What does the 2026 Autumn Budget mean for your business?

On Wednesday 28th October, John Healey delivered his first Budget as Chancellor.

The Budget was delivered against a challenging economic backdrop. Inflation is forecast to rise above 4% in early 2027, largely driven by increasing energy prices. Government borrowing is higher than previously forecast with national debt standing at 94% of GDP, and borrowing costs have reached their highest level in decades. However, the Chancellor also pointed out signs of resilience. The UK recorded the joint-fasted growth in the G7 (alongside the US) in the first half of 2026, with an upturn in productivity and increased business investment.

The Chancellor described his budget as providing “breathing space for today, fresh hope for the future.”

We’ve set out a summary of 8 key points from the Autumn Budget that may impact SMEs and business owners across the country:

1. Capital gains and business exits: The Chancellor has not increased the headline rates of capital gains tax as was mooted prior to the budget. This means the rate will remain at 18% for basic rate tax payers, and 24% for higher and additional rate tax payers. However, the Business Asset Disposal Relief (BADR) lifetime limit will reduce from £1m to £500k from April 2027. Business owners who were considering selling all or part of their business in coming years may wish to accelerate such decisions in order to benefit from the higher levels of relief available until April 2027. A new Founders Relief is proposed to incentivise entrepreneurs to start, scale and keep their businesses in the UK, with a reduced capital gains tax rate of 10% applicable for qualifying disposals up to £10m.

2. Capital allowances: The £1m annual investment allowance (AIA) remains in place, providing full tax relief in the year of acquisition for qualifying plant and machinery. The First Year Allowance (FYA) for investments and purchases outside of the £1m AIA will increase from40% to 50% from April 2027, providing incentives for expenditure and investment in business assets. The main pool writing down allowance will reduce from 14% to 12% from April 2027.

3. Energy costs: Whilst the Chancellor announced support with energy costs for UK houesholds (including a £100 council tax rebate and a reduction in VAT on domestic electricity costs from 5% to 0% until July 2027), this support did not extend widely to UK businesses. However, the 5p fuel duty cuty will be extended to July 2027, providing some relief for businesses, particular those in haulage and transport sectors. This is complemented by the extension to the vehicle exercise duty holiday for heavy good vehicles of over 3.5 tonnes until July 2027. The previously announced British Industrial Competitiveness Scheme (BICS) will provide reduced electricity costs for eligible manufacturing businesses from April 2027.

4. UK SME business funding: The Budget confirms the previously announced £6.5bn expansion of the Growth Guarantee Scheme provided via additional British Business Bank capacity, supporting an estimated 33,000 businesses across the UK. The scheme is to be amended to support a broader range of businesses with turnover eligiblity increasing from £45m to £54m and maxiumum facility term increasing from 6 years to 10 years.

5. Business rates relief: From April 2027, the small business rate relief threshold for retail, hospitality and leisure businesses will increase from a rateable value of £12,000 to £18,000, meaning an additional 70,000 businesses will see their business rates cut to zero. Tapered relief will apply up to a rateable value of £21,000. Pubs, clubs and music venues will receive an additional 20% relief, bringing total relief from 15% to 35%. For all other retail, hospitality and leisure properties, business rates increases will be capped at the rate of inflation until April 2029.

6. Minimum wage increases:The National Minimum Wage (applicable to 18-20 year old) and the National Living Wage (applicable to workers aged 21 and over) will both increase by 3.9% to £11.27 and £13.21 per hour respectively from April 2027. These increases will affect around 2.3m workers.

7. Your First Home Scheme: UK housebuilders and businesses in the construction sector may benefit from a demand-side boost through the “Your First Home” scheme which will provide 20% equity loans to first-time buyers who may not otherwise be able to buy their own home. The support is estimated to total up to £4.7bn.

8. Fiscal devolution: The Fiscal Devolution Roadmap was announced, with plans to extend devolution across the country and giving Mayors, strategic authorities and local authorities greater powers over coming years. Policies and measures included in the Roadmap include local retention of income taxes and business rates, the introduction of the overnight visitor levy and the establishment of Good Growth Funds giving local leaders greater flexibility to invest in their own growth priorities.

What this means for you

For many SMEs, this budget is a mixed picture. There is some good news around business investment, access to funding and rates relief, which could make it easier to invest and grow. However, rising wage costs, ongoing energy bill pressures and changes to business exit reliefs mean cashflow and forward planning will remain just as important.

Contact us

We’re happy to help you review your investment plans, business sale options or financing solutions. Get in touch to speak to one of our experts on 0161 633 2548 or email info@pmdbusinessfinance.co.uk.