Budget 2026: What It Means for Business Owners

The Budget was delivered on 28th October 2026. Here is what changes for owner managed companies, employers, landlords and anyone thinking about selling a business, in plain English, from the documents published on GOV.UK on theday.

Directors and dividends: no change

If you pay yourself a small salary and take the rest as dividends, nothing in this Budget changes your tax for 2027/28. Dividend tax stays at 10.75%, 35.75% and 39.35%, the dividend allowance stays at £500, and the personal allowance stays at £12,570.

Corporation tax stays at 19% for profits up to £50,000 and 25% over £250,000, with marginal relief in between. Full expensing on plant and machinery stays too.

Equipment, vans and capital allowances

The £1 million Annual Investment Allowance stays, and companies keep full expensing on new plant and machinery, so most small businesses still get 100% tax relief on new equipment and vans in the year they buy them.

Two things change. The main rate first year allowance rises from 40% to 50% for spending from 1st January 2027, which mainly helps sole traders, partnerships and leasing businesses spending over £1 million. And the main rate writing down allowance falls from 14% to 12% from 1st April 2027 for companies and 6th April 2027 for everyone else. That slows the tax relief on older equipment, vans and cars at 50g/km or less, so a little more tax is paid now and a little less later.

Employers: wages up, National Insurance the same

Employer National Insurance stays at 15% on pay over £5,000 a year, and the Employment Allowance stays at £10,500. Your staff pay the same 8% and 2%.

The National Living Wage and National Minimum Wage rise by 3.9% from April 2027, including for 18 to 20 year olds. From 1st April 2027 that is £13.21 an hour for workers aged 21 and over, up from £12.71, £11.27 for 18 to 20 year olds, and £8.31 for 16 and 17 year olds and apprentices. It is worth building that into next year's budget now. Our cost of employing calculator shows the full cost of a new hire.

Landlords: rental income taxed more from April 2027

From 6th April 2027 rental profit you own personally is taxed at 24%, 44% and 49%. That is a further 2% on top of the rates announced last year. The tax credit for mortgage interest stays in line with the basic rate, so it goes to 24%.

Property held in a limited company pays corporation tax instead, which is not changing. Our property tax calculator shows both ways on your own figures. It does not tell you which is right for you, as that depends on your full situation.

Savings interest

Tax on savings interest also rises by a further 2% from 6th April 2027, to 24%, 44% and 49%. The personal savings allowance stays at £1,000 for basic rate and £500 for higher rate taxpayers, and the £5,000 starting rate band stays. The cash ISA allowance stays at £20,000.

Selling your business

This is the big one for owners planning an exit. From 6th April 2027 the lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000. The rate stays at 18%.

A new Founders' Relief was also announced, at 10% on lifetime gains of up to £10 million, for qualifying sales of shares from 6th April 2027. It is aimed at founders of large, fast growing companies, not most small businesses. As proposed, the company needs turnover of at least £10 million and at least 15 staff, plus strong growth or significant R&D, and the founder needs to have held at least 25% from the start and owned the shares for five years. Any Business Asset Disposal Relief already used counts towards the £10 million. The rules are being consulted on until 30th November 2026. If a sale is on the horizon, timing and structure matter, so talk to us early.

Separately, from April 2028 the rules change for taking money out of a company other than as salary or dividends. This covers share buybacks, reductions of capital and demergers, and matters most for owners with a holding company or a shareholder wanting to leave. Draft rules are due in 2027, so if any of these are planned, talk to us first.

Cars and mileage

The 55p a mile tax free rate for the first 10,000 business miles is made permanent, and the rate above 10,000 miles rises from 25p to 35p from 6th April 2027. The same rates apply to sole traders using simplified expenses. Company car tax rates are as already set, with electric cars at 5% in 2027/28. Company car tax goes up 1% across all bands in 2030/31.

From 6th April 2027 company cars, vans, fuel and medical cover must be put through payroll rather than reported on a P11D, with most other benefits following from 6th April 2028. The 5p cut in fuel duty is extended to 30th June 2027.

Our company car calculator compares a company car with your own car and mileage, line by line.

Starting up, business rates and self assessment

• The trading allowance rises from £1,000 to £3,000 from 6th April 2027, so small side incomes can be earned before tax is due. The level of trading income you need to report through self assessment rises to £3,000 too.
• In England, from 1st April 2027, small business rate relief for retail, hospitality and leisure is extended to a rateable value of £18,000, tapering to £21,000. Other retail, hospitality and leisure bills are frozen for two years, and relief for pubs and live music venues rises from 15% to 35%.
• From April 2029, self assessment payments on account move to smaller, more regular payments through the year, and VAT and PAYE will have to be paid by Direct Debit.
• If you join Making Tax Digital for Income Tax in April 2027, there are no late submission penalty points for quarterly updates in 2027/28.
• The VAT registration threshold stays at £90,000.

Questions to ask yourself

This Budget is mostly about income from property, savings and selling a business. A few questions worth thinking about, and talking to us about:

• Do I own rental property in my own name, and do I know how much the new rates add?
• Do I have cash sitting in savings accounts that will be taxed more from April 2027?
• Am I planning to sell my business or shares in the next few years?
• Have I budgeted for the minimum wage rise from April 2027?
• Do I drive more than 10,000 business miles a year in my own car?
• Am I buying equipment, vans or cars in the next 18 months?
• Do I have a holding company, or a shareholder who may want to sell back their shares?

Indicative only, not advice. This summary is based on the Budget documents published on GOV.UK on 28th October 2026. Some measures still need to pass into law and details may change. It must not be relied upon, and it does not take account of your own circumstances. Speak to us before making any decision.