The Autumn Budget 2026 has been delivered by John Healey, his first as Chancellor, setting out the government’s economic and fiscal plan against a backdrop of global uncertainty and high energy prices. Billed as a Budget to give households and businesses “breathing space”, it covers business rates, investment, energy costs and support for growing businesses. While some measures aim to reduce costs and encourage investment, others introduce changes to tax compliance and the way businesses operate.
Below is a clear breakdown of the most important changes following the Autumn Budget 2026 announcement and what they could mean for your business.
Small business rates relief threshold raised from £12,000 to £18,000 for Retail, Hospitality & Leisure
This stood out as one of the most important Autumn Budget 2026 updates for high-street businesses. The Chancellor has increased the rateable value threshold for small business rates relief for retail, hospitality and leisure properties from £12,000 to £18,000, bringing around 70,000 more businesses into the scheme. According to the Chancellor, this means around half of all shops, restaurants and gyms will now pay no business rates at all.
Building on last year’s move to permanently lower rates for customer-facing businesses, this is designed to give bricks-and-mortar firms more stability after years of rising operating costs and competition from online retail. Looking further ahead, business rates will be fully retained by local areas by the end of the decade, so the way rates are set and spent could start to look quite different depending on where your premises are.
If your business falls into the new threshold, this could free up a meaningful sum each year that can be put back into stock, staff or premises. Business rates are devolved, so firms in Scotland, Wales and Northern Ireland should check how equivalent support will apply to them.
A further 2% rise on tax on property and savings income from April 2027
Tax rates on property and savings income were already due to rise by two percentage points from April 2027 following last year’s Budget. The Chancellor has now added a further two percentage points on top, making the increase steeper than expected. This covers rental income as well as interest earned from bank accounts, business savings, bonds and other interest-generating assets.
Importantly, there is no change to tax on dividend income or on income from employment. That will come as some relief to directors who extract profits through dividends, given the 2% dividend tax rise that came into effect in April 2026.
In practical terms, business owners who hold commercial or residential property personally, or who keep significant cash reserves in their own name, will keep less of that income after tax. It may be worth reviewing with your accountant how property and surplus cash are held before April 2027.
Business Asset Disposal Relief halved, with a new relief for founders
The lifetime limit for Business Asset Disposal Relief, which lets owners pay a lower rate of Capital Gains Tax when they sell all or part of their business, has been cut from £1 million to £500,000 in the Autumn Budget 2026. The Chancellor said three in four claimants will be unaffected, but owners of more valuable businesses who are planning to sell will face a higher tax bill on gains above the new limit.
Alongside this, the Budget proposes a new founders’ relief, applying a 10% Capital Gains Tax rate to up to £10 million of lifetime gains for business founders. Full details of who qualifies and when it will start are still to come. If you are considering selling your business in the next few years, it is worth speaking to your accountant now about how these changes affect your timing.
National Minimum Wage and National Living Wage to rise by 3.9%
The National Living Wage and National Minimum Wage will both increase by 3.9%, benefiting around 2.3 million workers. For over-21s, this takes the hourly rate from £12.71 to around £13.20, pushing it above £13 an hour for the first time. Unlike recent years, 18 to 20-year-olds will see the same 3.9% rise rather than a larger percentage increase.
For employers, this means higher wage bills from April, along with knock-on increases in employer National Insurance and pension contributions. Businesses in labour-intensive sectors such as hospitality, retail, care and cleaning will feel this most, and may need to factor in pressure to maintain pay differentials for staff already earning slightly above the minimum.
Fuel duty cut extended until July
The 5p cut to fuel duty, first introduced in 2022, has been extended until July in the Autumn Budget 2026. With oil prices still elevated, this gives vehicle-reliant businesses some short-term breathing space on running costs.
For SMEs in logistics, construction, delivery and field-based services, this is welcome, but it is a stay of execution rather than a permanent fix. It is sensible to budget now for the possibility of higher fuel costs in the second half of 2027, and to keep reviewing fleet efficiency and alternatives.
More generous first-year relief on equipment and vehicles
Full expensing remains in place for companies investing in qualifying plant and machinery. For other assets, the main-rate first-year allowance rises from 40% to 50%, while the main writing-down allowance falls from 14% to 12%. In practice, this rewards businesses that invest sooner, as more of the cost can be deducted from profits in the first year.
If you are planning to upgrade equipment or vehicles, it may be worth bringing that investment forward. Asset Finance can help you spread the cost while still benefiting from the tax relief.
Lower electricity bills for industrial firms
A new British Industrial Competitiveness Scheme will take 25% off electricity bills for around 10,000 firms. Eligibility details are still to be confirmed, but manufacturers and other energy-intensive businesses should check whether they qualify.
