UK Budget 2026: What It Means for Your Small Business

Every few weeks another headline tells you what the Chancellor is “plotting”, and every time you wonder whether to move money, bring forward a sale or just brace yourself. I understand the temptation. I’d still tell you to slow down.

Budget 2026 is on Wednesday 28 October, and it’s Chancellor John Healey’s first Budget. Much of what affects your business is already fixed, and the rest is guesswork until he’s on his feet.

The headline numbers:

I wrote this on 20 October 2026, before the Budget. I’ll update it with what was announced after 28 October.

Budget 2026 at a glance: locked in vs still up for grabs

The top half you can plan around. The bottom half is where the headlines live, so don’t make a tax decision this week because of a newspaper story. Make it because of a rule that’s on the statute book.

What’s already locked in before Budget 2026

Start with what you can plan around today. Most of it is already in law or formally announced with a date. Announcements usually take effect from a future date, so what’s set for this tax year rarely moves.

The dividend rate rise is the one directors feel first. Finance Act 2026, section 4 applies the new rates to 2026-27 and every year after, so there’s no rate advantage in paying yourself early or late before 28 October.

Other fixed points worth having in your diary:

• Thresholds stay frozen. The Budget 2025 document announced a longer freeze on income tax and NIC thresholds, including the employer secondary threshold, to April 2031. Pay rises and inflation drag more of your income into higher bands every year.
• Corporation tax stays at 25% on profits over £250,000, with the 19% small profits rate up to £50,000 and marginal relief in between.
• Capital allowances changed. The main-rate writing-down allowance fell from 18% to 14% in April 2026, and a 40% first-year allowance on main-rate assets (not cars) started on 1 January 2026.
• Business Asset Disposal Relief is 18% on the first £1 million of lifetime gains, for disposals from 6 April 2026.
• Pensions join inheritance tax for deaths on or after 6 April 2027, under sections 66 to 71 of the Act.
• The National Living Wage is £12.71 for over-21s since April 2026.
• Household electricity VAT is 0% since 1 October 2026. It’s a cost of living measure for households, not VAT-registered business supplies.
• Council tax gets a surcharge on English homes worth £2 million or more from April 2028.

Landlords and the self-employed face the next two big dates. Property income rates rise by 2 points from 6 April 2027, though finance cost relief moves to 22% too. Savers see a change that day as well: the cash ISA limit falls to £12,000 within the £20,000 ISA allowance, and over-65s keep £20,000.

And Making Tax Digital for Income Tax applies from 6 April 2027 if your 2025-26 gross self-employment and property income tops £30,000. That’s income before expenses, as HMRC’s qualifying income guidance explains.

If you want the background on how we got here, our Autumn Budget 2025 analysis covers the measures that now sit in the Finance Act.

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Budget 2026 rumours: what’s being talked about before 28 October

Now the guesswork. Nothing in this section is government policy. It’s what the press, think-tanks and business groups are saying ahead of the Budget, and I’d treat all of it as noise until the Chancellor says otherwise.

The UK government hasn’t helped anyone guess. On the Budget’s purpose, Chancellor John Healey has said it will move money and power out of Westminster. He’s also said “fiscal discipline was my first priority as Chancellor” in his Growth Speech, on GOV.UK. The same speech pledged a 25% cut in the burden of business regulation by the end of Parliament, and he and Prime Minister Andy Burnham are in lockstep on meeting the fiscal rules. Translation: he has to find money somewhere, and the question is where.

The money question

Think tanks such as the IFS have argued that spending pressures, not the headroom figure alone, are the Chancellor’s main Budget challenge. The ONS public finances figures for August show borrowing and the current budget deficit running above the OBR’s forecast. The Chancellor’s IMF speech on 15 October linked the Middle East and Ukraine conflicts to higher energy prices and borrowing costs.

Reports say Burnham and Healey have repeated the manifesto pledge not to raise the main rates of income tax, VAT or employee NIC. So the guessing is about smaller tax increases elsewhere. Those are ideas from outside the Treasury, not a proposal, and I’d treat every leak and headline as noise. The OBR’s economic forecasts land on the same day, so wait for those too.

I’d add one honest observation about capital gains. Capital Gains Tax (CGT) is 18% and 24% on most gains since 30 October 2024. Press reports conflict on what happens next, so I won’t guess. Past changes took effect on Budget day itself, so don’t assume a quiet transition period.

Online sellers and business rates

Reports suggest the Treasury is looking at making online marketplaces collect VAT from sellers above £90,000 of annual revenue. The Times is said to be the source. What’s confirmed is narrower but real: the UK government is consulting on making marketplaces more responsible for stopping non-compliant sellers avoiding tax. If you sell through Amazon, eBay or Etsy, that deserves your attention, and it helps to know what HMRC already knows about online sellers.

The same release confirms an extra 20% cut in business rates bills for pubs, clubs and live music venues from 2027-28. It also says the government will “return to our commitment to reform the wider business rates system, including Small Business Rates Relief” at the Budget. Reports suggest changes are being considered, but there’s no detail, so that’s talk, not policy.

Employer costs

The CBI has asked for the employer NIC threshold to rise from £5,000 to £6,000. I’d love that for you, but I wouldn’t budget on it. Our guide to the true cost of employing someone in 2026-27 shows what staff really cost today.

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What to do before the Budget

None of this needs a crystal ball. It needs a few tidy-up jobs that make sense whatever the next Budget brings.

1. Check your MTD position now. Add up your 2025-26 gross self-employment and property income. Over £30,000 and you start in April 2027. Over £20,000 on 2026-27 figures and you start in April 2028. Get your records digital early so April isn’t a scramble.
2. Review your salary and dividend split. The 2026-27 rates are fixed, so what matters is your reserves, your £500 allowance and where income lands in the bands. Do it before your year-end, not on the back of a headline.
3. Landlords should plan for April 2027. Look at how ownership is split between you and your spouse, and what the 22% finance cost relief does to your numbers. Incorporation has capital gains and stamp duty costs, so model it properly rather than rush.
4. Check your pension and inheritance position. The annual allowance is £60,000 with three years of carry forward. Two pension changes are already in law: pensions come into inheritance tax in April 2027, and salary sacrifice NIC gets a £2,000 cap from 2029-30. Review nominations and spending plans with your adviser, but don’t restructure on speculation.
5. Tidy your VAT and sales records if you sell online. The threshold is £90,000, and clean figures help whichever way the marketplace consultation goes.
6. Look at your rateable value. If you pay business rates, check your rateable value and any relief you’ve missed, then wait for the Budget detail.

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What not to do

Don’t sell your business because of a Budget 2026 rumour. Business Asset Disposal Relief has already risen to 18%, and the Budget could change the position without a transition period, so a sale before or after 28 October isn’t a protected position either way. Time a sale for commercial reasons, not headlines.

Don’t pull spending forward just for tax. The 40% first-year allowance is already available, and buying kit you don’t need to save tax means spending £1 to save a few pence.

Don’t pay yourself an unplanned dividend on a hunch. The rate is fixed for this year, so there’s nothing to beat.

I’ve watched owners make expensive decisions in October on rumours that never materialised. The checklist above keeps you on the right side. Wait for the Finance Bill before you restructure anything.

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Talk to us before you decide