Autumn Budget 2026 for Small Businesses and Startups: What Changes and When

The Autumn Budget 2026 for small businesses was a budget of many small changes rather than one big one. Delivered on 28 October 2026, it left the headline rates of Corporation Tax, Income Tax, National Insurance and VAT untouched, but it moved a long list of reliefs, allowances and deadlines that matter to owner-managed companies and startups. Almost nothing bites before 1 January 2027, and most changes start on 1 or 6 April 2027 — which means the next five months are a planning window, not a waiting room.

Key takeaways for small businesses and startups

• Selling your business? The Business Asset Disposal Relief (BADR) lifetime limit halves from £1m to £500,000 for disposals from 6 April 2027.
• Building a high-growth company? A new Founders’ Relief offers a 10% CGT rate on up to £10m of lifetime gains from 6 April 2027 — but the qualifying conditions are tight.
• Granting share options? CSOP is renamed EMI2, with the individual limit doubling to £120,000 from 6 April 2027.
• Buying equipment? The main-rate First Year Allowance rises from 40% to 50% from 1 January 2027; the writing-down allowance falls from 14% to 12% from April 2027.
• Buying an electric company car? The 100% first-year allowance ends on 31 March 2027 for companies.
• Not VAT registered? From April 2027, overseas suppliers of services will charge you UK VAT directly.
• Unchanged: Corporation Tax (19%/25%), dividend tax rates, employer NICs (15%), the £90,000 VAT threshold and frozen personal tax thresholds.

Autumn Budget 2026 for small business: the dates that matter

Date	Change	Who it affects
1 Nov 2026	20% VAT on electricity at public EV chargepoints	Businesses running EVs
30 Nov 2026	Founders’ Relief technical consultation closes	Founders, early investors
1 Jan 2027	Main-rate First Year Allowance rises to 50%	Companies and sole traders investing in plant
31 Mar 2027	100% FYA for zero-emission cars and chargepoints ends (companies; 5 Apr for unincorporated)	Anyone buying an EV through the business
1 Apr 2027	NLW rises to £13.21/hr; R&D claim notification form scrapped; WDA falls to 12% (companies); RHL business rates relief expands	Employers, R&D claimants, high-street businesses
6 Apr 2027	BADR limit halves to £500k; Founders’ Relief starts; CSOP becomes EMI2 at £120k; trading allowance rises to £3,000; MTD for Income Tax extends to income over £30,000; mandatory payrolling of cars, vans, fuel and medical benefits	Founders, sellers, sole traders, employers
Apr 2027	Reverse charge limited to VAT-registered buyers	Non-VAT-registered businesses buying overseas services
Oct 2027	Online marketplaces collect VAT on UK sellers’ sales	E-commerce sellers
Apr 2028	MTD for Income Tax extends to income over £20,000; company distribution reform expected	Sole traders, landlords, company owners
Apr 2029	Mandatory e-invoicing for VAT invoices	All VAT-registered businesses

Selling or exiting: BADR halved, Founders’ Relief introduced

The short answer: if you expect to sell shares in your company for a gain of more than £500,000, the tax cost goes up for disposals from 6 April 2027 — unless you qualify for the new Founders’ Relief.

Business Asset Disposal Relief (BADR)

BADR stays at 18% for 2026/27 and 2027/28, but the lifetime limit on qualifying gains falls from £1m to £500,000 for disposals on or after 6 April 2027. Gains above £500,000 will be taxed at the main CGT rate of 24%. For a higher-rate taxpayer with £1m of qualifying gains, that is an extra £30,000 of CGT (6% on the £500,000 that loses relief).

Transitional rules are expected for contracts exchanged before 6 April 2027 but not completed by then, and for certain share reorganisations. If a sale, management buy-out or members’ voluntary liquidation is already in discussion, timing is now worth real money.

Founders’ Relief: who actually qualifies?

Founders’ Relief gives a 10% CGT rate on qualifying share disposals from 6 April 2027, up to a lifetime limit of £10m of gains per individual. It is aimed at founders and significant early investors in high-growth, innovative UK companies — not the typical owner-managed business. HMRC’s own estimate is that around 600 people a year will be able to claim it.

Under the proposals currently out for consultation, an individual would broadly need to:

• have held a significant equity stake (around 25% of the ordinary share capital) from when the company started trading or preparing to trade;
• have held the shares for at least five years and been UK resident for five continuous tax years; and
• be selling shares in a company that has shown sustained high growth — the published test is average compound turnover growth of 25% over three consecutive accounting periods within the ten years before the sale, starting from turnover of at least £10m.

