The Autumn Budget on 28 October 2026 was billed as a “no surprises” Budget for business, and broadly it was. Corporation Tax rates are unchanged and there were welcome measures for founders and smaller firms. But there are real changes to capital allowances, selling a business, employment costs and HMRC administration. Here’s what owner-managed companies, sole traders and their directors need to know.
Corporation Tax: rates unchanged
The main rate stays at 25% and the small profits rate at 19%, with marginal relief for profits between £50,000 and £250,000. Full expensing for companies continues.
Capital allowances: bigger first-year allowance, slower writing down
- The main rate first-year allowance rises from 40% to 50% for expenditure on or after 1 January 2027.
- The main rate writing-down allowance falls from 14% to 12% from 1 April 2027 for companies and 6 April 2027 for unincorporated businesses.
The Annual Investment Allowance still covers most small business spending in full. But if you are planning major purchases that won’t be fully relieved up front, timing them around these dates could make a difference.
Selling your business: Business Asset Disposal Relief halved
The lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000 for disposals on or after 6 April 2027. The rate stays at 18%. If you are planning to sell or wind up your company in the next couple of years, the timing of that sale now matters a great deal – talk to us early.
For founders of high-growth companies there is a new Founders’ Relief from April 2027, offering a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for founders and early investors in qualifying innovative companies. The detail is still out to consultation.
Directors: dividends and extracting profit
There is no change to dividend tax in this Budget – the rates rose to 10.75% (basic) and 35.75% (higher) from April 2026. However, the government plans reforms to the rules on distributions, purchase of own shares and demergers from April 2028. If you are considering buying back shares or restructuring, these changes may affect the tax treatment.
A proposal for companies to report payments to participators (such as directors’ loans) to HMRC will now not go ahead.
Employing people
- The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027. The rate for 18 to 20 year olds rises to £11.27 and for 16 to 17 year olds and apprentices to £8.31.
- Payrolling benefits in kind becomes mandatory for company cars, vans, fuel and medical benefits from 6 April 2027, and most other benefits from April 2028.
- Approved mileage payments above 10,000 business miles rise from 25p to 35p from April 2027.
- New benchmark subsistence rates of £20, £60 and £75 (for travel of 5, 10 and 24 hours) apply from April 2028.
- EMI share options get more flexible, and the Company Share Option Plan is rebranded as EMI 2 with a £120,000 individual limit from April 2027.
Sole traders and the self-employed
- The trading allowance triples from £1,000 to £3,000 from 6 April 2027.
- Making Tax Digital for Income Tax reaches sole traders and landlords with income over £30,000 from April 2027 and £20,000 from April 2028. New joiners in April 2027 won’t receive penalty points for late quarterly updates in their first year.
- From April 2029, payments on account move to smaller, more regular automated payments during the year.
VAT
- From April 2027, the reverse charge on services bought from overseas will only apply to VAT-registered UK businesses.
- From October 2027 online marketplaces will collect VAT on sales by UK VAT-registered sellers and sellers with £90,000 or more of annual sales per platform.
- Mandatory VAT e-invoicing is planned from April 2029, with a roadmap published.
Business rates
From April 2027 small business rates relief thresholds rise for qualifying retail, hospitality and leisure properties: 100% relief up to a rateable value of £18,000 and tapered relief up to £21,000. The relief for pubs and live music venues rises to 35%, and the Supporting Small Business scheme is extended by a year.
HMRC compliance and filing
- Amended company tax returns must be filed online from 1 April 2028.
- From 1 April 2028 taxpayers will be legally required to correct errors once they identify them, and HMRC can issue Customer Correction Notices.
- HMRC will recruit hundreds more compliance officers, so accurate records and timely filings matter more than ever.
What should you do now?
- Plan any significant equipment or vehicle purchases around the January and April 2027 capital allowance changes
- If you might sell your business, take advice before 6 April 2027
- Check your payroll is ready for payrolling benefits and the new minimum wage
- Get onto MTD-compatible software if your self-employed or property income exceeds £30,000
How My Web Accountants can help
We prepare accounts under FRS 105, FRS 102 and FRS 101, Corporation Tax returns, payroll and VAT for small and medium-sized businesses, and help directors plan ahead of changes like these. Explore our services, read what the Budget means for your personal tax, or book a free consultation.
*Based on the Budget announcements of 28 October 2026 and correct at the date of publication. Measures may change as they are legislated. This is general information, not advice.*