In a Nutshell…
From 6 April 2027, the trading allowance triples to £3,000, a new Founders’ Relief cuts capital gains tax to 10% on up to £10m, and EMI2 doubles tax-advantaged share options to £120,000 per employee. The British Business Bank gets a £5bn uplift, including £1.4bn for equity funds and £450m for a new venture debt product. Raising the small business rate relief threshold from £12,000 to £18,000 means a further 70,000 retail, hospitality and leisure businesses will pay no business rates at all. Businesses should save almost £800m a year on admin, with a new Better Regulation Executive leading the work. On the cost side, plan for a 3.9% minimum wage rise, a lower Business Asset Disposal Relief limit and tougher HMRC collection powers.
John Healey used his first Budget to say he wants the UK to be “the best place in the world to start a business, scale it, and stay for the long term”. There’s a lot in it for small businesses, start-ups and growing firms in Birmingham, plus new powers and money for the West Midlands.
Most of the tax changes start on 6 April 2027, but there are a few that it’s well worth businesses and entrepreneurs being aware of now.
The big picture: no broad-based tax rises.
The Budget was delivered against a difficult global backdrop. The conflict in the Middle East has pushed up energy costs and borrowing costs, and the UK will spend £14bn more on debt interest this year.
Despite that, the Chancellor rejected broad-based tax rises, including:
- No increase to the headline rates of income tax, National Insurance or VAT.
- No change to tax on dividends or employment income.
- The 2024 Corporate Tax Roadmap commitments are maintained.
The economy is also showing resilience. The Office for Budget Responsibility has upgraded its 2026 growth forecast to 1.2%, growth reached 0.7% in the three months to August, and business investment is up 7.5% since the start of this Parliament.
With no rise in income tax, National Insurance, VAT or dividend tax, you can plan next year’s hiring and investment on the rates you already know.
What the Budget means for founders and start-ups
The government’s new “Entrepreneurship in the UK” prospectus sets out a tax offer for founders at every stage of growth:
| Measure | What changes | From |
|---|---|---|
| Trading Allowance | Tripled from £1,000 to £3,000 | 6 April 2027 |
| Founders’ Relief | 10% capital gains tax on up to £10m of lifetime gains | 6 April 2027 |
| EMI2 (formerly CSOP) | Tax-advantaged options per employee doubled from £60,000 to £120,000 | 6 April 2027 |
| Young Entrepreneurs Allowance | One year of living costs for young founders | To be confirmed |
The government will also simplify R&D tax reliefs and improve venture capital schemes so founders can raise money with more certainty.
From side hustle to limited company
If you’ve got a side hustle on the go, the changes to the Trading Allowance of £3,000 a year tax-free could give you room to test the idea properly. Once it starts to grow, most people set up a limited company, and that’s usually when they realise their home address is about to go on the public register. A registered office address solves that and gives you a proper Birmingham base from day one and we see plenty of businesses that use a registered or virtual address to protect their privacy whilst getting their business off the ground.
Access to finance
Getting funding is often the biggest barrier to growth, and this Budget aims to put more money behind it. The British Business Bank’s financial capacity gets a £5bn uplift, including £1.4bn to invest in equity funds backing high-growth businesses, and £450m to launch a brand new venture debt product, announced in today’s Budget. For many of us this may feel like a massive number that just doesn’t reach start-up’s or companies growing – but it’s well worth being aware of the funding and finance options out there.
Beyond the British Business Bank, the government expects the Mansion House Accord to unlock around £25bn of pension investment into UK private markets. The Sovereign AI Fund also gets an extra £60m to invest directly in promising UK AI companies.
Venture debt is a loan for fast-growing businesses, and today’s new £450m product should mean more of it is available to UK firms. Because you’re borrowing rather than selling shares, you keep more of your company. That matters even more now, because when you do sell, Founders’ Relief means you’ll pay just 10% tax on up to £10m of the profit.
Business rates: who pays less?
The biggest changes are for retail, hospitality and leisure (RHL) businesses in England. The Small Business Rate Relief threshold rises from £12,000 to £18,000, which means a further 70,000 RHL businesses will pay no business rates at all. Pubs, music venues and social clubs get an extra 20% reduction, and all other RHL properties will have their rates frozen for two years.
Taken together, every RHL business in England will see its business rates frozen in real terms, reduced or cut to zero from April. The government is paying for this by requiring online marketplaces to collect VAT on behalf of sellers. Gambling and vaping are being made to pay their way. Adult gaming centres and vape shops won’t get any of the new rates relief, and Machine Games Duty on higher-stakes machines rises from 20% to 25%, although pubs and seaside arcades are exempt.
If you run a shop, café, salon or leisure business in Birmingham, check your rateable value now. You could be paying nothing from April.
Cutting red tape
The Budget promises businesses almost £800m a year in savings through less admin, extended tariff suspensions and faster routes to test new technologies.
A new Better Regulation Executive will lead the work. It follows last week’s government response to the Small Business Regulatory Taskforce, which accepted 14 of the taskforce’s 15 recommendations. The one it turned down would have let dormant companies skip their annual confirmation statement. Alongside the response, the Prime Minister confirmed a pause on plans to make the smallest businesses file full profit and loss accounts at Companies House. For small limited companies, that’s the change that matters most.
Trade, tariffs and energy
Businesses that import goods have a practical deadline to note. A new window for tariff suspension applications opens on 11 November and runs to 3 February, and existing suspensions across chemicals, plastics, automotive and food and drink have been extended.
