Autumn Budget 2026 for business owners and founders

A Budget to model against your own business

The Autumn Budget on 28 October 2026 gives owners and founders reasons to revisit exit plans, investment decisions and the cost of employing people. Our view is that the immediate priority is to model the changes against your own business, particularly where a sale, succession or major purchase is already under consideration. Several measures remain subject to consultation and legislation. The weeks before each change takes effect are worth more than the weeks after, and the sensible moves before a Budget, which are the ones that are right on their own merits, are set out in the companion note on the corridor moves worth making before the Budget.

Founder exits need a fresh calculation

From 6 April 2027, the government proposes Founders' Relief at a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders and significant early investors in high-growth, innovative UK companies. Proposed eligibility conditions cover the size of the early equity stake, holding and UK residence periods, and the company's activities and UK presence. Companies would also need to meet minimum size requirements and at least two of three tests covering turnover growth, employee growth and qualifying R&D expenditure. The detailed rules remain subject to consultation and legislation. This is not a general 10% exit rate for all founders, so the headline rate should not yet be built into an expected sale return.

At the same time, the lifetime gains limit for Business Asset Disposal Relief is due to fall from £1 million to £500,000 for disposals from 6 April 2027. Its qualifying rate is 18%. This matters particularly to owners who may not qualify for the new relief or who have already used some of their lifetime allowance. Claims to Business Asset Disposal Relief and Investors' Relief made from 6 April 2027 will also reduce the proposed £10 million Founders' Relief lifetime limit.

Owners with a transaction in progress should compare the expected net proceeds under the relevant rules and check the tax disposal date with their advisers. Special provisions are announced for certain contracts entered into before 6 April 2027 that have not completed, and certain share reorganisations and exchanges. The commercial terms, eligibility conditions and any anti-avoidance provisions all matter before deciding whether timing should change.

Restructuring and succession remain on the agenda

The Treasury plans to reform the taxation of company distributions to individual shareholders from April 2028, with draft legislation for consultation in 2027. It says the changes will protect capital treatment for genuine ownership changes, including family succession, and may improve relief for some demergers. Payments and loans from overseas companies are also within the reforms. Owners considering extracting accumulated profits or reorganising a group should review the proposals as they develop rather than assume today's treatment will continue.

Check the relief before committing to investment

The main-rate first-year capital allowance is set to increase from 40% to 50% for qualifying expenditure on new and unused main-rate plant and machinery from 1 January 2027. Cars and second-hand assets are excluded. The main-rate writing-down allowance will fall from 14% to 12% from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax. Compare the available reliefs, including full expensing and the Annual Investment Allowance where eligible, before fixing purchase dates. These allowances affect the timing of tax relief; they do not fund the purchase itself.

Employment costs and share incentives need joint planning

The National Living Wage for workers aged 21 and over will rise to £13.21 an hour from 1 April 2027, an increase of 3.9%. Employers should update payroll forecasts and consider the effect on pay differentials, employer National Insurance and pension costs.

For businesses competing for talent, the Company Share Option Plan, to be known as EMI2, is due to offer a £120,000 individual option limit from 6 April 2027, up from £60,000, with its exercise period extended to 15 years. Separate Enterprise Management Incentives changes include extending the exercise window after disqualifying events from 90 to 180 days from 6 April 2027. Review scheme eligibility, dilution and documentation before promising awards.

Research and development claims should become simpler

The government plans to remove the R&D Claim Notification Form requirement for claims made on or after 1 April 2027 and simplify the Additional Information Form from autumn 2027. This should ease administration, but companies will still need to substantiate qualifying activity and expenditure. Continue meeting the existing notification requirements until the change takes effect, and retain clear project and cost records.

Build tax changes into cash flow forecasts

From 6 April 2027, the announced rates on taxable savings income will be 24%, 44% and 49% across the UK, subject to applicable allowances and exemptions. The same rates will apply to property income in England, Wales and Northern Ireland. Owners with personal rental or interest income should update their forecasts alongside their business income.

Cross-border services also need attention. From 1 April 2027, the overseas-services reverse charge will apply only where the UK business customer is VAT registered. For affected supplies to non-VAT-registered UK businesses, the overseas supplier will instead need to charge and account for UK VAT. International groups should review supplier registration requirements, customer VAT status and pricing. This is particularly relevant to founders operating through international structures.

Mandatory e-invoicing for VAT invoices is planned from 1 April 2029, with detailed requirements still being developed. Separately, from April 2029, Self Assessment taxpayers liable to make payments on account will move to more regular in-year payments. Automated payments will be the default, with eligible taxpayers able to opt into payment through PAYE. Payment frequency, safeguards and transition arrangements remain under development. Businesses and owners should factor both developments into systems planning and cash flow forecasts.

