Chancellor John Healey’s first Budget was delivered on 28 October 2026 with a clear focus on driving “growth in every postcode”. While many expected major tax reforms, the Budget instead combines a series of targeted measures aimed at encouraging investment, supporting entrepreneurship and maintaining stability for businesses while increasing certain taxes in specific areas.
For business owners, directors and self-employed individuals, this Budget contains several important announcements that may influence tax planning, investment decisions and future growth strategies.
Personal Tax Changes
One of the most significant announcements was a further two percentage point increase in Income Tax rates on property and savings income from April 2027. The basic rate will rise to 24%, the higher rate to 44% and the additional rate to 49%. No changes were announced to other Income Tax rates.
The ongoing freeze of the Personal Allowance and Income Tax thresholds has also been extended until April 2031, meaning many taxpayers could continue to be affected by fiscal drag as earnings increase over time.
There was some positive news for savers and first-time buyers. The annual ISA allowance will remain at £20,000, while a new First Time Buyer ISA will launch in April 2029, allowing eligible savers to contribute up to £4,000 annually and receive a 25% government bonus towards a qualifying property purchase.
Employment and Workforce Costs
Employers will see continued stability in National Insurance thresholds, with key limits remaining frozen until April 2031.
At the same time, wage costs will rise as the National Living Wage increases by 3.9% to £13.21 per hour from April 2027. National Minimum Wage rates for younger workers (18–20-year-olds) will also increase by 3.9% to £11.27 per hour.
Businesses that reimburse employee travel will welcome confirmation that the temporary 55p per mile rate for the first 10,000 business miles in a private vehicle has been made permanent. Additionally, mileage rates above 10,000 miles will rise from 25p to 35p from April 2027.
Changes for Business Owners and Entrepreneurs
The Budget contains a mix of incentives and restrictions for business owners.
The government has reaffirmed its commitment to the Corporate Tax Roadmap, maintaining the Corporation Tax headline rate at 25% and continuing with the Full Expensing regime, giving businesses greater certainty when planning future investment.
Self-employed individuals are among the winners from this Budget, with the Trading Allowance increasing from £1,000 to £3,000 from April 2027.
For growing businesses looking to attract and retain talent, the expanded Enterprise Management Incentive 2 (EMI2) scheme will increase the value of tax-advantaged employee share options from £60,000 to £120,000 from April 2027 and extend the exercise period from 10 to 15 years.
The government has also announced plans to pilot a Young Entrepreneurs Allowance, providing support towards living costs during the first year of trading for successful applicants.
Capital Gains Tax and Exit Planning
Business owners considering future succession or exit strategies should pay close attention to the changes to Capital Gains Tax reliefs.
The lifetime limit for Business Asset Disposal Relief (BADR) will reduce from £1 million to £500,000 for disposals made from 6 April 2027. This could significantly affect owners planning to sell all or part of their business in the future.
Conversely, the government is introducing a new Founders’ Relief. From April 2027, qualifying founders of high-growth, innovative companies will be able to benefit from a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains.
These changes make forward tax planning more important than ever for directors and shareholders contemplating future business exits.
Support for Business Growth
The Budget also includes several measures designed to support business growth and competitiveness.
Funding has been confirmed for the British Industrial Competitiveness Scheme (BICS), which aims to reduce electricity bills by up to 25% for more than 10,000 energy-intensive businesses from April 2027.
Smaller businesses should benefit from increased Small Business Rates Relief thresholds, with 100% relief available up to £18,000 and tapered relief up to £21,000 for qualifying retail, hospitality and leisure properties in England. The government has also announced a real-terms freeze in business rates bills for qualifying businesses during 2027/28 and 2028/29.
Our Thoughts
This Budget is less about major headline tax changes and more about creating long-term certainty while encouraging investment and entrepreneurship. However, the increase in tax rates on savings and property income, alongside the reduction in Business Asset Disposal Relief, means many business owners and investors may wish to review their tax planning sooner rather than later.
As accountants and business advisers, we recommend reviewing your plans now if you are considering a future business sale, expanding your workforce, investing in assets or operating as a self-employed individual. Early planning can often create opportunities before these changes take effect.
If you would like to understand how the 2026 Budget affects your personal or business circumstances, please contact our team for tailored advice.