Published: 28 October 2026 | DMO Accountants
The Chancellor has delivered the Autumn Budget 2026, outlining a range of changes affecting businesses, employees, landlords and taxpayers across the UK.
The government’s chosen theme this year is “Breathing Space for Today, Fresh Hope for the Future.”
Which sounds lovely, although most business owners would probably settle for a little less tax and fewer forms to complete!
At DMO Accountants, we’ve reviewed the announcements and highlighted the changes most relevant to our clients.
The good news? For most small business owners, there are no major immediate changes requiring urgent action.
However, there are some important developments worth understanding, particularly if you’re considering selling your business.
Autumn Budget 2026: Key Changes at a Glance
| Tax or allowance | What’s changing? | When? |
|---|---|---|
| Business Asset Disposal Relief | Lifetime limit reducing from £1 million to £500,000 | April 2027 |
| Founders’ Relief | New 10% CGT rate for qualifying founders | April 2027 |
| Business mileage | 55p for first 10,000 miles; 35p thereafter | April 2026 / April 2027 |
| National Living Wage | Increasing to £13.21 per hour | April 2027 |
| Trading allowance | Increasing from £1,000 to £3,000 | April 2027 |
| Business rates | Expanded relief for qualifying retail, hospitality and leisure businesses | April 2027 |
| Property Income Tax | Previously announced two-percentage-point increase | April 2027 |
| Savings Income Tax | Previously announced two-percentage-point increase | April 2027 |
| Electronic VAT invoicing | Mandatory electronic invoicing planned | April 2029 |
Let’s look at what these announcements mean in practice.
1. Personal Tax, Dividends and Corporation Tax
There were no major new changes to the main Income Tax or Corporation Tax rates.
The main Corporation Tax rate remains at 25%, with the small profits rate remaining at 19%.
Previously announced increases to dividend taxation remain in place, meaning tax-efficient remuneration planning continues to be important for limited company directors.
For most owner-managed limited companies, it’s largely business as usual.
2. Business Asset Disposal Relief: Important Changes for Business Owners
One of the most significant announcements concerns Business Asset Disposal Relief (BADR), previously known as Entrepreneurs’ Relief.
BADR allows qualifying business owners to pay a reduced rate of Capital Gains Tax when selling their business or shares in their company.
What’s changing?
From 6 April 2027, the lifetime limit for BADR will reduce from:
£1 million to £500,000.
The reduced Capital Gains Tax rate remains at 18%, compared with the standard higher rate of 24%.
Example: Selling a Business for a £1 Million Gain
For a business owner making a qualifying taxable gain of £1 million:
| Before April 2027 | From April 2027 | |
|---|---|---|
| Capital Gains Tax | £180,000 | £210,000 |
| Additional tax | — | £30,000 |
This simplified illustration assumes the full lifetime BADR allowance is available, all qualifying conditions are met and the annual CGT exemption is ignored.
Any previous BADR claims will count towards the new lifetime limit.
Our advice: If you’re considering selling your business, retiring or transferring ownership, it’s worth reviewing your plans sooner rather than later.
The timing and structure of a disposal could make a substantial difference to your tax liability.
Apparently, spending years building a successful business wasn’t quite challenging enough!
3. New Founders’ Relief: Some Positive News for Entrepreneurs
Alongside the reduction in BADR, the government has announced a new Founders’ Relief.
From April 2027, qualifying founders of high-growth, innovative companies may benefit from:
- A reduced Capital Gains Tax rate of 10%.
- Relief on up to £10 million of lifetime gains.
- Preferential treatment when disposing of qualifying business interests.
The detailed qualifying conditions are still being developed.
Although potentially valuable, this relief is unlikely to apply to every small business owner.
It appears the Chancellor is particularly keen on encouraging the next big technology company!
4. Business Mileage Allowances Are Increasing
There is some welcome news for individuals using their own vehicles for business journeys.
The approved mileage allowance rates are becoming more generous.
New Mileage Rates
| Business mileage | Previous rate | New rate |
|---|---|---|
| First 10,000 miles | 45p | 55p |
| Above 10,000 miles | 25p | 35p |
The 55p rate applies from April 2026 and has now been made permanent.
The higher mileage rate of 35p applies from April 2027.
These allowances can be used for qualifying tax-free mileage reimbursements to employees and directors.
Eligible self-employed individuals may also use simplified mileage expenses instead of claiming actual vehicle running costs.
For businesses and individuals undertaking substantial business travel, these changes could provide worthwhile savings.
5. National Minimum Wage Increases from April 2027
From 1 April 2027, the National Living Wage for employees aged 21 and over will increase to £13.21 per hour.
Other minimum wage rates will also rise.
| Employee age | Hourly rate from April 2027 |
|---|---|
| 21 and over | £13.21 |
| 18–20 | £11.27 |
| 16–17 | £8.31 |
| Eligible apprentices | £8.31 |
While welcome news for employees, the increases will mean additional costs for some employers.
Businesses should consider the impact on payroll budgets, particularly where several employees are paid at or close to the minimum wage.
At DMO Accountants, we’ll help our payroll clients prepare for these changes ahead of April 2027.
6. Trading Allowance Increasing to £3,000
There is some positive news for sole traders and individuals earning additional income from smaller businesses.
From 6 April 2027, the trading allowance will increase from £1,000 to £3,000.
This means individuals with qualifying trading income of up to £3,000 may be able to receive that income tax-free.
