Autumn Budget 2026: What it means for your business
Here are the announcements that affect sole traders, small, and medium-sized businesses—plus what it all means in practice, and the next steps to take.
The UK Chancellor delivered the Autumn Budget 2026 on Wednesday 28 October, and it had more in it for businesses than many expected.
A long list of targeted measures touches almost every part of running a company: business rates, minimum wage, mileage, capital allowances, online selling, e-invoicing and even how you’ll be expected to pay HMRC in future.
Below is a summary of what was announced, grouped by area, with the figures and start dates you need. Most changes take effect from April 2027 onwards, and some not until 2029, so there’s time to plan.
Here’s what we discuss:
Business bills, including rates
Headline news for the Budget was the likely abolition of the standing charge on home gas bills at some point in 2027, with the Chancellor charging Ofgem with implementation. What’s more, homes classed in Council Tax bands A to D will get a £100 energy payment.
Alas, none of this is extended to energy bills for businesses. Standing charges have never been capped in the same way, and can vary enormously depending on the size of the enterprise and the nature of supply contract.
Don’t forget previously-announced measures, though. From April 2027, around 10,000 energy-intensive manufacturers in eligible sectors will see electricity bills cut by up to 25% under the British Industrial Competitiveness Scheme, which exempts them from the indirect costs of the Renewables Obligation, Feed-in Tariffs and Capacity Market. Note that inclusion in this isn’t automatic. Eligibility depends on SIC and HS codes and a minimum electricity intensity, and the application window ends on 30 November 2026.
When it comes to business rates, it’s once again retail, hospitality and leisure (RHL) businesses that benefit. From April 2027, qualifying pubs, social clubs and most live music venues will receive an additional 20 percentage points of relief, bringing their total relief to 35%. The Chancellor has also increased the Small Business Rates Relief thresholds for qualifying RHL properties in England. From 1 April 2027, properties with a rateable value of up to £18,000 will qualify for 100% relief, with relief tapering to zero for properties with a rateable value between £18,000 and £21,000. Previously, these thresholds were £12,000 and £15,000 respectively. The government estimates that the changes will mean 70,000 more businesses pay no business rates.
What this means for businesses
Check your rateable value on the Valuation Office Agency website and challenge it if you believe it is incorrect. The government offers a service to calculate rates.
With no changes in the budget affecting bills, it’s once again down to businesses to get the best deals for their utility usage. Businesses with high energy usage should consider using third-party intermediaries (TPis; aka brokers), while other businesses should use price comparison sites.
After all, every utility, software, and telecoms bill you pay is the product of a decision made at some point. The quickest win is to find out when each of those decisions is next up for grabs, and then ensure bill contract management is a clearly-identified part of someone’s job. They should put every contract end date and notice window in one shared calendar, with a reminder 90 days out.
Never, ever end up using out-of-contract rates. These can easily be up to 50% higher than a fixed deal. You can usually switch with as little as 28 days notice, so do so, especially if you “inherited” the utility provider when you moved into your premises.
Finally, read the small print on how prices can move during the term. This kind of effort up front pays dividends in the long-run. Mid-contract price rises are an old trick, even if you’re on an introductory deal, and if they match the rate of inflation with a little extra added-on then it can be a substantial increase.
Corporation tax and VAT
The main rate of Corporation Tax stays at 25%, and the small profits rate at 19%, for the financial year starting 1 April 2028. As was previously announced, marginal relief for profits between £50,000 and £250,000 continues unchanged.
The rates of VAT and the £90,000 registration threshold haven’t changed in this Budget, either.
But there are some interesting VAT developments elsewhere.
The headline measure affects online sellers. From October 2027, marketplaces will be responsible for collecting VAT on sales by UK VAT-registered businesses, and by any other UK business with annual sales of £90,000 or more on a single platform. Note that this applies per platform, and not across all marketplaces combined, and only covers goods located in the UK at the point of sale to consumers.
What’s more, personal sales, second-hand goods, and business-to-business transactions are excluded.
The government also announced that how VAT is paid is also changing: From April 2029, businesses will need a Direct Debit instruction in place for VAT return liabilities, if they don’t have one already, with other payment methods still allowed before a cut-off date. This matches a similar announcement for PAYE.
