SME Insights is our monthly briefing for UK small business owners: what’s changing in the economy, what we’re seeing on Enterprise League, and one practical move for the month ahead. This edition covers the Budget delivered by Chancellor John Healey on Wednesday 28 October 2026.
In one sentence: no rises to the headline rates of income tax, National Insurance or VAT, some real help on business rates for high-street businesses in England, and higher wage costs from April 2027, against a forecast of slower growth and higher inflation next year.
Key takeaways
- Small Business Rates Relief for retail, hospitality and leisure in England widens from 1 April 2027: full relief up to £18,000 rateable value, tapered relief up to £21,000. About 70,000 more businesses will pay no rates.
- The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027.
- Employer National Insurance (15%), the Employment Allowance (£10,500), the VAT threshold (£90,000) and Corporation Tax (25% and 19%) are unchanged.
- A new Founders’ Relief offers a 10% Capital Gains Tax rate on up to £10 million of lifetime gains from 6 April 2027, while the Business Asset Disposal Relief limit halves to £500,000.
- The OBR expects growth of about 1.2% in 2026 and 1.0% in 2027, with inflation peaking at around 3¾% in early 2027.
What changed for small businesses
Business rates (England)
- Small Business Rates Relief for retail, hospitality and leisure properties gets more generous from 1 April 2027. Full relief now covers properties with a rateable value up to £18,000 (from £12,000), and tapered relief up to £21,000 (from £15,000). The Treasury says about 70,000 more businesses will pay no rates at all.
- Rates bill increases for these properties are capped at CPI inflation in 2027-28 and 2028-29.
- Pubs, social clubs and live music venues get 35% relief instead of 15% from 1 April 2027, as announced in July.
- Appeal fees at the Valuation Tribunal (£150 and £300) are abolished.
Wages
From 1 April 2027 the National Living Wage rises 3.9% to £13.21 an hour. The rate for 18–20-year-olds rises to £11.27, and for 16–17-year-olds and eligible apprentices to £8.31.
What didn’t change
Employer National Insurance stays at 15%, with the Employment Allowance at £10,500. The VAT registration threshold stays at £90,000. Corporation Tax stays at 25%, with the 19% small profits rate.
Investment and growth
- The main-rate first-year capital allowance rises from 40% to 50% for spending from 1 January 2027. Full expensing stays, and the Annual Investment Allowance stays at £1 million.
- A new Founders’ Relief: a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies, from 6 April 2027 (see the conditions in the FAQ below).
- At the same time, the lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000 for disposals from 6 April 2027.
- Share options get easier to offer. The limit on the renamed Company Share Option Plan (now EMI2) doubles to £120,000, from 6 April 2027.
For the self-employed and side businesses
The Trading Allowance triples from £1,000 to £3,000 from 6 April 2027. Anyone joining Making Tax Digital for Income Tax in April 2027 won’t get penalty points for late submission of their first four quarterly updates.
Finance and contracts
The British Business Bank gets £5 billion of extra capacity, including £1.4 billion for equity funds and a new £450 million debt product aimed at growth-stage companies. The government also promises to make it simpler for small businesses to bid for public contracts, with a new “UK supplier” definition due by January 2027.
What’s missing
There’s no new measure on late payment beyond a commitment to tackle it. There’s also no general help with energy bills: the electricity discount of up to 25% applies to about 10,000 energy-intensive manufacturers only. The British Chambers of Commerce called that “disappointing”. The Federation of Small Businesses said small firms “got nothing to ease sky-high energy bills and nothing to make hiring someone more affordable”, while welcoming the higher Trading Allowance (SME Magazine).
The numbers behind it
The forecast. The Office for Budget Responsibility expects growth of about 1.2% this year and 1.0% in 2027. It expects inflation to peak at around 3¾% in early 2027 before returning to the 2% target in 2028. It forecasts flat business investment this year and a small fall in 2027, as higher energy prices weigh on firms. It also notes that many businesses have absorbed rises in employer National Insurance and energy costs “into lower profits”.
What it means. For most small businesses, 2027 looks like a year of rising costs and modest demand. The Budget takes some of the pressure off high-street businesses in England. For everyone else, the cost side of the plan matters more than ever.
