What does the Autumn Budget 2026 mean for your business?

Chancellor John Healey delivered his first Budget today, setting out what he called a “new approach” from the Labour government under Prime Minister Andy Burnham. For business owners, the headlines are lower business rates for thousands of small firms, new tax breaks for founders, extended help with fuel and energy costs, and a higher minimum wage. Here’s what was announced, and what it could mean for your business.

A further 70,000 small businesses to pay no business rates

From 1 April 2027, the small business rate relief threshold for retail, hospitality and leisure properties in England will rise from a rateable value of £12,000 to £18,000 for 100% relief, and from £15,000 to £21,000 for tapered relief. The Chancellor said this will take 70,000 businesses out of paying business rates altogether, with high street retail, hospitality and leisure firms set to benefit most. Pubs, music venues and social clubs will also get an extra 20% reduction, and rates for all other retail, hospitality and leisure properties will be frozen for two years.

The cut will be funded by requiring online marketplaces to collect VAT on behalf of sellers. The threshold has been frozen since 2017, so this change largely brings it back in line with inflation. Even so, for eligible businesses it removes a significant fixed cost.

Longer term, business rates will be collected and kept locally. From next year, 20% of business rates revenue will go to regional mayors, rising to 100% retained locally by the end of the decade.

New tax breaks for founders and entrepreneurs

The Budget includes several measures to help people start and grow businesses:

• Founders’ relief: from 6 April 2027, a new 10% capital gains tax rate on lifetime gains of up to £10m for the founders of the UK’s high-growth, innovative companies.

• Bigger share option scheme: the new EMI2 scheme doubles the value of tax advantaged share options employees can hold, from £60,000 to £120,000, from 6 April 2027, making it easier for growing businesses to attract and keep talent.

• Trading allowance tripled: the amount people can earn tax-free from trading or miscellaneous income rises from £1,000 to £3,000 a year.

• Young entrepreneurs allowance: a new pilot in England giving successful applicants help with their living costs during their business’s first year.

• Support for women-led businesses: a new scale-up programme for female founders, with the British Business Bank doubling its commitment to women-led businesses to £200m.

There is one less favourable change for business owners planning to sell. The threshold for Business Asset Disposal Relief will fall from £1m to £500,000. The Chancellor said this will mean no change for three in four claimants, however if you’re planning an exit, it’s worth reviewing your timing with an adviser.

Lower fuel costs and better mileage rates

The 5p cut to fuel duty has been extended until 1 July 2027, with the Chancellor citing ongoing high fuel prices linked to the conflict in the Middle East.

For those who use their own vehicles for work, the 55p per mile tax-free rate for the first 10,000 business miles, introduced as a temporary measure in May, is now permanent, the higher mileage rate will rise from 25p to 35p per mile, and the recent increase to the standard mileage rate will be made permanent. The government says someone driving 15,000 business miles a year could save up to £300 in tax. This is good news for businesses that reimburse staff travel, and for sole traders who drive as part of their work.

Energy bills

The cut to VAT on household electricity bills, from 5% to zero, has been extended from March to July 2027, which the Chancellor said will take £50 off the annual price cap. Gas standing charges will be scrapped, with Ofgem aiming to do this by the end of 2027, and changes to electricity standing charges will be set out next year. Twenty million households in council tax bands A to D will also receive a £100 energy payment this winter, paid directly into bank accounts from January 2027. While these measures are aimed at households, they will help many sole traders and home-based business owners.

For energy-intensive manufacturers, the new British Industrial Competitiveness Scheme will give 10,000 firms a 20–25% discount on electricity from April 2027, including a back payment for 2026-2027.

Minimum wage rises by 3.9%

From 1 April 2027, the National Living Wage will rise by 3.9% to £13.21 an hour, and the National Minimum Wage for 18 to 20 year olds will also rise by 3.9% to £11.27. The rate for 16 to 17 year olds and eligible apprentices rises to £8.31. Employers should factor the increase into budgets and payroll planning now. The Budget also included measures on pay band transparency in job roles, and self-employed fathers, partners and adopters will be able to claim parental pay for the first time. Changes to tax admin and HMRC enforcement

HMRC is hiring 670 more compliance officers and will receive extra funding and new powers to collect overdue tax directly from the bank accounts of those who can afford to pay but ignore repeated contact. 

Self-assessment payments on account are being reformed too. From April 2029, people who already make payments on account will pay smaller, more regular amounts through the year, bringing payments closer to when income is earned. This could make tax bills easier to plan for, but it means paying sooner, so sole traders and partnerships should build it into their cash flow forecasts.

If you’re joining Making Tax Digital for Income Tax in April 2027, you won’t get penalty points for late submission of your first four quarterly updates.

Temporary tax rise for banks

Banks will pay an extra 3% on the bank surcharge, on top of the 25% corporation tax rate between 1 January 2027 and 31 March 2028. The increase helps to fund the £100 Household Energy Payment and the extended VAT cut on electricity. The government says the 15 month increase will not be extended. The rise was smaller than many expected, and bank share prices rose after the announcement.

The economic outlook

The Office for Budget Responsibility (OBR) expects the economy to grow by 1.2% this year, slightly better than its March forecast. Growth is expected to slow to 1% next year, before picking up to 1.6% in 2028 and 1.8% in 2029.

The UK recorded the joint-fastest growth in the G7 in the first half of this year and credited business owners for that performance.

Investment in regional growth and AI

The Budget sets out what the Chancellor called the biggest wave of devolution in a generation. In 2027-28, £165m will help mayors set up new “Good Growth Funds”, and £120m of “incubator capital” will go to areas working towards a devolution deal. From 2028 mayors will receive a share of income tax revenue and get the power to introduce overnight visitor levies.

On AI, the Budget includes almost £500m for AI security and resilience, including £120m for the AI Security Institute. There is also £140m for the Sovereign AI Unit to back promising UK AI companies, and a new Data Centre Covenant setting out what new strategic data centres must contribute to their communities and the UK economy.

What does this mean for your business?

For many small businesses, particularly on the high street, this Budget brings welcome savings on business rates and running costs. Founders and new ventures also have more reasons to start and scale in the UK. Nicholas Richardson, Head of Funding at Capitalise, said:

“This Budget gives small businesses some breathing space. Lower rates bills, cheaper fuel and more government-backed lending will all help, but most of the changes don’t start until April 2027, while the higher wage bill arrives at the same time. Businesses should use the next few months to plan their cash flow and, if they’ll need funding to bridge the gap or invest, start the conversation with lenders now rather than when the pressure is on.”

With this in mind, now is a good time to:

• Check your premises’ rateable value to see if you now qualify for full business rates relief.

• Update your payroll forecasts for the 3.9% minimum wage increase.

• Review your mileage claims and expense policies in line with the new rates.

• Speak to your accountant if you’re planning to sell your business, given the change to Business Asset Disposal Relief.

Many of today’s announcements will take effect over the coming months, and further detail is still to come. We’ll be following each change closely and sharing what it means for small businesses as it happens, so you can plan ahead with confidence.