Eight Budget announcements all businesses should know about

In his first Budget statement, delivered at the end of October, Chancellor John Healy avoided any major tax changes. But he did make a string of policy decisions that will affect businesses. 

Here are eight of the most significant.

1. Small business rate relief is being expanded

The chancellor announced an increase to the small business rate relief threshold to come into effect in England from April 2027. 

Under the revised scheme, retail, hospitality and leisure businesses occupying properties with a rateable value of up to £18,000 will qualify for 100% relief (up from £12,000), and those with values up to £21,000 will qualify for tapered relief (up from £15,000).

As a result, a further 70,000 retail, hospitality and leisure businesses will pay no business rates. 

The Budget also provides an additional 20% reduction in business rates for pubs, music venues and social clubs.

2. Headline corporation tax rates are untouched, but capital allowances are changing

In a move providing some certainty for businesses, for the financial year beginning 1 April 2028, the main rate of corporation tax will stay at 25%, with the small profits rate remaining at 19%.

There were changes to the capital allowances, from 1 January 2027, that are significant for companies investing in plant and machinery: 

•    The main-rate first year allowance will rise to 50% for qualifying expenditure 
•    The main-rate writing-down allowance will go down from 14% to 12% 

3. Admin for R&D tax relief is being simplified

Claiming R&D tax relief can entail a significant amount of red tape, and in the Budget the government announced plans to simplify some of these admin requirements.

Notably, the requirement for an R&D claim notification form will be removed entirely for claims made on or after 1 April 2027.

The government will also simplify the Additional Information Form from autumn 2027 in a bid to streamline the information businesses must provide when submitting a claim. 

4. A new CGT relief for high-growth business founders and early investors

Founders and significant early investors in high-growth, innovative UK companies will get a new capital gains tax (CGT) relief. 

Founders’ Relief will provide a 10% CGT rate on qualifying disposals made on or after 6 April 2027. This will be subject to a lifetime limit of £10 million of qualifying gains.

The Treasury has set a consultation in motion to gather views about the exact terms of the relief.

5. Crackdown on VAT payments by online sellers

There are changes to VAT collection rules for online marketplaces and businesses that sell through these marketplaces.

From October next year, marketplaces such as Amazon, eBay and Temu will be responsible for collecting VAT on sales for any UK business with a minimum annual sales threshold per platform of £90,000.

The measure extends a regime first introduced in 2021, under which online marketplaces became liable for VAT on certain sales made by overseas sellers. 

The new rules won’t apply to personal sales, second-hand goods, or business-to-business transactions. 

Some businesses wanted further action to bring forward the end of tax breaks for online sellers importing cheaper items from overseas.

6. Another minimum wage rise

Just before the Budget, the government confirmed an increase for both the National Living Wage (NLW) and the youth National Minimum Wage rates, to start in April 2027. 

Pay for 18 to 20-year-olds will rise to £11.27, while over-20s will a make a minimum of £13.21 an hour.

This adds to already high operating costs for businesses, particuarly for those operating in labour-intensive sectors.

7. Bolstered cyber defences and a data centre covenant

The Budget includes measures to improve cyber security, to the tune of £194 million.

The lion’s share, £154 million, will be spent on strengthening cyber defences. The remaining £40 million will be used to establish a National Agentic Security Unit to investigate and respond to incidents involving rogue AI agents. 

In addition, the government will invest £140 million in the government’s Sovereign AI Unit, intended to back promising UK AI companies.

It also introduced a ‘Data Centre Covenant’, aimed at establishing the tests that data centres are expected to meet, such as paying their fair share of energy costs and delivering benefits for local communities.

8. A promise of energy support for businesses

The chancellor confirmed that there would be some additional support for businesses facing high energy bills. 

The British industrial competitiveness scheme (BICS), intended to help energy-intensive manufacturers, will be expanded to provide a 20-25% electricity discount to 10,000 energy-intensive manufacturing firms from April 2027. This will include back-payments for 2026-27. 

Industry groups countered that the vast majority of businesses won’t receive any assistance under BICS.

The government also froze the electricity main rates of the climate change levy, a UK environmental tax, from April 2028, in order to reduce electricity costs in real terms for businesses.