Bank surcharge to increase by 3%
The surcharge paid by banks on their profits will rise by 3 percentage points, as part of what the Chancellor described as “balanced” tax rises to fund the Budget’s measures.
While this is a tax on lenders rather than on businesses directly, it comes at a time when the Bank of England is widely expected to raise interest rates to tackle inflation. Together, these factors could make some mainstream lenders more cautious or more expensive. For SMEs, that makes it more important than ever to compare the whole market, including specialist and alternative lenders, rather than relying on a single high-street bank.
HMRC gets tougher on overdue tax
HMRC is receiving extra funding for compliance work, along with stronger powers to collect overdue tax from those who can afford to pay but ignore repeated contact. Businesses with tax arrears should engage with HMRC early rather than let debts build up.
Looking further ahead, from 2029 self-assessment will start moving towards smaller, more regular payments instead of large lump sums, which should make tax bills easier to manage for sole traders and partnerships.
New support for founders, key staff and sole traders
The Autumn Budget 2026 introduces a new “Young Entrepreneurs Allowance”, which will cover a year of living costs for young business founders. This is aimed at lowering the barrier to starting a business and could help a new generation of founders get off the ground without needing to draw an income straight away.
The government is also launching EMI2, a new share scheme that will let private businesses give key employees a stake in the company and its growth in a tax-efficient way. For growing SMEs competing for talent, this could become a valuable tool for recruiting and retaining the people who matter most.
In addition, the trading allowance, available to those earning trading or miscellaneous income, will be tripled from £1,000 to £3,000, which will benefit sole traders and people running small side businesses. Further detail on eligibility and timing for all three measures is still to come.
Other Key Changes for the Autumn Budget 2026
- Planned cut to the cash ISA allowance scrapped, with the annual tax-free allowance staying at £20,000, plus a consultation on a new “Starter ISA” for first-time investors.
- No increase to headline Capital Gains Tax rates, although Business Asset Disposal Relief has been halved (see above).
- Machine games duty to rise from 20% to 25% for higher-stakes machines, with the money raised going towards a high-street support package.
- Tariffs suspended on more than 100 supermarket products, which may help food retailers with stock costs.
- The VAT cut on household electricity extended to July 2027, a £100 energy payment for households in council tax bands A to D, and a new “cost control framework” to drive down energy bills.
- Gas standing charges on household bills to be scrapped and added to unit prices from 2027.
- Mayors to receive a share of income tax receipts from 2028, along with the power to introduce an overnight visitor levy.
- The Office for Budget Responsibility (OBR) has upgraded its UK growth forecast for this year to 1.2%, but expects growth to slow to 1% next year. The government’s fiscal headroom has fallen to around £15 billion, and market movements have added £14 billion to government borrowing costs this year. With inflation forecast to rise above 4% in early 2027, the Bank of England is expected to raise interest rates.
What does the Autumn Budget 2026 mean for UK businesses?
Challenges:
- Higher wage bills from the 3.9% minimum wage rise, with knock-on National Insurance and pension costs
- Steeper tax on property and savings income, reducing returns for business owners holding property or cash personally
- Business Asset Disposal Relief halved to £500,000, increasing the tax bill for many owners selling their business
- Tougher HMRC collection powers for businesses with overdue tax
- A higher bank surcharge and expected interest rate rises, which could tighten or raise the cost of mainstream lending
- Slowing growth forecasts and inflation expected to climb above 4% in early 2027
- Fuel duty relief only guaranteed until July 2027, leaving vehicle-reliant businesses exposed later in the year
Benefits:
- Around 70,000 more high-street businesses taken out of paying business rates altogether
- No change to dividend tax, headline Capital Gains Tax rates or tax on employment income
- A higher 50% first-year allowance, rewarding businesses that invest in equipment sooner
- A 25% cut to electricity bills for around 10,000 industrial firms
- A proposed 10% founders’ relief on up to £10 million of lifetime gains
- A Young Entrepreneurs Allowance and a tripled trading allowance to support new and small businesses
- EMI2 offering a new, tax-efficient way to reward and retain key staff
- An upgraded growth forecast for this year and continued fuel duty and red diesel relief in the short term
Overall, while the Autumn Budget 2026 offers welcome relief for the high street and some breathing space on everyday costs, rising wage bills, higher borrowing costs and a cooling economy mean the months ahead will still be challenging. Businesses that plan early, manage cash flow carefully and secure the right funding ahead of any rate rises will be best placed to adapt and grow.
If you’re worried about cash flow or rising borrowing costs after the Autumn Budget 2026, reach out to us. Moorgate Finance can walk you through a range of options to ease the pressure, including Unsecured Business Loans to boost cash flow, Invoice Finance to get your invoices paid faster, and Asset Finance to spread the cost of new equipment and vehicles.
Call us on 01908 92 62 62 to discuss your options or click here to schedule a call back with one of our specialists.
