Budget Day always brings plenty of announcements and information to get our heads around, but all in all, this year's Autumn Budget has been a relatively quiet one!
There have been no major changes to the headline rates of Corporation Tax, Income Tax on earnings, National Insurance or VAT. Instead, the government has focused on smaller, more targeted changes.
But that doesn’t mean there’s nothing for business owners to think about.
We’ve picked out the key changes and broken them down into plain English, helping you understand what they could mean for your business and what you might need to plan for.
Many measures still need legislation or further consultation, so some details could change.
1. National Living Wage to Increase by 3.9%
From 1 April 2027, the National Living Wage for employees aged 21 and over will rise from £12.71 to £13.21 per hour, an increase of 3.9%. The minimum wage for 18 to 20-year-olds will also increase to £11.27.
To put that into perspective, someone working 35 paid hours a week on the National Living Wage will cost approximately £910 more each year in basic pay, before any additional employer National Insurance or pension contributions.
If you employ people on or close to minimum wage, make sure these higher payroll costs are reflected in your staffing budget and future recruitment plans.
2. Business Asset Disposal Relief Lifetime Limit to Be Halved
If you’re thinking about selling your business, this is one of the more significant announcements.
Business Asset Disposal Relief (BADR) currently allows qualifying business owners to pay a reduced 18% Capital Gains Tax rate on up to £1 million of lifetime gains when selling their business or qualifying shares.
From 6 April 2027, this limit will be halved to £500,000, with gains above the available limit taxed at the normal applicable Capital Gains Tax rate.
The government estimates that around three-quarters of BADR claimants won’t be affected. However, owners expecting gains between £500,000 and £1 million could face a higher tax bill.
If you’re planning a business sale, the timing could affect your tax position, particularly if you’re considering selling before 6 April 2027. Getting advice early will help you understand your options.
3. New 10% Founders’ Relief Proposed
While the government is reducing BADR, it’s also proposing a new tax break for founders of high-growth, innovative businesses.
From 6 April 2027, the proposed Founders’ Relief would allow eligible founders to pay just 10% Capital Gains Tax on up to £10 million of lifetime gains when selling qualifying shares.
However, the proposed eligibility criteria are demanding. Businesses would need at least £10 million in annual turnover and 15 full-time equivalent employees, alongside additional growth, innovation and ownership requirements.
This means the relief is aimed at larger, high-growth scale-ups rather than typical owner-managed businesses, which will generally continue to rely on BADR.
The consultation closes on 30 November 2026, so the final rules are still to be confirmed.
4. More Funding for Start-ups and Scale-ups
The British Business Bank, which helps smaller businesses access finance, will receive £5 billion in additional financial capacity. This includes:
- £1.4 billion for investment funds backing growing companies.
- £450 million for a new venture debt product. Venture debt allows eligible businesses to access finance without necessarily giving up additional ownership.
There are also minor technical changes to the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), which offer tax incentives to investors supporting eligible early-stage businesses.
These changes will take effect from April 2027. The government also plans to explore improvements to Advance Assurance, a service that helps businesses check whether they could qualify before approaching investors, alongside stronger guidance on fees.
While these measures could support innovative businesses, securing investment still takes preparation. Reliable financial forecasts, up-to-date management accounts and a clear growth strategy will remain essential.
5. R&D Tax Relief Claims Are Being Simplified
Good news for businesses investing in research and development!
From 1 April 2027, the government will remove the R&D Claim Notification Form, which some businesses currently need to submit to HMRC before claiming R&D tax relief. The change applies to claims made on or after that date. Until then, businesses required to submit the form, including many first-time claimants, must continue to do so.
The Additional Information Form, which provides supporting details about R&D projects and costs, will also be simplified in autumn 2027, reducing some of the paperwork involved.
These changes should mean less paperwork, although the rules around which projects qualify aren’t changing. Businesses will still need accurate records and evidence to support their claims.
6. Employee Share Schemes Are Becoming More Flexible
The Budget includes changes to help growing businesses attract and retain talented employees through share schemes.
The Company Share Option Plan (CSOP) was renamed EMI2 on Budget Day, 28 October 2026, with further changes taking effect from 6 April 2027. These include:
- Doubling the individual limit on tax-advantaged EMI2 share options from £60,000 to £120,000.
- Increasing the maximum option exercise period from 10 to 15 years.
