Quick answer: The Autumn Budget 2026 will take place on 28 October 2026, delivered by Chancellor John Healey. Several key measures have already been confirmed ahead of Budget day – including a VAT cut on electricity bills and a 20% business rates reduction for pubs and live music venues. While others, like pension inheritance tax changes, are already legislated and coming into effect from 2027.
With the Autumn Budget now just weeks away, small business owners are watching for changes that could affect tax on business sales, employment costs, cash flow, and succession planning.
And with our recent SME Insights Report 2026 revealing that 36% of business owners believe that the UK economy will probably worsen in 2026, all eyes are on the Budget.
Some tax relief has already been confirmed. But there’s still plenty the Budget could clarify, extend, or change. Here’s an overview of some of the more likely changes that could appear in this year’s red box:
And what’s been confirmed already:
- electricity bill VAT reductions
- business rates (but could go further)
- pensions and inheritance tax
- next steps for business owners
When is the Autumn Budget 2026?
The Autumn Budget takes place on Wednesday 28 October 2026. Chancellor John Healey will deliver a statement to Parliament covering the government’s plans for tax and public spending.
Healey has said the Budget will “move money and power out of Westminster, and into every postcode around Britain” – and that it’ll give businesses and families “some of the stability they need to plan for the future.”
Will income tax, VAT, or National Insurance go up?
The government has indicated it doesn’t plan to raise the main rates of income tax, VAT, or National Insurance, though that still leaves room for changes elsewhere in the tax system.
Prime Minister Andy Burnham has committed to honouring Labour’s 2024 manifesto pledges, which included a promise not to raise these three taxes for the rest of this Parliament. Combined, they account for nearly 60% of total tax receipts – so keeping them frozen significantly limits the government’s options for raising revenue.
That said, Burnham has acknowledged the country is in a “challenging position” and hasn’t ruled out other forms of tax rises. Capital gains tax (CGT) is one area to watch. The rates last changed in October 2024, rising to 18% to 24% depending on your band.
What it means: For now, no changes to the main rates of income tax, VAT, or National Insurance have been confirmed for 28 October.
Could business asset disposal relief change in the Autumn Budget?
Business asset disposal relief (BADR) reduces the rate of capital gains tax paid on qualifying business disposals, subject to the lifetime limit and eligibility rules. For many founders and directors, it can make a significant difference to their tax bill when selling a business or shares in their company.
There’s been no official confirmation that BADR will change on 28 October. But because the government has limited room to raise the main headline taxes, reliefs connected to capital gains may come under closer scrutiny in the run-up to the Budget.
Potential changes people may be watching for include:
- an increase in the BADR tax rate
- a cut to the lifetime allowance
- tighter qualifying conditions
- anti-avoidance changes aimed at restructuring before a sale
Any of these would mainly affect business owners planning to sell all or part of their business, retire, or pass ownership on.
What it could mean: If BADR became less generous, the tax due on a future sale could rise. That could reduce the amount an owner keeps from selling their business, affect retirement planning, or change the timing of an exit. Owners who are already considering a sale, management buyout, or share disposal may want early tax advice before making structural changes or accelerating plans.
What about employer costs and payroll?
Although the government has said it doesn’t expect to raise the main rates of income tax, VAT, or National Insurance, small employers will still be alert to any changes that increase the overall cost of taking on staff.
This could include:
- changes to employment allowances or thresholds
- reforms affecting statutory pay costs
- new compliance or reporting requirements for employers
What it could mean: For a micro-business with only a handful of employees, even small payroll cost changes can have a noticeable impact on hiring plans, wage reviews, or whether the owner can afford to recruit at all.
Fuel duty increase?
Fuel duty is frozen at 52.95p per litre through 31 December 2026 (maintaining the temporary 5p per litre cut originally introduced in 2022). However, under current legislation, this rate is scheduled to step back up to 57.95p per litre across early 2027 (increasing to 55.95p in January and 57.95p in March).
While we won’t know until the day, attention is on whether the government will confirm a further extension of the 5p freeze or go ahead with the scheduled increases in the new year.
What it could mean: Fuel duty going up can directly affect your operating costs, whether you’re a tradesperson, mobile service provider, courier, or caterer. Even small businesses that don’t rely on transport for work could see these hikes impacting costs of their logistics, deliveries, and supplies.
Making Tax Digital – revised penalties?
Making Tax Digital was introduced in April 2026 for those with a qualifying income over £50,000. But from April 2027, it will automatically apply to those that meet a new lower threshold of £30,000.
As more people are pulled into HMRC’s mandatory record-keeping process, all eyes will be on the chancellor for any adjustments. Confirmation of implementation timelines or the penalty points system could be mentioned in the Budget.
What it could mean: If your business is going to fall into the threshold for Making Tax Digital next April (or already is), it’s worth keeping an eye on the rules, deadlines, and penalties.
Minimum wage rates for 2027
The national minimum wage and national living wage rates are typically announced in the Autumn Budget. This means we could expect to hear the latest increase, which will apply from 1 April 2027, in the chancellor’s Budget later this month.