And finally, there’s a change if you use services overseas. From April 2027, if your business isn’t VAT registered and you buy services from overseas suppliers, those suppliers will charge you UK VAT directly rather than the reverse charge applying.
The customs treatment of low-value imports is being reformed, with implementation now due by October 2028, six months earlier than previously announced.
What this means for businesses
If you sell through a marketplace, and have been casting a blind eye to your VAT liability, then the game is over. You can expect the marketplaces you use to contact you. If you’re not VAT registered then now’s the time to do so.
If you pay VAT in any other way than via Direct Debit, then you’ve over a year to sort it out.
The low-value import changes bring small parcels closer to the treatment of goods imported as freight, so overseas sellers can’t undercut UK businesses by sidestepping duty. Alongside the marketplace VAT change, it narrows the pricing advantage some overseas sellers currently enjoy, which is good news if you compete with them.
Income tax, National Insurance, and wages
Headline rates of Income Tax and National Insurance contributions (NICs) are unchanged.
This means no change to the government continued freeze of Income Tax thresholds for employees and the self-employed in England and Northern Ireland until 2030/31.
However, Class 2 NICs Small Profits Threshold rises to £7,355 for 2027-28, and the voluntary Class 2 rate becomes £3.80 a week.
Note that the Scotland and Welsh parliaments have their own rules: the Welsh budget is due on 17 November 2026, and the Scottish budget is due on 3 December 2026.
As expected, National Minimum Wage (NMW) and National Living Wage (NLW) hourly rates will rise by 3.9% as of 1 April 2027, as follows (according to the usual age brackets):
- National Living Wage (21 and over): Rises from £12.71 to £13.21 per hour
- National Minimum Wage (18 to 20): Rises from £10.85 to £11.27 per hour
- National Minimum Wage (16 to 17): Rises from £8.00 to £8.31 per hour
- Apprentice rate: Rises from £8.00 to £8.31 per hour
The Lower Earnings Limit for Class 1 National Insurance rises to £6,916 a year (£133 a week) for 2027-28, uprated by September’s 3.5% CPI figure. It’s the point at which employees start building entitlement to statutory payments and the State Pension, so update payroll settings before April 2027.
If you’re self employed and pay your Income Tax on account twice each year, how you pay will change as of April 2029. Details are due in yet-to-be-announced legislation, but there will also be an option to pay more frequently via PAYE (that is, paying any outside Income Tax liability via your existing salary payments, if you’re employed by a business).
If you’re running a side hustle or other micro business, perhaps as a hobby, there’s some good news: The trading allowance rises from £1,000, to £3,000. This means that you don’t need to pay tax on income up to that amount, or even tell HMRC (although other income or reporting requirements may still apply).
Separately, employers will have to report and tax most benefits in kind through payroll rather than on P11Ds: company cars and vans, fuel and medical benefits from 6 April 2027, and almost all other benefits from 6 April 2028.
What this means for businesses
As always, there’s a need to avoid the hidden tripwires in pay runs. A rise in NMW and NLW narrows your margin for error. Deductions for uniforms or tools, unpaid pre-shift briefings, travel between jobs, salary sacrifice schemes, and apprentices still on the apprentice rate after their first year can all drag pay below the legal minimum without anyone noticing.
And that’s bad. Penalties imposed by HMRC can reach 200% of the underpayment, capped at £20,000 per worker.
A rise in the National Living Wage pushes up every number built on top of it including employer National Insurance, pension contributions, holiday pay, and overtime premiums. If you’re going to model the rises across the year, or model for new hires, then ensure you model the fully loaded hour, not just the hourly rate.
So-called fiscal drag remains an issue for many employees, who see annual increases in income via wage rises move them into higher tax brackets, meaning proportionately less of that increase than they might anticipate arrives in their pockets. Disappointment about this can unfortunately be directed to your business, despite the fact it’s beyond your control. However, it can be offset to a greater or lesser degree by looking at non-cash benefits-in-kind to create attractive employment packages.
Making Tax Digital
The expansion of Making Tax Digital for Income Tax goes ahead as planned in April 2027, with sole traders and landlords with qualifying income over £30,000 joining the scheme.