- Removing the interaction between EMI and EMI2 limits, meaning eligible employees could hold £250,000 of EMI options alongside £120,000 of EMI2 options.
There are also improvements to the existing Enterprise Management Incentive (EMI) scheme, including giving employees 180 days rather than 90 to exercise their options following certain changes in eligibility.
EMI will also remain available when a company moves to an Employee Ownership Trust, where the business is owned on behalf of its employees.
7. Changes to Tax Relief on Business Investment
Capital allowances let businesses deduct the cost of certain purchases from their taxable profits, reducing the amount of tax they pay.
From 1 January 2027, the main-rate first-year allowance will increase from 40% to 50%, allowing businesses to deduct a larger proportion of qualifying purchases upfront.
However, the main-rate writing-down allowance, which spreads tax relief over several years, will fall from 14% to 12% from April 2027.
Existing full-expensing rules remain unchanged, allowing companies to claim a 100% upfront deduction on many qualifying purchases.
It’s worth noting that full expensing is only available to companies. Sole traders and partnerships instead rely on allowances such as the £1 million Annual Investment Allowance (AIA) and the first-year allowance, making the increase to 50% particularly relevant to them.
8. More Business Rates Relief for High Street Businesses
There was some welcome news for retail, hospitality and leisure businesses in England.
From 1 April 2027, the threshold for 100% Small Business Rates Relief will increase from £12,000 to £18,000 in rateable value for qualifying properties in these sectors. Partial relief will extend to properties valued up to £21,000.
The government estimates that around 70,000 additional businesses will no longer have to pay business rates under the new thresholds. Pubs, social clubs and qualifying live music venues will also benefit from 35% relief.
If you operate a business in one of these sectors, checking whether you’ll qualify for additional support could help ease pressure on running costs.
9. New VAT Rules for Online Marketplaces
From October 2027, online marketplaces will become responsible for collecting VAT on certain sales made by UK businesses through their platforms.
The changes will affect VAT-registered sellers and some other businesses making more than £90,000 in annual sales through an individual marketplace.
Importantly, this threshold is assessed separately for each platform. VAT registration requirements, however, are still based on a business’s total taxable turnover across all sales channels.
Personal sales, second-hand goods and business-to-business transactions are excluded from the new marketplace rules.
If you sell through online platforms, make sure your accounting processes can handle the changes and continue to record sales and VAT correctly.
10. Higher Tax Rates on Savings and Property Income
Following increases announced in last year’s Budget, the government has added a further two percentage points to the tax rates on savings and property income. From 6 April 2027, the basic, higher and additional rates will therefore rise to 24%, 44% and 49%.
The property income changes apply in England, Wales and Northern Ireland, while savings income rates apply across the UK.
This could mean higher personal tax bills for landlords receiving rental income, as well as business owners receiving rent or interest from their own companies.
A Couple of Other Changes to Keep on Your Radar
The Trading Allowance will increase from £1,000 to £3,000 from April 2027, meaning people earning smaller amounts from freelancing, side businesses or self-employment could benefit from less tax and admin.
The government is also planning changes to how certain payments from companies to shareholders are taxed from April 2028, including when a company buys back its own shares. These could affect business owners planning changes to company ownership or structure, with more details expected in 2027.
What About Businesses in the North East?
There were also a few announcements highlighting opportunities closer to home.
The Budget referenced more than £85 million of investment in offshore wind testing facilities in Blyth, although this funding was originally announced in 2024.
It also confirmed that the next International Investment Summit will take place in the North East in spring 2027.
The North East and Tees Valley are also included in the proposed first wave of Business Rates Retention Zones, which could allow more business rates revenue to be retained locally to support development, subject to approval and legislation.
While these measures don’t represent new grants businesses can apply for directly, they could create opportunities through regional investment, supply chains and partnerships, particularly in technology, renewable energy and innovation.
Have Questions About the Budget? Let’s Chat!
While this year’s Budget hasn’t brought any sweeping tax changes, there are still some important announcements that could affect your business.
Whether you’re wondering how a particular change could impact your finances or looking to plan ahead with confidence, the Blu Sky team are here to help.
If you’re already a Blu Sky client, feel free to reach out to your usual point of contact. And if you’re not a client yet, that’s no problem! We’re always happy to offer practical advice and help you plan your next steps.
