Budget 2026: key points for small businesses

Income tax and dividends

• The Personal Allowance remains £12,570, and the main income-tax thresholds remain frozen.
• Dividend tax rates remain at 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers and 39.35% for additional-rate taxpayers.
• The dividend allowance remains £500.
• Scotland sets its own income-tax rates and bands for income such as earnings and pensions. UK-wide rates apply to savings and dividends.

Landlords and savers

• From 6 April 2027, property and savings income tax rates are due to rise to 24%, 44% and 49%.
• Savings rates apply UK-wide. Scotland and Wales have powers to set their own property income rates.
• Landlords who own property personally should review how the changes could affect their tax bills.
• The cash ISA limit remains £20,000, within the overall £20,000 annual ISA allowance.

Selling your business

• The Business Asset Disposal Relief lifetime limit on qualifying gains is due to fall from £1 million to £500,000 for disposals from 6 April 2027.
• The government has announced a new Founders’ Relief from 6 April 2027, with a 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains.
• Eligibility and detailed rules remain subject to the technical consultation, which closes on 30 November 2026, and to legislation.

Employers

• The National Living Wage and National Minimum Wage rates are due to rise by 3.9% from 1 April 2027.
• The National Living Wage will increase to £13.21 an hour.

Business investment and capital allowances

• The main-rate first-year allowance is due to increase from 40% to 50% for qualifying expenditure from 1 January 2027.
• The main-rate writing-down allowance is due to fall from 14% to 12%, from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.
• The Annual Investment Allowance remains £1 million.
• The relief available depends on the asset, eligibility and purchase timing. Check these before committing to equipment or vehicle purchases.

Self-employed and growing businesses

• The trading allowance is due to rise from £1,000 to £3,000 from 6 April 2027.
• The increased mileage rate of 55p for the first 10,000 business miles in a personal car or van is being made permanent. The rate above 10,000 miles is due to rise from 25p to 35p from 6 April 2027.
• From 1 April 2027, the government plans to increase Small Business Rate Relief thresholds for qualifying retail, hospitality and leisure properties in England. The rateable-value threshold for full relief will rise to £18,000, with tapered relief up to £21,000.

Making Tax Digital for Income Tax

Taxpayers required to join in April 2027 will not receive late-submission penalty points for quarterly updates in 2027/28. They must still submit those updates before submitting their tax return.

Tax payments

From April 2029, Self Assessment taxpayers who already make payments on account are due to make smaller, more regular payments throughout the year. Further implementation details are still to be developed.

Official sources

• GOV.UK: Budget 2026, Annex A rates and allowances
• GOV.UK: Budget 2026 document