The Budget somewhat unexpectedly extended the ‘soft landing period‘, which is the period of grace whereby missed quarterly update deadlines were not penalised by HMRC across 2026/27. Anyone required to join in April 2027 won’t receive late submission penalty points for their 2027-28 quarterly updates. The updates still have to be sent, though, because you can’t file your tax return until they’re in.
It was also announced that a few groups are exempt from MTD until further notice, including those eligible for qualifying care relief, non-UK resident foreign entertainers and sportspeople, and expected non-residents.
What this means for businesses
If you’re part of the April 2027 MTD intake, start preparing now. There’s never been a better time to start keeping digital records.
Then use the penalty-free first year to get your software and quarterly routine working properly, rather than treating it as a reason to delay.
Fuel, vehicles, travel, and haulage
Fuel duty has been frozen again, for the 16th year in a row. What’s more, the 5p cut—announced way back in 2022 as a supposedly temporary cost-of-living measure—is extended from 1 January 2027 to 30 June 2027. At that point, rates are set to return to pre-2022 levels and will rise with RPI from 1 July 2027.
Both measures are undoubtedly welcome but neither will alter the cost of fuel, of course.
For those that use their own vehicles for work activities—so called grey fleet drivers—the 55p rate in the approved mileage allowance payment (AMAP) rates for the first 10,000 miles, introduced in May 2026 and backdated to 6 April 2026, is now permanent.
From 6 April 2027 the rate for miles above 10,000 also rises, from 25p to 35p.
Mileage Allowance Relief (MAR) and Relevant Motoring Expenditure (RME) changes to accommodate and match AMAP are also now permanent.
AMAP is the maximum rate that can be claimed by employees for personal vehicle use, and is reimbursed free of tax and National Insurance by employers through wages, with there being no requirement for employee or employer to report it to HMRC provided the rate is at or below the AMAP rates (although detailed records still need to be kept).
Sole traders can deduct AMAP rates as a simplified expense on their tax return.
The rates are now as follows, and claims can be backdated to April 2026:
- Cars and vans: 55p/mile for the first 10,000 miles, then 35p/mile for miles driven above 10,000
- Motorcycles: 24p/mile, regardless of miles covered
- Bicycles: 20p/mile, regardless of miles covered
There’s also a potential extra 5p per mile if transporting fellow employees for business.
On the flip side, if you provide staff with company vans they can use privately, or pay for private fuel in company cars or vans, the taxable benefit figures rise in line with inflation from 6 April 2027. The flat-rate van benefit charge goes up to £4,310 (from £4,170), the van fuel benefit charge to £825 (from £798) and the car fuel benefit multiplier to £30,200 (from £29,200).
And finally, some business travel-related changes: From 6 April 2028, the benchmark scale rates employers can pay for staff meals on business trips, without checking receipts, rise to £20 for journeys over 5 hours, £60 over 10 hours and £75 over 24 hours. The 200-plus overseas rates will be replaced by a simpler tiered system linked to these.
What this means for businesses
If an employee’s private fuel use is modest, the tax on the fuel benefit can cost more than the fuel itself, so it may be cheaper for both sides to have them repay private mileage instead. Note these benefits must be payrolled through RTI from 6 April 2027 under the new mandatory rules.
If you pay below the AMAP rate, you’re leaving your staff out of pocket twice. They absorb the shortfall, and most won’t know they can claim Mileage Allowance Relief on the difference. Paying the full rate costs you nothing extra in tax or National Insurance, so unless there’s a good reason not to, pay it.
Also check your expenses system records business mileage per trip with dates and destinations, because HMRC’s position is that an unsupported mileage claim is taxable pay, and the mandatory payrolling of benefits from April 2027 means payroll data will be scrutinised more closely.
Benchmark scale rates are a quiet admin win. From April 2028, you can pay £20, £60 or £75 for meals on qualifying trips with no receipts to collect or check. If you’re still processing individual lunch receipts for travelling staff, moving to scale rates removes a layer of paperwork for your finance team and gives employees certainty about what they’ll get back. You’ll still need a record that the trip happened and how long it lasted, but not what was eaten.
E-invoicing
The Budget confirmed the timetable for the preliminary steps for mandatory e-invoicing. From 1 April 2029, VAT-registered businesses will need to be able to issue and receive structured electronic invoices for domestic transactions where a VAT invoice is required, unless exempt.