What it could mean: While rising wages is positive news, the rising cost of employing staff can be disproportionately difficult for the smallest of businesses in the UK. Smaller employers can feel the increase acutely as they’re less likely to feel able to pass on extra costs to customers, have cash reserves, or negotiate prices with suppliers through scale.
Devolution, mayors, and local growth support
Another area to watch in the run-up to the Budget is devolution — particularly the role of directly elected mayors in shaping local growth, jobs, and skills policy. The government has already said more detail is coming on expanding apprenticeship opportunities by matching young people with small businesses in all 14 areas with elected mayors in England.
For small businesses, that could mean better local access to apprenticeships, simpler support with recruitment, and more help finding young people with the right skills for the local labour market. If your area has a mayor, it may also mean more decisions about business growth support are made locally rather than centrally.
What it could mean: In practice, this could make it easier for smaller employers to hire apprentices without having to navigate the system alone. Over time, stronger mayor-led skills and growth support could also help local firms recruit faster, fill skills gaps, and benefit from investment targeted at the industries their region wants to grow.
VAT removed from domestic electricity bills – what it means for small businesses
One significant measure has already been confirmed and will take effect before Budget day. From 1 October 2026, VAT on household electricity bills drops from 5% to 0%.
Our SME Insights Report revealed that 35% of business owners rank high running costs (such as energy bills) as one of their biggest challenges.
So while this cut is primarily aimed at households – saving the average home around £45 a year, according to the government – there’s a benefit for some smaller businesses too.
Small businesses, charities, and residential care homes that already qualify for the reduced 5% VAT rate on electricity – through the existing VAT certificate and declaration process – will also benefit from the new 0% rate.
The VAT cut has been funded for the 2026-27 financial year. The government has said it will “keep looking” at what more it can do on energy bills, so it’s possible the October Budget could extend or build on this measure.
What it means: If your business pays a non-domestic energy tariff at the standard rate, you won’t automatically benefit. It’s worth checking with your energy supplier to understand what applies to you.
Business rates cut for pubs, clubs, and live music venues
On 23 July 2026, the government confirmed a 20% cut to business rates for pubs, social clubs, and live music venues in England, taking effect from April 2027.
This is on top of the 15% relief already in place for 2026/27 – announced back in January 2026. According to the government, the new cut will benefit nearly 32,000 businesses, saving the typical pub an estimated £1,100 in its first year.
The package is worth around £100 million a year and will be fully funded, partly through reviewing reliefs for businesses that don’t make a positive contribution to local communities – such as vape shops.
What it means: Cuts are coming but there are some important caveats. For example, the 20% discount won’t apply to the very largest live music venues. The government hasn’t yet said exactly where that line falls – but it’s promised to set out the details in the Budget.
Wider business rates reforms?
We don’t know the details, but the government has promised to go further with reforms to the small business rates relief on Budget day. There’s also been some speculation that the threshold for small business rates relief could be increased from £12,000 rateable value to £15,000.
What it could mean: Changes would apply to businesses in England. The current package to support pubs, music venues, and clubs, could be expanded further to other high street businesses of a certain size.
Unused pensions and inheritance tax: what’s changing and when
This one’s already legislated – but many people still aren’t aware of it.
From 6 April 2027, most unused pension funds and pension death benefits will be included within a person’s estate for inheritance tax (IHT) purposes.
Currently, unused pension savings in discretionary pension schemes can be passed on to beneficiaries after death without any IHT charge. That’s been increasingly used as a tax-planning tool – and the government wants to put a stop to it.
Under the new rules, personal representatives (the people responsible for managing a deceased person’s estate) will be liable for reporting and paying any IHT due on unused pension funds.
The government estimates around 10,500 estates will have an IHT liability where they previously wouldn’t have, with a further 38,500 estates paying more IHT than before. The average IHT liability is expected to rise by around £34,000 when pension assets are included.
What it means: While this change was confirmed under the previous government, the Budget on 28 October could potentially revise how it’s implemented – particularly given the new Prime Minister’s reported willingness to look again at some inheritance tax reliefs. This one is worth watching closely.
What should small business owners do now?
The October Budget will bring more clarity – but there’s no need to wait until then to start thinking about your position.
Here’s what’s worth doing in the run-up to 28 October:
- Check your electricity tariff – if you’re on a qualifying reduced-rate tariff, confirm with your supplier that the VAT cut to 0% is being applied from 1 October.
- If you run a pub, club, or live music venue – look out for further Budget detail on the 20% business rates cut, including the threshold for large venues and any potential wider review of Small Business Rates Relief.
- If you have a pension you’re not drawing down – it’s worth speaking to a financial adviser about how the 2027 IHT changes could affect your estate planning. The rules are now confirmed in legislation.
- Watch the Budget on 28 October – and check back here for a full breakdown of what it means for your business.
More guides for small business owners
- Key types of business tax in the UK (2026-27 update)
- Quarterly tax reporting: practical ways to stay ahead of the new deadlines
- Mandatory e-invoicing starts in 2029: what you need to do first
- The hidden cost of running a small business (and tips to deal with it)
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