What owners should do now

Before April 2027, revisit expected sale proceeds, planned capital spending and the full cost of employment. Review personal tax exposure alongside the company's position. If your business operates internationally, check how the VAT changes affect each entity and its customers. We can help owners and founders assess the implications for their business and coordinate the next steps.

Frequently asked questions

When does the Autumn Budget 2026 take effect for business owners?

The Budget was delivered on 28 October 2026, but most of the measures that matter to owners and founders take effect later, with the main changes landing from 6 April 2027. Founders' Relief, the Business Asset Disposal Relief cut, the share scheme changes, the National Living Wage rise and the new savings and property income rates are all dated to 2027, while the first-year capital allowance change starts on 1 January 2027. Several measures are still subject to consultation and legislation, so the detail may move. The practical point is that the planning window is now, in the period before the changes take effect, rather than afterwards.

What is the new Founders' Relief, and who qualifies?

Founders' Relief is a proposed new relief giving a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders and significant early investors in high-growth, innovative UK companies, from 6 April 2027. The proposed conditions cover the size of the early equity stake, holding and UK residence periods, and the company's activities and UK presence, and the company would need to meet minimum size requirements and at least two of three tests on turnover growth, employee growth and qualifying R&D expenditure. It is narrow and conditional, not a general 10% exit rate, so the headline rate should not be built into an expected sale return until the rules are settled.

How is Business Asset Disposal Relief changing?

The lifetime limit for Business Asset Disposal Relief is due to fall from £1 million to £500,000 for disposals made on or after 6 April 2027, while its qualifying rate stays at 18%. That matters most to owners who will not qualify for the new Founders' Relief, or who have already used part of their lifetime allowance. The two reliefs also interact, because claims to Business Asset Disposal Relief and Investors' Relief made from 6 April 2027 reduce the proposed £10 million Founders' Relief limit, so they cannot simply be stacked. An owner approaching a sale should model the position under each relief rather than assume the old £1 million limit still applies.

Should I bring forward a business sale before 6 April 2027?

It depends on the numbers for your own transaction, not on the headline dates. Where a sale is already in progress, compare the expected net proceeds under the current and the proposed rules, and check the tax disposal date with your advisers, because that date, rather than the completion date, often decides which rules apply. Special provisions have been announced for certain contracts entered into before 6 April 2027 that have not completed, and for certain share reorganisations and exchanges, and anti-avoidance provisions may apply to transactions rushed to beat a change. Timing should follow the commercial terms and the eligibility conditions, not the calendar alone.

What is changing for capital allowances and investment?

The main-rate first-year allowance rises from 40% to 50% for qualifying expenditure on new and unused main-rate plant and machinery from 1 January 2027, with cars and second-hand assets excluded. At the same time 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. Before fixing purchase dates, compare the reliefs available to you, including full expensing and the Annual Investment Allowance where eligible. These allowances change the timing of the tax relief on a purchase; they do not fund the purchase itself, so the cash position still has to work on its own terms.

What is EMI2, and how do the share scheme changes help?

The Company Share Option Plan is being rebranded as EMI2, and from 6 April 2027 its individual option limit is due to double from £60,000 to £120,000, with the exercise period extended to 15 years. Separately, the Enterprise Management Incentives window to exercise options after a disqualifying event is extended from 90 to 180 days for events from 6 April 2027. For a business competing for talent these are useful improvements, but awards still need to be planned against scheme eligibility, dilution and proper documentation, so the time to review a share plan is before awards are promised rather than after.

How does the Budget affect employment costs?

The main change is the National Living Wage for workers aged 21 and over rising to £13.21 an hour from 1 April 2027, an increase of 3.9%. The direct wage cost is only part of it, because a higher baseline wage feeds through to pay differentials, employer National Insurance and pension contributions, so payroll forecasts should be updated on the full cost rather than the headline rate. Employers planning headcount or pay reviews into 2027 should build the increase in now, alongside the share incentive changes, so that the reward package is costed as a whole.

What are the VAT and cash-flow changes owners should plan for?

From 6 April 2027 the rates on savings income across the UK, and on property income in England, Wales and Northern Ireland, become 24%, 44% and 49%, so owners with personal interest or rental income should update their forecasts. From 1 April 2027 the overseas-services reverse charge applies only where the UK business customer is VAT registered, and for supplies to non-registered UK businesses the overseas supplier must charge and account for UK VAT, which matters to international groups and to founders operating through international structures. Further ahead, mandatory e-invoicing for VAT invoices is planned from 1 April 2029 and Self Assessment payments on account move to more regular in-year payments from April 2029, both of which belong in systems and cash-flow planning now.

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This article provides general information only and does not constitute advice on any particular circumstances. Tax treatment depends on individual circumstances and applicable legislation. Announced measures may change during consultation and the legislative process. Obtain tailored advice before acting.