The £10m limit is reduced by any BADR or Investors’ Relief claimed from 6 April 2027. The technical consultation closes on 30 November 2026, so the final conditions may change.

What this means for startups: if you are a founder of a venture-backed or scaling business, Founders’ Relief may be valuable at exit, but you need clean records now — share issues, cap table history, residence and turnover by accounting period. For most small companies, BADR at £500,000 is the relief that will actually apply. Talk to our startup accountants before any exit planning decision.

Share options for startups: CSOP becomes EMI2

From 6 April 2027, the Company Share Option Plan is rebranded as EMI2 and made more generous:

• the individual option limit doubles from £60,000 to £120,000;
• the interaction between the CSOP/EMI2 and EMI individual limits is removed, so employees can hold both in full;
• the EMI2 exercise period extends to 15 years, matching EMI;
• the EMI exercise window after a disqualifying event extends to 180 days;
• the EMI exception for Employee Ownership Trusts extends to companies arranging to become EOT-controlled.

This builds on April 2026’s EMI expansion (500 employees, £120m gross assets, £6m company option limit). The previously announced removal of the separate EMI grant notification also takes effect for grants from 6 April 2027 — the annual return remains.

What this means: startups that have outgrown EMI, or want to reward senior hires beyond the EMI individual limit, now have a credible tax-advantaged alternative. If you are planning grants above £60,000 under CSOP, wait until 6 April 2027.

SEIS, EIS and R&D: less admin for fundraising and claims

SEIS and EIS received technical fixes rather than headline changes. For shares issued from 6 April 2027, SEIS and EIS (or VCT) investment can take place on the same day without jeopardising relief, and exceeding an EIS investment limit will no longer automatically cost investors all of their relief. These remove two common traps in seed and Series A rounds. EIS income tax relief remains 30%, and SEIS remains 50%. Our SEIS and EIS founders’ guide covers the full rules, and our SEIS/EIS advance assurance service handles the application.

R&D tax relief: from 1 April 2027, companies will no longer need to submit a claim notification form. A simplified Additional Information Form follows in autumn 2027. First-time claimants were the most likely to lose a claim to a missed notification deadline, so this is a real win for early-stage companies.

Capital allowances: when to buy equipment

The short answer: for most small businesses nothing changes, because the £1m Annual Investment Allowance (AIA) and, for companies, 100% full expensing still give full relief in year one. The changes matter at the margins.

• 50% First Year Allowance from 1 January 2027. The main-rate FYA rises from 40% to 50%. Unlike full expensing, it is available to sole traders and partnerships and to assets bought for leasing. Cars, second-hand assets and assets for overseas leasing are excluded.
• Writing-down allowance falls to 12% from 1 April 2027 (companies) and 6 April 2027 (unincorporated businesses), slowing relief on existing main-pool balances. The special-rate pool stays at 6%.
• Electric company cars: the 100% FYA for new zero-emission cars and EV chargepoints ends on 31 March 2027 for companies and 5 April 2027 for sole traders. After that, a new EV company car gets 12% a year. Chargepoints can usually still be relieved through the AIA or full expensing.

What this means: if an electric company car is on your list, buying (not just ordering) before 31 March 2027 keeps the full first-year deduction. If you are a sole trader making large purchases beyond the AIA, the maths tilts towards January 2027 rather than December 2026.

Paying yourself and your team in 2027/28

Founder-director pay: Corporation Tax stays at 19% for profits up to £50,000 and 25% above £250,000, with marginal relief in between. Dividend tax rates for 2027/28 are unchanged at 10.75%, 35.75% and 39.35%, with a £500 allowance. Personal allowance and bands stay frozen at £12,570 / £50,270 / £125,140 to 2030/31. The salary-and-dividend mix most directors use therefore still works for 2027/28 — run your own numbers in our limited company tax calculator.

Savings and property income will be taxed more. From 6 April 2027, rates on property and savings income rise by four percentage points to 24%, 44% and 49%. Directors who extract surplus cash and hold it in personal savings, or who own buy-to-let property personally, will pay more. It strengthens the case for reviewing where surplus cash sits — inside the company, in pensions, or in ISAs (the £20,000 cash ISA limit is no longer being cut).

Employers:

• National Living Wage rises from £12.71 to £13.21 an hour from 1 April 2027 (18–20s: £11.27; 16–17s and apprentices: £8.31). Budget for the fully loaded cost, including 15% employer NICs and pension contributions — and stress-test hiring plans in our startup runway calculator.
• Employer NICs stay at 15% above £5,000, with the Employment Allowance at £10,500 (not available to companies whose only employee is a sole director).
• Mandatory payrolling of benefits starts 6 April 2027 for company cars, vans, fuel and medical benefits, with Class 1A NICs paid each pay period rather than annually. Other benefits follow from 6 April 2028. Check your payroll software is ready.
• Approved mileage rates are now 55p per mile for the first 10,000 miles, rising to 35p (from 25p) above that from 6 April 2027.

