be in touch.