On 28 October 2026, John Healey stood up to deliver his first Budget as chancellor. While the announcements were relatively subdued compared with previous Budgets, there are some important changes to be aware of as a business owner.
Here are the key points you need to know.
Key tax break for business owners exiting is slashed and a new Founders’ Relief is introduced
Business Asset Disposal Relief (BADR) reduces the rate of Capital Gains Tax (CGT) you pay when you sell or dispose of all or part of your business.
The chancellor revealed plans to reduce the lifetime limit from £1 million to £500,000 from 6 April 2027. As a result, you may want to revisit your exit strategy and reassess your expected tax bill.
For some business owners, the introduction of Founders’ Relief could reduce their overall tax bill.
From 6 April 2027, the relief will offer a reduced CGT rate of 10% on up to £10 million in lifetime gains, provided you meet certain conditions.
The details have yet to be confirmed, but the consultation documents suggest the conditions will be more restrictive than those for BADR, as the relief aims to encourage founders of high-growth, innovative businesses. For example, proposed conditions include annualised employee growth of 25% over three years and investment of at least £1.5 million in qualifying research and development expenditure.
The chancellor unveiled incentives for British innovators
As well as the Founders’ Relief, Healey aimed to incentivise entrepreneurs to stay in Britain by introducing two additional measures.
First, the amount you can earn from a new venture without paying tax will be tripled. Known as the “trading allowance”, it will rise from £1,000 to £3,000 on 6 April 2027.
Second, the government plans to pilot a Young Entrepreneurs Allowance, which would provide successful applicants with support for their living costs during the first year of their businesses. The scheme aims to encourage those without access to family support to pursue their business ideas.
The National Minimum Wage will rise in April 2027
If your business has employees who earn the National Minimum Wage or National Living Wage, a 3.9% increase could affect your outgoings.
This means the hourly rate will increase to £11.27 from 1 April 2027 for 18- to 20-year-olds who are paid the National Minimum Wage. The National Living Wage will rise to £13.21 an hour for the 2027/28 tax year – the equivalent of £910 a year for a full-time worker.
As well as the salary increase for employees earning the National Minimum Wage or National Living Wage, the announcement may prompt you to review pay across your wider team. As a result, your payroll expenses could rise by more than you expected in the new tax year.
Thresholds for business rates relief increased for retail, hospitality, and leisure firms
The cost of living crisis is affecting businesses across many sectors, particularly retail, hospitality, and leisure, as consumers cut back on discretionary spending.
To ease some of the challenges these firms face, the chancellor confirmed plans to increase the threshold for 100% small business rates relief (SBRR) for retail, hospitality, and leisure firms from £12,000 to £18,000 from April 2027. This move is forecast to bring around 70,000 more high street businesses outside the scope of business rates.
In addition, the threshold for tapered relief for qualifying businesses will rise from £15,000 to £21,000.
A financial plan could improve your tax efficiency
These are just some of the announcements made in the 2026 Budget. If you’d like to explore the changes in more depth, we’re here to help.
Whether your personal or business finances are affected, a tailored plan could provide direction and help you identify allowances or exemptions that might reduce your overall tax bill. Please get in touch to arrange a meeting with us.
Please note:
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.