VAT changes that catch small businesses out

The £90,000 registration threshold is unchanged, but three measures matter:

• Reverse charge restricted (April 2027). Today, a UK business buying services from an overseas supplier accounts for VAT under the reverse charge. From April 2027, that only applies if you are VAT registered. If you are not, overseas suppliers — cloud software, advertising platforms, offshore contractors — will be expected to charge you UK VAT directly, which you cannot recover. Pre-revenue startups with heavy overseas SaaS spend should model whether voluntary VAT registration now makes sense.
• Online marketplaces (October 2027). Platforms will account for VAT on sales of goods by UK sellers who are VAT registered or who sell £90,000 or more on a single platform. B2B, second-hand and personal sales are excluded.
• E-invoicing (April 2029). VAT-registered businesses will need to issue and receive structured electronic invoices for domestic VAT invoices. Ask your software provider now when it will support the required format.

Sole traders and side businesses

• Trading allowance triples to £3,000 from 6 April 2027 — useful for founders testing an idea before incorporating.
• Making Tax Digital for Income Tax extends to sole traders and landlords with qualifying income over £30,000 from 6 April 2027, and over £20,000 from April 2028. The April 2027 intake will not receive late-submission penalty points for 2027/28 quarterly updates — but the updates still need to be filed. Read our Making Tax Digital guide and start keeping digital records now.
• Class 2 NICs: the Small Profits Threshold rises to £7,355 for 2027/28; the voluntary rate becomes £3.80 a week.

Business rates for high-street businesses

From 1 April 2027, qualifying retail, hospitality and leisure properties in England with a rateable value up to £18,000 pay no business rates (previously £12,000), with tapered relief up to £21,000. Pubs, social clubs and most live music venues get relief of 35% (up from 15%). Vape shops and adult gaming centres lose access to the RHL multipliers and Small Business Rate Relief. Check your rateable value with the Valuation Office Agency.

Your Autumn Budget 2026 action checklist

1. Planning a sale? Model your gain against the £500,000 BADR limit and consider completing before 6 April 2027.
2. Founder of a scaling company? Check eligibility for Founders’ Relief and respond to the consultation by 30 November 2026 if it affects you.
3. Buying an EV company car? Complete the purchase by 31 March 2027.
4. Granting share options? Review EMI vs EMI2 for grants after 6 April 2027.
5. Running payroll? Update for the April 2027 wage rates and mandatory benefit payrolling.
6. Not VAT registered with overseas suppliers? Model the cost of UK VAT from April 2027 against voluntary registration.
7. Sole trader over £30,000? Get MTD-compatible software before April 2027.

Frequently asked questions

Did the Autumn Budget 2026 change Corporation Tax?

No. The main rate stays at 25% and the small profits rate at 19% for the financial year starting 1 April 2028, with marginal relief between £50,000 and £250,000 profits unchanged.

What is Founders’ Relief?

Founders’ Relief is a new Capital Gains Tax relief giving a 10% rate on qualifying share disposals from 6 April 2027, up to £10m of lifetime gains. It is aimed at founders with a significant stake from the start of trading in high-growth UK companies, and its final conditions depend on a consultation closing on 30 November 2026.

What happens to Business Asset Disposal Relief from April 2027?

The rate stays at 18%, but the lifetime limit falls from £1m to £500,000 for disposals on or after 6 April 2027. Gains above £500,000 are taxed at the normal CGT rate of 24%.

What is EMI2?

EMI2 is the new name for the Company Share Option Plan (CSOP). From 6 April 2027, the individual option limit doubles to £120,000, the exercise period extends to 15 years, and the limit no longer interacts with EMI options.

Did dividend tax rates change in the Autumn Budget 2026?

No. For 2027/28, dividend tax rates remain 10.75%, 35.75% and 39.35% with a £500 dividend allowance. Rates on savings and property income rise by four percentage points from April 2027.

When does the 50% First Year Allowance start?

The main-rate First Year Allowance rises from 40% to 50% for qualifying new plant and machinery from 1 January 2027. It applies to companies and unincorporated businesses, but excludes cars and second-hand assets.

This article summarises announcements made at the Autumn Budget on 28 October 2026. Several measures are subject to consultation and legislation and may change. It is general guidance, not advice for your circumstances.