Budget 2026: what changes for businesses and when

What has changed

HM Treasury published the Budget 2026 document on 28 October 2026. The headline rates of Income Tax, National Insurance contributions and VAT do not change, and the main rate of Corporation Tax stays at 25%.

The main changes for businesses are to business rates in England, pay rates for workers, capital allowances, Capital Gains Tax reliefs for business owners, and how VAT is collected and reported. Most tax changes will be made law through Finance Bill 2026-27. Until that Bill is passed, the dates and figures below are the government's stated plans.

Business rates in England

From 1 April 2027, these changes apply to business rates in England:

• Pubs, social clubs and live music venues: relief rises from 15% to 35%. Live music venues with a rateable value of £1 million or more do not get the increase. Their bills are instead capped at CPI inflation in 2027-28 and 2028-29.
• Small Business Rates Relief for qualifying retail, hospitality and leisure properties: 100% relief applies up to a rateable value of £18,000 (currently £12,000), with tapered relief up to £21,000 (currently £15,000).
• Bill increases capped: for qualifying retail, hospitality and leisure properties, bill increases in 2027-28 and 2028-29 are capped at CPI inflation. The cap does not cover increases from improvements to the property, or from losing other reliefs such as improvement relief or hardship relief.
• Supporting Small Business scheme: extended for one year to ratepayers who received 2023 Supporting Small Business relief.
• Transitional Relief Supplement: the 1p supplement continues for 2 more years. It is paid by properties whose bills would otherwise rise by less than the transitional relief and Supporting Small Business caps.
• Vape shops and Adult Gaming Centres: no longer qualify for the retail, hospitality and leisure multipliers. Vape shops also lose Small Business Rates Relief.
• Valuation Tribunal fees: the £150 and £300 fees for business rates appeals are abolished for the 2026 rating list and future lists.

Your local council applies reliefs to your bill. Check your 2027-28 bill when it arrives and contact the council if a relief you qualify for is missing.

Pay rates for workers

From 1 April 2027, across the UK:

• National Living Wage (age 21 and over): £13.21 an hour
• National Minimum Wage, age 18 to 20: £11.27 an hour
• National Minimum Wage, age 16 to 17, and eligible apprentices: £8.31 an hour
• Accommodation offset: £11.53 a day

The current rates apply until 31 March 2027. From 1 April 2027 you must pay at least the new rate for each worker's age, starting from the first pay reference period that begins on or after that date.

Capital allowances

The main rate first-year allowance rises from 40% to 50% for expenditure incurred on or after 1 January 2027. Full expensing for companies continues.

The main rate writing down allowance falls from 14% to 12%, from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax. If your accounting period spans the change date, you will use a hybrid rate for that period.

Capital Gains Tax for business owners

The lifetime limit on gains that qualify for Business Asset Disposal Relief falls from £1 million to £500,000 for disposals made on or after 6 April 2027. Qualifying gains within the limit are still taxed at 18%.

A new Founders' Relief will give a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies from 6 April 2027. The qualifying rules are subject to a technical consultation.

From April 2028, the government plans to change how distributions from companies to individual shareholders are taxed. Draft legislation will be published for consultation first.

VAT collection and reporting

Online marketplaces (from 1 October 2027): marketplaces will collect and pay the VAT on sales by UK VAT-registered businesses, and by any other UK business selling £90,000 or more a year through that platform. This already applies to overseas sellers. It does not apply to personal sales, second-hand goods or business-to-business sales.

Services bought from overseas (from April 2027): the reverse charge will apply only to VAT-registered businesses. If your business is not VAT registered, an overseas supplier of services will charge you UK VAT in the normal way.

E-invoicing (from 1 April 2029): VAT invoices must be issued in a specified electronic format. HMRC will publish the full technical design by April 2028.

Direct debit (from April 2029): you will need a direct debit instruction for VAT return liabilities (from 1 April 2029) and PAYE liabilities (from 6 April 2029). You can still pay by other methods before a cut-off date. HMRC will use the direct debit to collect anything unpaid.

Making Tax Digital for Income Tax

If you join Making Tax Digital for Income Tax from 6 April 2027, you will not get penalty points for late quarterly updates during the 2027-28 tax year. You must still keep digital records and send updates.

From April 2029, Self Assessment payments on account will change to smaller, more regular payments through the year. The government will consult on the detail.

Other changes for specific sectors

• Gaming machines: Machine Games Duty rises from 20% to 25% for machine games with stakes over £1 or prizes over £100 from 1 April 2027. Lower-stake machines stay at 20%.
• Small alcohol producers: Small Producer Relief becomes more generous from 1 February 2027, with a larger discount for products below 3.5% ABV.
• Private hire vehicle operators: larger operators will charge 20% VAT on the full fare from 2 January 2028. The turnover threshold is subject to consultation, with £50 million as the lead option.
• Importers: tariff suspensions on 269 goods due to end in 2026 are extended. You can ask for tariffs on other products to be suspended between 11 November 2026 and 3 February 2027.