Budget 2026: what it means for small businesses and directors
What the Budget means for you and your business
The Chancellor's Budget focuses on easing living costs and avoids broad tax rises, and the government says it still meets its fiscal rules with £15bn of headroom in 2029-30.
Hi there. Here are the points from today's Budget that matter most to business owners and directors, with the dates to note in your diary. We'll keep you updated as the detail is published.
Good news for businesses
- Business rates support for the high street: Retail, hospitality and leisure properties in England will see their business rates frozen in real terms, reduced or cut to zero, with a two-year real-terms freeze on bills. A higher Small Business Rates Relief threshold takes around 70,000 more of these businesses out of rates, so half of all such properties will pay none.
- Corporation Tax: The Budget maintains the government's Corporate Tax Roadmap commitments, including the lowest headline Corporation Tax rate in the G7.
- Founders Relief: A new 10% Capital Gains Tax rate on up to £10m of lifetime gains for eligible founders of high-growth, innovative companies.
- Trading allowance: The trading allowance triples from £1,000 to £3,000.
- Backing growth and investment: Venture capital schemes are being improved, R&D tax relief simplified and tax-advantaged employee share schemes expanded. The British Business Bank also gets extra capital, including a new venture-debt offer.
- Non-compete clauses: These will be restricted for startups and scaling firms. The government will consult first and set out its position in early 2027 before legislating.
- Lower electricity bills for energy-intensive firms: From April 2027, the British Industrial Competitiveness Scheme will cut electricity bills by up to 25% for over 10,000 eligible electricity-intensive businesses.
Costs and rules to plan for
- National Living Wage: Rises 3.9% to £13.21 an hour from 1 April 2027. If you employ staff, now is the time to factor the extra payroll cost into your budgets.
- Savings and property income: Tax rates on savings and property income rise by a further 2 percentage points across all bands from April 2027. The government says 84% of taxpayers will see no increase and the £20,000 cash ISA limit stays. Landlords and people with significant savings income are the most exposed.
- Company distributions: Rules will be modernised to stop complex arrangements being used to extract profits at lower tax rates, while protecting genuine commercial transactions and family business succession. Details aren't out yet, so please speak to us before changing how you pay yourself.
- Online marketplace VAT: From October 2027, online marketplaces will collect VAT on qualifying sales by UK businesses using their platforms. If you sell online, it's worth preparing now.
- Private hire operators: Larger operators will have to account for VAT on the full passenger fare. Smaller and local firms are protected.
- Banks: The bank corporation tax surcharge rises from 3% to 6% for 15 months, ending on 31 March 2028. This applies to banks only.
Household and employee measures
- Energy and driving: A £100 Household Energy Payment goes to up to 20 million households in council tax bands A to D in England from January. The VAT cut on electricity is extended to 1 July 2027, and the 5p fuel duty cut is extended for a further six months.
- Mileage rates: Tax-free mileage rates are permanently increased, helping around 2 million employees and 1 million self-employed people who drive for work.
- Parental pay and ISAs: Parental pay extends to more than 160,000 additional parents, including self-employed dads and partners. A new First Time Buyer ISA is introduced and the Lifetime ISA withdrawal charge falls to 20% from today.
- Pensioners: People above State Pension age with total income up to the new State Pension level will pay no Income Tax from April 2027.
Key dates
- From today: Lifetime ISA withdrawal charge falls to 20%.
- From January: £100 Household Energy Payment paid.
- 1 April 2027: National Living Wage rises to £13.21. Savings and property income rates rise by 2 percentage points. Electricity-bill scheme for energy-intensive firms starts.
- 1 July 2027: Electricity VAT cut ends. Deferred fuel duty RPI increase is due.
- October 2027: Marketplace VAT collection starts.
- 31 March 2028: Bank surcharge ends.
What you might want to do next
- Review payroll and pricing budgets for the 1 April 2027 National Living Wage rise.
- Landlords and anyone with savings income: let's look at the April 2027 rate increases before the tax year ends.
- Owner-managers: speak to us before changing dividend or profit-extraction arrangements while the distribution rules are clarified.
- Founders and growing businesses: ask us about Founders Relief, R&D relief and share schemes.
- Online sellers: prepare for the October 2027 VAT change.
Call or WhatsApp Adam on 0161 511 2143 or email adam@meetenso.co.uk.
Speak soon,
Adam
Founder, Enso Accountants
Source: GOV.UK Budget 2026 summary. This is general information, not personal advice, and details may change when the Budget legislation is published.
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