For exporters, the trade picture is improving. The UK-India trade deal came into force on 15 July 2026, the UK is now a full member of the CPTPP trade bloc, and an agreement with the Gulf Cooperation Council has been concluded.
Energy-intensive manufacturers should look at the British Industrial Competitiveness Scheme. It could cut electricity bills by up to 25% for 10,000 firms from April 2027, with a back payment for 2026-27. Applications close on 30 November. More widely, the government has promised that no new policy costs will be added to energy bills until a Cost Control Framework is in place in 2027.
Running costs and allowances
Today’s Budget also changes capital allowances, the rules that decide how much of what you spend on equipment, machinery and vans you can take off your taxable profits. For most small businesses, very little changes. The £1m Annual Investment Allowance still lets you deduct the full cost of most equipment in the year you buy it, and companies keep full expensing. The changes mostly help sole traders and partnerships spending beyond that. From 1 January 2027, the first-year allowance on new equipment rises from 40% to 50%, so you can deduct half the cost straight away. From April 2027, the writing down allowance, which spreads the rest of the cost over the following years, falls from 14% to 12% a year. Your accountant can tell you which applies to you.
The Budget also confirmed the mileage changes announced earlier this week. If you or your staff use your own cars for work, you can now claim more back tax-free. The 55p a mile rate for the first 10,000 business miles each year is now permanent, and every mile after that goes up from 25p to 35p. The government says someone driving 15,000 business miles a year could save up to £300 in tax.
Things to plan for
The biggest new cost for employers is wages. From 1 April 2027, the National Living Wage for workers aged 21 and over rises by 3.9%, from £12.71 to around £13.20 an hour, and the rate for 18 to 20-year-olds goes up to £11.27. That gives you five months to build it into staffing budgets.
Owners planning an exit should look closely at Business Asset Disposal Relief, where the lifetime limit is being cut from £1m to £500,000. The government is also modernising how company distributions are taxed, while protecting genuine commercial transactions such as family successions. Both are worth discussing with your accountant.
On compliance, HMRC is getting tougher powers to collect tax from people who ignore repeated contact, including taking money directly from bank accounts. Online marketplaces will collect VAT on behalf of their sellers, and from 2029 self-assessment will move to smaller, more regular payments instead of large annual bills.
People, skills and hiring
For the first time, self-employed fathers and partners will be able to claim parental pay, currently worth up to £194 a week for two weeks. Until now, self-employed dads couldn’t claim anything.
For businesses looking to hire, the Budget backs a Jobs Guarantee for eligible 18 to 24-year-olds on Universal Credit, and £100m for local apprenticeship services to match young people with local employers. Fast-growing companies will also benefit from skilled worker visa reforms, and changes to non-compete clauses will make it easier for people to move between jobs.
What it means for Birmingham and the West Midlands
The Budget sets out a roadmap to fiscal devolution, which the Treasury describes as the biggest transfer of power out of Whitehall in a generation. From April 2027, mayors will receive a share of business rates income and a permanent 20% share of business rates growth in their area. Nine strategic authorities will also get Business Rates Retention Zones, keeping 100% of growth above an agreed baseline for 25 years.
New Good Growth Funds will give mayors more flexible money to spend on local priorities, starting with £285m of seed funding in 2027-28 and a £1.5bn borrowing facility from April 2028. The West Midlands also receives a City Investment Fund to support city densification, and mayoral authorities share an extra £150m in capacity funding in 2027-28.
There’s support for technology adoption too. £30m will fund local AI partnerships with mayoral authorities, bringing together councils, universities and businesses, including SMEs, to adopt AI and build skills.
The Budget also backed the Black Country metro extension, and Rolls-Royce’s next-generation engine work brings investment across the Midlands. The West Midlands Combined Authority will decide where much of the new local money goes, so watch its announcements if you want a share.
How Grosvenor House can help
If you’re setting up a limited company, our registered office service keeps your home address off Companies House from the day you incorporate. We also have meeting rooms and coworking space in Birmingham for when you need to see clients or interview.
See our registered and virtual office plans or get in touch with the team to talk it through.
Frequently Asked Questions
What did Budget 2026 do for small businesses?
Key measures include a tripled £3,000 trading allowance, a new 10% Founders’ Relief, EMI2 share options of up to £120,000, a £5bn British Business Bank uplift, and business rates relief for 70,000 more retail, hospitality and leisure businesses.
When do the new founder tax reliefs start?
Founders’ Relief, the tripled Trading Allowance and the expanded EMI2 scheme all start from 6 April 2027.
What is Founders’ Relief?
Founders’ Relief is a new capital gains tax relief for company founders. It sets a 10% rate on up to £10m of lifetime gains.
What is EMI2?
EMI2 is the expanded version of the Company Share Option Plan (CSOP). From 6 April 2027, it doubles the value of tax-advantaged options an employee can hold from £60,000 to £120,000.
Who gets small business rate relief?
The higher threshold means a further 70,000 retail, hospitality and leisure businesses in England will pay no business rates. Other RHL properties have their rates frozen for two years.
What is changing with Business Asset Disposal Relief?
The lifetime limit is being cut from £1m to £500,000. Speak to your accountant if you are planning to sell your business.
About this article
This article was written and published on 28 October 2026, the day of the Autumn Budget. It draws on HM Treasury’s Budget 2026 document, the “Entrepreneurship in the UK” prospectus, the Chancellor’s Budget speech, and press coverage including The Telegraph.
The information is correct at the time of publication. Budget measures may change as they pass into law, and some details are still to be published. This article is general information only and is not financial, tax, legal or accounting advice. Your own situation may be different, so speak to a qualified accountant or tax adviser before making decisions about your business.