The Autumn Budget 2026, announced on 28 October, included several changes that could affect small businesses, sole traders and limited companies.
Among the announcements are a higher tax-free trading allowance, changes to tax relief on business equipment and simpler rules for claiming Research and Development (R&D) tax relief.
Some changes could make life easier for smaller businesses, while others may affect how you plan future investments or the sale of your business.
Here’s a closer look at the main announcements and what they could mean for you.
Trading Allowance Increases to £3,000
From 6 April 2027, the trading allowance will increase from £1,000 to £3,000.
The trading allowance lets individuals earn a certain amount from self-employment or other qualifying trading activities without paying income tax on it.
For example, if you earn £2,000 a year from occasional freelance work or a small side business, this income could fall entirely within the new allowance.
The increase could be particularly helpful for people who run a small business alongside their employment or earn extra income from occasional work.
The Government is also increasing the Self Assessment reporting threshold for trading income to £3,000, which could mean less paperwork for some people.
One thing to remember: The trading allowance is an alternative to claiming your actual business expenses. If your expenses are higher than the allowance, claiming those expenses instead may work out better. Other tax reporting obligations may also still apply.
Corporation Tax Rates Stay the Same
There are no changes to the main Corporation Tax rates for 2027/28 and 2028/29.
The rates remain:
| Company profits | Corporation Tax rate |
| £50,000 or less | 19% |
| Between £50,000 and £250,000 | Between 19% and 25% |
| £250,000 or more | 25% |
Companies with profits between £50,000 and £250,000 may qualify for marginal relief. This means their Corporation Tax bill increases gradually rather than jumping straight from 19% to 25%.
These profit limits can be lower if your company is connected to other companies or has a shorter accounting period.
Although the rates aren’t changing, it’s still worth keeping track of your expected profits so you can plan for your Corporation Tax bill.
Changes to Tax Relief on Business Equipment
If your business is planning to buy machinery, equipment or other qualifying assets, two changes to capital allowances are worth knowing about.
Capital allowances allow businesses to reduce their taxable profits by claiming tax relief on certain purchases.
The Budget announced:
- From 1 January 2027: The main first-year allowance will increase from 40% to 50%. This means eligible businesses can deduct more of the cost of qualifying equipment in the year it’s purchased.
- From April 2027: The main writing-down allowance will fall from 14% to 12%. This means businesses using this allowance will claim tax relief on the remaining cost of qualifying assets more slowly.
For businesses investing in equipment, these changes could affect when tax relief is received.
However, other allowances are available, including the Annual Investment Allowance, which can allow businesses to deduct the full cost of qualifying purchases.
The most suitable option will depend on what you’re buying and which allowances your business can claim.
Simpler Rules for Research and Development Tax Relief
The Budget also announced changes intended to make Research and Development (R&D) tax relief claims less complicated.
R&D tax relief is available to companies carrying out qualifying work to develop new products, processes or technologies, or improve existing ones by resolving scientific or technological uncertainties.
From 1 April 2027, companies will no longer need to submit a separate claim notification form before making an R&D claim.
Further changes are planned for autumn 2027 to simplify the additional information businesses need to provide.
This should reduce some of the paperwork involved. However, companies will still need to show that their work qualifies for relief and keep suitable records to support their claims.
Business Asset Disposal Relief Limit Will Be Reduced
If you’re thinking about selling your business, another change could affect the amount of Capital Gains Tax you pay.
Business Asset Disposal Relief (BADR) allows eligible business owners to pay a reduced rate of Capital Gains Tax when selling all or part of their business, or qualifying shares.
From 6 April 2027, the maximum amount of gains that can qualify for this relief over a person’s lifetime will fall from £1 million to £500,000.
This means business owners making larger gains from a sale could face a higher tax bill.
The Budget also announced a new Founders’ Relief, offering a 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains. This will be available to eligible founders of high-growth, innovative companies, rather than business owners generally.
If selling or transferring your business is part of your plans, these changes make it worth looking at your options well in advance.
Planning Ahead for the Changes
Many of these measures won’t take effect until 2027, but it’s worth understanding how they could affect your business before then.
For smaller traders, the increased trading allowance may reduce tax and paperwork. For established businesses, the changes to investment allowances and business disposal relief could influence longer-term decisions.
At ammu, we help businesses across Glasgow, Ayrshire and beyond understand their tax obligations and make informed decisions about their finances.
If you’d like to discuss how the Autumn Budget 2026 could affect your business, get in touch with our team.
You can also download our Autumn Budget 2026 Summary for a full breakdown of the announcements.