That means invoices in a machine-readable format exchanged system to system, not a PDF attached to an email. There’s a single start date rather than staged cohorts, and Peppol, the international framework already used widely in Europe and Australasia, will be the UK’s core interoperability standard.
Much of the detail is still to come, and we’ll be covering it in detail here on Sage Advice. HMRC plans to consult on technical standards in spring 2027, publish practical guidance in autumn 2027, and finalise scope, exemptions, standards, business identifiers and provider requirements between October 2027 and April 2028.
Existing legacy arrangements will be allowed to continue, provided businesses using them can also exchange compliant e-invoices through the UK framework.
Note: The 2029 mandate doesn’t introduce routine reporting of invoice data to HMRC. A separate consultation on the possible future use of e-invoice data runs until 20 January 2027, and no reporting duty has been decided.
What this means for businesses
Two and a half years sounds like a long time, but it’s roughly two average software upgrade cycles, so this is a planning item rather than a panic item.
The first practical step is to ask your accounting or invoicing software provider, in writing, whether they intend to support Peppol e-invoicing and when. Most mainstream packages are expected to build it in, but you want that confirmed before your next renewal, not after.
Think about receiving as well as sending. The requirement covers both directions, and for many small businesses the bigger change will be how supplier invoices arrive and get matched to purchase orders and payments. If your bookkeeping still relies on someone keying in figures from PDFs, e-invoicing is the point at which that stops being necessary, and it’s worth tidying up your supplier records and payment processes in the meantime so you benefit from the automation.
If you sell to larger customers or the public sector, expect them to move early. Big organisations will want all their suppliers on structured invoicing well before the deadline, so being e-invoice ready could become a condition of winning or keeping contracts from 2028 onwards.
Investment and entrepreneurship
A new Founders’ Relief will apply a 10% rate of Capital Gains Tax to qualifying disposals of shares, up to a lifetime limit of £10 million of gains per individual, for disposals made on or after 6 April 2027. It’s aimed at founders and significant early investors in high-growth, innovative UK companies, although the government is still working out some of the details—so ensure you monitor the situation.
Under the proposed conditions, you’d need to have held 25% of the ordinary share capital when the company’s trade (or preparation for it) began, held the shares for at least five years, and been UK resident for at least five continuous tax years.
Less welcome news is that the lifetime limit for Business Asset Disposal Relief (BADR) halves from £1 million to £500,000 for qualifying disposals on or after 6 April 2027, with transitional rules for contracts signed but not completed before that date. The Chancellor said this means no change for three in four claimants.
On investment, the main rate first-year allowance rises from 40% to 50% for spending from 1 January 2027, while the main writing-down allowance falls to 12% from April 2027. Minor fixes to SEIS, EIS and VCT rules follow from 6 April 2027. Note that the 50% allowance does not apply to all expenditure and that eligible assets already qualifying for full expensing are treated differently.
What this means for business
If you’re planning to sell your business, the BADR change is the one to act on.
Gains above £500,000 will lose the lower rate from April 2027, so anyone with a sale already in motion should speak to their accountant about timing and whether the transitional provisions apply. For most owner-managers selling for less than that, nothing changes.
Founders’ Relief is more specific. The 25% founding stake, five-year holding period, and the proposed “sustained high growth” test mean it’s for scale-ups, and not the typical small business.
The allowance change rewards investing sooner. From January 2027, up to half the cost of qualifying plant and machinery can be deducted in year one, for assets that don’t qualify for full expensing, so if you’re weighing up equipment purchases, the maths tilts towards early 2027 rather than late 2026.
Final thoughs
This was a Budget of many small changes rather than one big one, and that works in your favour. Nothing lands before April 2027, and the biggest shifts, in e-invoicing and how you pay HMRC, are two years or more away.
Use that time well.
Pick the three or four measures that apply to you, put the dates in your calendar, run the numbers, and talk to your accountant before the year-end rush.
MTD: Your business survival guide
Your real world guide to using Making Tax Digital for Income Tax in April 2026, April 2027 or April 2028. For sole traders, landlords, freelancers, side-hustlers—and more.
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