The Autumn Budget 2026 has been delivered, setting out the Government’s latest plans for taxation, public finances, business investment and economic growth.
Chancellor John Healey described a Budget built on “fiscal discipline” and intended to give “breathing space” to working people and British businesses. That reflects the wider context of continued cost pressures, with the Government seeking to support households and businesses while remaining within its fiscal rules.
The announcements range from changes affecting business investment and employment costs to business exits, savings, pensions and personal tax. Below, we summarise some of the headline measures
What changed in the Autumn Budget 2026?
Changes to capital allowances
The Government confirmed that full expensing will be maintained, continuing to allow qualifying companies to deduct 100% of eligible main-rate plant and machinery expenditure from taxable profits in the year the investment is made.
The Chancellor also announced an increase in the main rate first-year allowance from 40% to 50%, alongside a reduction in the main rate writing-down allowance from 14% to 12%.
Businesses planning capital expenditure should model the timing of proposed investments carefully. Although an enhanced upfront allowance can accelerate tax relief, a lower ongoing writing-down allowance could affect the relief available where expenditure does not qualify for full expensing or where a first-year allowance is not claimed.
The Government has published a summary of responses to the tax treatment of Predevelopment Costs Consultation. They have confirmed that they will work with stakeholders to explore any improvements that can be made to HMRC guidance and whether legislative changes could provide greater clarity on the application of the existing capital allowances rules in relation to predevelopment costs.
The statutory definition of a finance lease will be expanded in the anti-avoidance sections of the Capital Allowances Act, for lease and leaseback arrangements, with changes being effective from 28 October 2026. Businesses should review leasing agreements to check if the expansion in the definition of a finance lease now captures their leasing arrangements.
New founders’ Capital Gains Tax relief
The Government announced a new Founders’ Relief, providing a 10% Capital Gains Tax rate on qualifying disposals of shares, up to a lifetime limit of £10 million of gains per individual. The relief is aimed at founders and significant early investors in high-growth, innovative UK companies and is intended to apply to qualifying disposals made on or after 6 April 2027. The detailed eligibility conditions are subject to consultation.
Business Asset Disposal Relief lifetime limit reduced
From 6 April 2027, the lifetime limit for gains qualifying for Business Asset Disposal Relief (BADR) is to be reduced from £1 million to £500,000.
This could have an impact on entrepreneurs and shareholders planning to sell or transfer a qualifying business. Under the existing rules, BADR can reduce the CGT payable on qualifying business disposals, subject to a £1 million lifetime limit and detailed eligibility conditions.
Business owners already considering an exit, succession, management buyout or family transfer should assess whether the reduced lifetime limit could change the anticipated tax cost of that transaction. However, decisions should not be accelerated solely in response to the headline announcement without first confirming transitional arrangements and wider commercial and tax consequences.
National Minimum Wage and National Living Wage increases
Both the National Minimum Wage and National Living Wage are set to increase by 3.9%.
For employers, the direct cost will extend beyond hourly pay. A higher wage floor can also increase employer National Insurance contributions, pension contributions, holiday pay and the cost of maintaining appropriate pay differentials between roles.
Employers should update payroll budgets and workforce forecasts ahead of the new rates taking effect. They should also check that salary-sacrifice arrangements, deductions for items such as uniforms or equipment, and unpaid working time do not inadvertently bring pay below the applicable statutory minimum.
Enterprise Management Incentives
The Government has continued its expansion of the Enterprise Management Incentive (EMI) scheme by:
- Increasing the company option limit from £3m to £6m.
- Increasing the gross assets limit from £30m to £120m.
- Increasing the employee threshold from 250 to 500 employees.
- Extending option exercise periods from 10 to 15 years.
This is particularly significant for:
- Scale-up businesses
- Technology companies
- Private equity-backed businesses
- High-growth organisations competing for talent
Businesses previously excluded from EMI may now be eligible.
EMI2 - The Company Share Option Plan (CSOP) will be known as EMI2 from 28 October 2026. This will be available to all companies regardless of size and sector, and from April 2027:
- The individual limit will increase from £60,000 to £120,000
- EMI and EMI2 will operate independently of one another as the interaction between them will be removed
- The period where EMI2 options can be exercised whilst retaining their tax advantages will increase from 10 to 15 years
Increased mileage allowances
The Government has confirmed that the approved mileage rate of 55p per mile for the first 10,000 business miles will be maintained, while the rate above 10,000 miles will increase from 25p to 35p per mile from April 2027. Around three million workers are expected to benefit.
Not all employers will reimburse mileage at these rates and if an employee is reimbursed below the approved rate they can still claim tax relief on the balance up to the approved mileage allowance confirmed in the budget.
This is a practical measure that puts additional money into employees' pockets without creating significant additional compliance obligations for employers.
Cash ISA allowance reduction abandoned
The Chancellor has abandoned plans to reduce the annual Cash ISA allowance from £20,000 to £12,000 for savers under 65 from April 2027.
While this maintains flexibility for savers, the appropriate balance between cash and investments will still depend on individual objectives, timescales, access requirements and attitude to investment risk.
New Starter ISA for first-time investors
The Chancellor also announced plans for a new Starter ISA intended to encourage and reward people making their first investments. For first-time investors, the important question will be how the new product compares with existing ISA options and whether it supports their wider savings and investment objectives. The detailed eligibility criteria, contribution limits and incentive structure will therefore be important.
