Tax
UK Budget 2026: What Small Businesses Should Do Next
The UK Budget announced on 28 October 2026 contains changes that could affect your next payroll forecast, rental profit and business investment. For small businesses in Basildon, Leigh on Sea and across the UK, the useful question is: what needs to change in my numbers, and when?
This special edition was prepared on 29 October 2026 using HM Treasury’s Budget document. It separates announced future measures from current obligations. Measures requiring legislation remain subject to that process, and eligibility matters. The practical suggestions below are our interpretation of the announcements, rather than government instructions.
Employers: plan for April 2027 wage increases
From 1 April 2027, the announced National Living Wage is £13.21 an hour. The rates for ages 18 to 20 and for ages 16 to 17 and eligible apprentices are £11.27 and £8.31 respectively. Check each worker’s age and apprentice eligibility before selecting a rate.
For an illustrative employee working 35 paid hours each week, the move from £12.71 to £13.21 adds £17.50 to weekly gross pay, or £910 over 52 weeks. Employer pension and National Insurance costs may add to that figure, depending on circumstances. Review prices and staffing budgets before April, rather than waiting for the first higher payroll bill.
Business mileage: check the date as well as the rate
The Budget makes the 55p rate for the first 10,000 qualifying car or van business miles permanent. Its policy table gives 6 April 2026 as the start date for that rate. The rate above 10,000 miles increases to 35p from 6 April 2027. Do not apply the later rate to an earlier tax year.
For a qualifying 15,000-mile year from April 2027, the mileage amount would be £7,250: £5,500 for the first 10,000 miles plus £1,750 for the remaining 5,000. This is an allowable mileage amount under the relevant rules, not a £7,250 tax saving. Keep journey records and check whether mileage or actual cost rules apply to your circumstances.
Landlords and savers: rebuild the 2027/28 tax forecast
From 6 April 2027, announced property income tax rates are 24%, 44% and 49% in England, Wales and Northern Ireland. Savings income rates are also announced at 24%, 44% and 49%, applying UK wide. These are a further two percentage points above the increases previously announced for April 2027, rather than a fresh two point change from today’s rates.
If you personally receive rent, ask for a forecast based on taxable property profit and your wider income. Gross rent is not the same as taxable profit. Do not apply personal property income rates directly to a limited company’s rental income, or assume that moving a property into a company automatically saves tax.
Side businesses: a higher trading allowance starts next April
The government plans to increase the Trading Allowance from £1,000 to £3,000 from 6 April 2027. That is relevant to small side businesses, but it does not retrospectively change the allowance for the 2025/26 return due in January 2027.
Keep records even if turnover is modest. The allowance has eligibility rules and interacts with expense deductions; it is not simply an extra £3,000 deduction on top of every business’s actual expenses. Review your position for each tax year separately.
High street businesses: check the property, not just the headline
For qualifying retail, hospitality and leisure properties in England, the announced Small Business Rate Relief thresholds rise from April 2027: full relief up to a rateable value of £18,000 and tapered relief up to £21,000. Pubs, social clubs and qualifying live music venues are also due increased relief, with exceptions for the largest venues.
The announcement also caps qualifying sector bill increases at CPI inflation for two years, subject to exclusions. A real terms freeze does not mean every cash bill stays unchanged. Check your property’s rateable value, eligibility, other premises and council bill before putting a saving into your cash flow forecast.
Online sellers: prepare for marketplace VAT collection
From October 2027, online marketplaces are to collect VAT on qualifying sales by UK VAT registered businesses and other UK businesses meeting a £90,000 annual sales threshold per platform. The Budget excludes personal sales, second hand goods and business to business transactions from these rules.
This is not a statement that every marketplace seller must immediately charge VAT. Review platform sales, existing VAT registration and the eventual implementation guidance. Keep gross sales, fees, refunds and tax deductions separate in your bookkeeping so platform payouts can be reconciled.
Buying equipment or selling your company? Review the timing
Announced capital allowance changes include a 50% main rate first year allowance for qualifying expenditure from 1 January 2027 and a 12% main rate writing down allowance from April 2027. The April start date differs between Corporation Tax and Income Tax. Compare the reliefs available to your business before deciding when to buy.
The Business Asset Disposal Relief lifetime limit is also due to fall from £1 million to £500,000 for disposals from 6 April 2027. A separate proposed Founders’ Relief targets qualifying high growth innovative companies; it is not a replacement available to every small business owner. Obtain transaction specific advice before agreeing a sale.
Your practical next step
Put payroll, mileage, rental income, business rates and planned purchases into a dated checklist. Update a rolling cash flow forecast, prioritising the changes that actually apply to you. A Budget headline only becomes useful when you can see its effect on the next twelve months.
EvolveBooks can help you review the figures and organise bookkeeping, payroll and tax planning in English or Spanish. Contact us with your business type and the changes you are concerned about so we can identify the right next step.