Where trading income exceeds £3,000, the allowance can be deducted instead of actual business expenses, where beneficial.
This could be particularly useful for:
- Individuals running smaller side businesses.
- People earning occasional self-employed income.
- Sole traders with relatively low business expenses.
The allowance cannot be claimed in addition to actual trading expenses, and eligibility restrictions apply.
7. Business Rates Relief for Retail, Hospitality and Leisure
The Budget includes additional support for qualifying retail, hospitality and leisure businesses in England.
From April 2027:
- The rateable value threshold for 100% Small Business Rates Relief will increase from £12,000 to £18,000 for qualifying properties.
- Tapered relief will be available for qualifying properties with rateable values up to £21,000.
- Additional support will be available for certain pubs, social clubs and live music venues.
These measures could provide meaningful savings for smaller businesses occupying eligible premises.
However, relief remains subject to qualifying conditions, including rules for businesses occupying more than one property.
8. Making Tax Digital: Further Changes and Penalty Protection
Making Tax Digital for Income Tax remains a significant development for sole traders and landlords.
The government has announced additional penalty protection for taxpayers joining MTD in April 2027, alongside further deferrals for certain taxpayer groups.
Importantly, the additional penalty protection does not remove the requirement to maintain digital records or submit quarterly updates.
At DMO Accountants, we’re continuing to prepare affected clients for the new requirements and will contact individuals where action is necessary.
For anyone hoping Making Tax Digital might quietly disappear, unfortunately, there’s no such luck!
9. Property Landlords: Higher Income Tax Rates Ahead
There were no major new announcements providing additional tax relief for private landlords.
However, previously announced increases to the taxation of property income are scheduled to take effect from April 2027.
The new property income tax rates will be:
| Tax band | Current rate | From April 2027 |
|---|---|---|
| Basic | 20% | 22% |
| Higher | 40% | 42% |
| Additional | 45% | 47% |
These changes could increase tax liabilities for landlords receiving taxable rental income.
We recommend considering their impact as part of regular tax planning.
10. Savings Income Tax: Rates Increasing
Previously announced changes will also increase Income Tax rates on savings income by two percentage points from April 2027.
| Tax band | Current rate | From April 2027 |
|---|---|---|
| Basic | 20% | 22% |
| Higher | 40% | 42% |
| Additional | 45% | 47% |
The Personal Savings Allowance remains unchanged.
These changes could affect individuals receiving significant taxable interest from savings held outside tax-efficient accounts such as ISAs.
11. Fuel Duty, Energy Bills and ISAs
The Budget also includes several measures affecting household finances.
Fuel Duty
The temporary 5p-per-litre reduction in fuel duty has been extended until July 2027.
Household Energy Support
The government has announced a £100 Household Energy Payment for eligible households in England, alongside an extension of the temporary VAT reduction on electricity bills.
Cash ISAs
The annual Cash ISA allowance will remain at £20,000.
This provides continued opportunities for individuals to shelter qualifying savings interest from Income Tax.
12. Electronic Invoicing and Future HMRC Reporting
Looking further ahead, the government is planning additional changes to how businesses report and pay tax.
These include:
Mandatory electronic VAT invoicing
From April 2029, businesses will be required to use structured electronic invoicing for relevant VAT transactions.
More frequent Self Assessment payments
The government intends to introduce more frequent tax payments for certain Self Assessment taxpayers.
Changes to VAT and PAYE collection
Further changes are planned to how HMRC collects VAT and PAYE liabilities.
Most of these measures are still some way off, with additional technical guidance expected before implementation.
HMRC remains committed to simplifying tax administration, primarily by giving businesses and accountants more opportunities to interact with HMRC.
Accountants everywhere are understandably delighted.
Our Verdict: What Does Budget 2026 Mean for You?
For most small business owners, Autumn Budget 2026 has been relatively uneventful.
And sometimes, that’s good news!
There are some welcome improvements, particularly around business mileage, the trading allowance and business rates relief.
However, there is little in the way of significant tax reductions for the average business owner.
Employers will continue to face pressure from rising employment costs, while landlords and individuals receiving taxable savings income face previously announced tax increases.
The reduction in Business Asset Disposal Relief is particularly disappointing for business owners considering retirement or selling their companies.
The longer-term direction is also clear: more digital reporting, more regular tax payments and increased HMRC compliance activity.
Do You Need to Take Action?
For the vast majority of businesses, there is nothing you need to do immediately as a result of the Budget.
However, if you’re considering selling your business, particularly before April 2027, we strongly recommend seeking professional advice.
Planning ahead could make a significant difference to your tax position.
For everyone else, we’ll continue monitoring developments and advising our clients where changes affect their circumstances.
Need Advice About the Autumn Budget?
At DMO Accountants, we help limited companies, sole traders, landlords and individuals understand their tax obligations and plan for the future.
Whether you’re considering selling your business, reviewing how you pay yourself or preparing for Making Tax Digital, we’re here to help.
Contact DMO Accountants today to discuss how the Autumn Budget 2026 could affect you.
In the meantime, we’ll get back to the thrilling world of tax returns, reconciliations and politely asking HMRC to answer the telephone.
Disclaimer: This article provides general information based on announcements made in the Autumn Budget on 28 October 2026. It should not be treated as personalised tax advice. Individual circumstances and subsequent legislation may affect how the measures apply.
Source: HM Treasury, Autumn Budget 2026.