What we’re seeing on Enterprise League
- 300,000+ companies are now listed on Enterprise League, across 700+ business categories.
- Information Technology is one of our largest sectors, with 50,966 companies listed.
- In October, 47 companies were recognised with an Enterprise League award, across 38 different industries.
From next month, this section will include trends from our own data: which sectors buyers are searching most, and where new companies are joining.
One practical move: put April 2027 in the diary now
Most of these changes start in April 2027, which gives you five months. Four conversations worth having with your accountant before then:
- Hiring. Price your 2027-28 wage bill at the new rates now, not in March.
- Equipment. If you plan a major purchase, ask whether timing it after 1 January 2027 changes the tax relief you get.
- Rates. If you run a shop, café or venue in England, check your rateable value against the new £18,000 and £21,000 thresholds.
- Selling up or raising. If you’re a founder thinking about an exit, the Business Asset Disposal Relief limit halves from 6 April 2027, and the new Founders’ Relief has its own conditions. Get advice early.
This is general information, not tax advice. Your accountant can tell you what applies to your business.
Dates to watch
- Thu 5 Nov 2026: Bank of England interest rate decision
- Wed 11 Nov 2026: businesses can start requesting tariff suspensions (window closes 3 Feb 2027)
- Wed 18 Nov 2026: October inflation figures (ONS)
- Mon 30 Nov 2026: consultation on the new Founders’ Relief closes
- Thu 17 Dec 2026: Bank of England interest rate decision
- Sun 31 Jan 2027: online self-assessment deadline for 2025-26
Frequently asked questions
What did Budget 2026 change for small businesses?
The main changes are wider Small Business Rates Relief for retail, hospitality and leisure in England (full relief up to £18,000 rateable value from 1 April 2027), a 3.9% rise in the National Living Wage to £13.21 from 1 April 2027, a higher first-year capital allowance (50% from 1 January 2027), a tripled Trading Allowance (£3,000) and a new Founders’ Relief. Employer National Insurance, the VAT threshold and Corporation Tax rates did not change.
Who qualifies for Founders’ Relief?
Under the proposals in the government’s technical consultation, an individual must have held at least 25% of the company when its trade (or preparation for it) started, held the shares for at least five years, and been UK resident for at least five tax years before the sale. The company must have had turnover of at least £10 million and at least 15 qualifying full-time employees in the accounting period before the sale, and pass two of three tests: 25% average annual turnover growth over three years, 25% average annual headcount growth over three years, or at least £1.5 million of R&D on which R&D tax relief was claimed. The relief applies to disposals from 6 April 2027. These are proposals and may change: the consultation closes on 30 November 2026.
Did the VAT registration threshold change?
No. It stays at £90,000.
When does the new National Living Wage start?
On 1 April 2027, at £13.21 an hour for workers aged 21 and over. The rate for 18–20-year-olds rises to £11.27, and for 16–17-year-olds and eligible apprentices to £8.31.
Does the business rates relief apply in Scotland, Wales or Northern Ireland?
No. The business rates measures in this Budget apply to England. Business rates are devolved in Scotland, Wales and Northern Ireland.
Get SME Insights every month
SME Insights is published monthly on our LinkedIn page and here on the blog. If your company is listed on Enterprise League, make sure your profile is up to date before the new year: claim or update your free company profile.
Sources
- HM Treasury, Budget 2026 (HC 726), 28 October 2026
- Budget 2026 speech
- Overview of tax legislation and rates, Annex A: rates and allowances
- Founders’ Relief: technical consultation
- OBR, Economic and fiscal outlook, October 2026
- ONS, Consumer price inflation
- ONS, GDP monthly estimate
- ONS, Labour market overview
- Bank of England, upcoming MPC dates
- Insolvency Service, Company insolvencies September 2026
- GOV.UK, Self Assessment deadlines
Enterprise League figures: enterpriseleague.com and enterpriseleague.com/business-awards, October 2026.
More must-read stories from Enterprise League:
- Keep more profit with smart financial management strategies for lean trading years.
- Discover why tax automation saves small businesses time, money and compliance headaches.
- Learn which business expenses you can claim to reduce your yearly tax bill.
- Weigh the pros and cons of bank loans before funding your next move.
- Handle tighter margins calmly with practical advice on surviving budget cuts.
