Autumn Budget 2026: What Small Businesses Need to Know — and What to Do Next

The Chancellor delivered the Autumn Budget on 28 October 2026, announcing changes that will affect businesses across the UK.

For small business owners, the challenge isn't simply understanding the announcements. It's knowing which changes will affect their business, when those changes take effect, and what they should be doing about them.

Some businesses will benefit from reduced business rates and new tax allowances. Others will need to prepare for higher employment costs, changes to capital gains tax relief and additional reporting responsibilities.

At Ledgers Accountants, we believe good financial planning starts well before changes take effect.

Here's our practical guide to the announcements that matter most to small businesses, and the steps worth taking now.

1. Business rates: Welcome relief for some high street businesses

One of the more positive announcements concerns business rates, particularly for businesses operating in retail, hospitality and leisure.

From April 2027, eligible properties in England will benefit from increased Small Business Rate Relief thresholds:

• 100% relief: The rateable value threshold increases from £12,000 to £18,000.

• Tapered relief: The upper threshold increases from £15,000 to £21,000.

• Additional support: Eligible pubs, social clubs and live music venues will receive increased relief, bringing the total to 35%.

• Greater predictability: A two-year real-terms freeze will limit increases in eligible retail, hospitality and leisure business rates bills.

The government estimates that approximately 70,000 additional businesses will pay no business rates as a result of the changes.

What should your business do now?

If you operate a shop, café, restaurant, salon or another qualifying high street business, review your property's rateable value and check whether you could benefit.

Don't assume that relief will be applied in the way you expect. Eligibility depends on your circumstances, including the property and any other premises you occupy.

Businesses should also review their forecasts for 2027/28 to understand how potential savings could improve cash flow.

2. Employment costs: Time to review your payroll budget

From 1 April 2027, the National Living Wage and National Minimum Wage will increase by 3.9%.

The new hourly rates include:

• £13.21 for workers aged 21 and over.

• £11.27 for workers aged 18–20.

• £8.31 for workers aged 16–17 and eligible apprentices.

While these increases will benefit employees, businesses with significant staffing costs will need to prepare.

The financial impact extends beyond the headline hourly rate. Higher wages can also affect employer National Insurance contributions, pension contributions and pay differentials between employees.

What should your business do now?

Review your staffing costs for the next financial year.

Consider whether existing budgets can accommodate the increases and whether your pricing, staffing arrangements or productivity targets need adjusting.

For businesses with tight profit margins, particularly in hospitality, retail and other labour-intensive sectors, early planning will be essential.

A payroll forecast can help you understand the full cost before the changes take effect.

3. Selling your business? Capital Gains Tax planning becomes more important

Business owners considering retirement, succession or selling their company should pay particular attention to changes to Business Asset Disposal Relief (BADR).

From 6 April 2027, the lifetime limit on qualifying gains eligible for BADR will reduce from £1 million to £500,000.

BADR currently allows qualifying business disposals to benefit from a reduced Capital Gains Tax rate of 18%.

The reduction means that owners making larger qualifying gains could face a substantially higher tax bill when selling their business.

The Budget also announced a new Founders' Relief, offering a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative businesses. Strict eligibility conditions will apply, so this is not a general replacement for BADR.

What should your business do now?

If you're considering selling, retiring or transferring ownership of your business, seek professional advice before making decisions.

The timing and structure of a disposal can make a considerable difference to the eventual tax liability.

However, bringing forward a transaction solely for tax reasons is not necessarily the right commercial decision. The overall circumstances, eligibility requirements and any anti-avoidance provisions must be considered.

4. Self-employed businesses: A higher trading allowance

From 6 April 2027, the Income Tax Trading Allowance will increase from £1,000 to £3,000.

This could benefit individuals earning relatively small amounts from self-employment, side businesses or other qualifying trading activities.

The allowance can simplify tax treatment for people with modest trading income, although it will not necessarily be the most beneficial option for everyone.

What should you do now?

If you operate a small side business or have additional trading income, review whether the increased allowance could apply to you.

Remember that claiming the trading allowance generally means you cannot also deduct actual business expenses against the same income.

Where expenses are significant, calculating profits in the usual way may produce a better result.