Pension Tax Allowance
A new Pension Tax Allowance was announced to ensure that pensioners whose income is no higher than the full new State Pension do not pay Income Tax. Pensioners with private pensions, employment income, savings interest, rental income or investment income may still have a tax liability depending on their total taxable income.
More regular Self Assessment payments
The Government announced further reform of Income Tax Self Assessment, with the intention of moving towards smaller and more regular payments.
This continues the direction set out in the Government’s earlier consultation on more timely payment of Self Assessment liabilities, including possible reform of payments on account and, from April 2029, greater use of PAYE to collect forecast liabilities from some taxpayers who have both PAYE and Self Assessment income.
More frequent payments could help some taxpayers manage their liabilities and avoid a larger January payment. However, the change may also affect cash-flow planning, particularly for the self-employed, landlords and people whose income fluctuates during the year.
Tax rates on property and savings
There will be a further increase of two percentage points on the tax rates on property and savings from April 2027. For taxpayers in England, Wales and Northern Ireland, this will increase the basic rate to 24%, higher rate to 44%, and the additional rate to 49%.
Business rates relief for retail, hospitality and leisure
The Chancellor announced an increase in business rates relief for eligible smaller retail, hospitality and leisure businesses in England, with the relevant threshold rising from £12,000 to £18,000.This could provide welcome support for high street businesses and other eligible operators facing continued pressure from wage costs, energy bills and wider operating expenses.
Temporary increase in the Bank Corporation Tax Surcharge
The Bank Corporation Tax Surcharge will temporarily increase from 3% to 6% for 15 months. While the measure applies directly to banks rather than their customers, businesses and individuals should be aware of the potential wider implications. A higher tax burden on lenders could influence the availability or pricing of finance, lending criteria and returns offered to savers if banks seek to absorb or pass on some of the additional cost.
Improving R&D tax reliefs
The Government will remove the research & development (R&D) tax credit Claim Notification Form from 1 April 2027 and simplify the Additional Information Form from autumn 2027. The changes should reduce some of the administrative burden associated with making an R&D tax relief claim. However, businesses will still need to ensure that claims are technically robust, supported by appropriate evidence and meet the relevant eligibility requirements.
Extension of temporary reduction in VAT on supplies of electricity
The Government introduced a temporary zero-rate of VAT on electricity supplies from 1 October 2026 to 31 March 2027. This temporary reduction will now be extended until 30 June 2027.
Support for smaller brewers and cider makers
A £10 million alcohol duty relief package was announced for approximately 2,000 smaller British brewers and cider makers. For eligible producers, the measure could provide some relief against continued cost pressures.
Customs Rules for low-value imports
Originally announced for implementation in 2029, this measure is now to come into force from October 2028 at the latest. The Government is abolishing the £135 low value import Customs duty relief, which sees parcels valued at less than £135 imported without Customs duty. This will be replaced by a new Customs regime for low-value e-commerce products.
Carbon Border Adjustment Mechanism (CBAM) extension of scope consultation
Originally announced in Budget 2026, and with CBAM due to start 1 January 2027, the Government has announced a new consultation on expanding CBAM to increase from the initial five sectors to include refinery products, potentially impacting Oil & Gas, Petrochemical and Chemical firms. The consultation opens today and will close 20 January 2027.
Stronger HMRC tax collection powers
Additional funding will be provided to HMRC, alongside stronger powers to collect overdue tax. For businesses and individuals, this further underlines the importance of good tax governance, accurate records and addressing potential liabilities early. Those already experiencing difficulty meeting tax obligations should avoid waiting for HMRC enforcement action before considering their options.
What should you consider now?
Following the Budget, priorities will vary according to individual circumstances. However, businesses and individuals may want to consider:
- Capital investment: whether planned expenditure should be revisited in light of the changes to capital allowances.
- Employment costs: the impact of higher National Minimum Wage and National Living Wage rates on payroll budgets and wider workforce costs and wider employer reporting obligations, such as expenses and benefits and mandatory Payrolling of Benefit in Kind from April next year.
- EMI 2 For businesses that could qualify for the expanded EMI scheme consider the benefits the scheme can bring to employees and employers.
- Business exits and succession: founders, entrepreneurs and other business owners considering a future sale or transfer should assess how the new founders’ relief and changes to BADR could affect their expected tax position and the timing and structure of an exit.
- Personal savings and investments: whether the Cash ISA announcement and new Starter ISA affect existing savings and investment plans.
- Retirement planning: how the new Pension Tax Allowance interacts with pensions and other sources of retirement income.
- Tax payments and compliance: whether changes to Self Assessment payment arrangements or increased HMRC enforcement activity could affect cash flow or require earlier action.
- Existing plans: how today's measures interact with tax and pension changes already scheduled for April 2027 and beyond.
- Property and savings income: Landlords and savers should consider how the higher rates applying from April 2027 could affect their tax position and cash flow. Landlords in particular may want to review the expected returns, financing and longer-term strategy for their property portfolios.
Above all, avoid making decisions based on a headline announcement alone. The effective dates, transitional provisions and interaction between different measures can materially change the outcome.
We’re here to help
The Autumn Budget will affect businesses and individuals in different ways, and the significance of individual measures will depend on your circumstances.
Our tax specialists and financial planners are reviewing the announcements and supporting documentation in detail. They can help you understand what the changes mean for you, identify where action may be required and plan for what comes next.
If you would like to discuss how the Autumn Budget 2026 could affect you or your business, get in touch with our specialist team.