5. Making Tax Digital: Don't leave preparation until the deadline

Although Making Tax Digital for Income Tax is not a new Budget announcement, it remains one of the most important upcoming changes for sole traders and landlords.

Under the planned rollout:

• From 6 April 2027, qualifying individuals with annual gross self-employment and property income exceeding £30,000 will be brought into the system.

• From 6 April 2028, the threshold reduces to £20,000.

These changes will require affected taxpayers to maintain digital records and submit quarterly updates using compatible software, subject to the applicable rules and exemptions.

For businesses accustomed to preparing their accounts once a year, this represents a significant change in how financial information is recorded and reported.

What should you do now?

Check whether your qualifying income places you within the next phase.

If it does, start preparing your bookkeeping processes and software arrangements.

Moving to digital records early will make the transition considerably easier than waiting until the new requirements become compulsory.

6. Investment and equipment: Review your capital spending plans

The Budget also announced changes to capital allowances.

The main-rate first-year allowance will increase from 40% to 50% for qualifying expenditure from 1 January 2027, while the main-rate writing-down allowance will reduce to 12% from April 2027.

For businesses planning significant investment in machinery, equipment or other qualifying assets, these changes may influence tax planning.

However, many smaller businesses can already benefit from the Annual Investment Allowance or other existing reliefs.

What should your business do now?

If you're planning substantial capital expenditure, discuss the timing and tax treatment with your accountant before committing.

The most advantageous approach will depend on your business structure, profitability, available allowances and the type of assets being purchased.

Tax efficiency matters, but investment decisions should always make commercial sense first.

7. Online sellers: Prepare for changes to VAT collection

From October 2027, online marketplaces will become responsible for collecting VAT on qualifying sales made by UK businesses through their platforms.

The changes are intended to improve VAT compliance and create fairer competition between online sellers and traditional retailers.

Businesses selling through marketplaces such as Amazon and eBay should review how the new arrangements could affect their accounting processes, pricing and VAT reconciliation.

What should your business do now?

Check whether your business uses marketplaces that will be affected and monitor the implementation guidance.

If you're VAT registered, make sure your bookkeeping arrangements can accommodate the new collection and reporting processes.

The VAT registration threshold remains £90,000, so businesses approaching that level of taxable turnover should continue monitoring it carefully.

What should small businesses prioritise over the next 90 days?

Rather than attempting to respond to every Budget announcement, we recommend focusing on the changes most relevant to your business.

In the next 30 days: Understand your exposure

Review your current financial position, identify which Budget measures affect you and discuss any significant tax or cost implications with your accountant.

Within 60 days: Update your forecasts

Revisit cash flow projections, staffing budgets, planned investment and expected tax liabilities.

Where costs are increasing, assess whether your pricing and profit margins remain sustainable.

Within 90 days: Put your plans into action

Prepare for upcoming payroll changes, confirm eligibility for relevant reliefs, review digital bookkeeping arrangements and establish a timetable for any necessary changes.

Business owners considering retirement, succession or a sale should seek advice as early as possible.

The bigger picture: Good planning matters more than ever

Every Budget creates headlines, but the practical implications are different for every business.

A reduction in business rates might provide welcome breathing space for one company, while another faces increasing employment costs or needs to reconsider its longer-term tax strategy.

The important thing is not to react to every announcement in isolation.

It's to understand how the changes affect your overall financial position and make informed decisions accordingly.

At Ledgers Accountants, we help businesses look beyond the figures to understand what they mean in practice.

Whether you need help with tax planning, payroll, bookkeeping, cash flow forecasting or preparing for Making Tax Digital, our team can help you identify the right next steps.

Let's plan ahead together

Not sure how the Autumn Budget will affect your business?

A conversation now could help you avoid unnecessary costs, identify available reliefs and make better-informed decisions for the year ahead.

Contact Ledgers Accountants on 01202 488000 or visit www.ledgers.co.uk to discuss your business's circumstances.

This article provides general information based on the Autumn Budget announcements of 28 October 2026. Some measures are subject to legislation, detailed guidance and eligibility conditions. It should not be treated as individual tax or financial advice. Please seek professional guidance before acting on any of the measures discussed.