Autumn Budget 2026: What it means for small businesses, landlords and the self-employed

While some of the changes won’t take effect for a year or two, there are several measures that business owners should be aware of now, particularly around Making Tax Digital, wages, Capital Gains Tax, business expenses and the way tax bills will eventually be paid.

At KP Simpson Ltd, we work with businesses and individuals across the North East and beyond, so we’ve picked out the announcements that we think will be most relevant to our clients.

Making Tax Digital is still coming in April 2027

The next stage of Making Tax Digital for Income Tax (MTD) is set to go ahead from 6 April 2027.

Landlords and sole traders with more than £30,000 of qualifying income during the 2025/26 tax year will be brought into the MTD regime.

This means affected taxpayers will need to maintain digital records and provide information to HMRC through compatible software.

There is, however, some breathing space. Those joining MTD for Income Tax in April 2027 will not receive late-filing penalties for submitting any of their 2027/28 quarterly updates late.

Our view: If you’re likely to fall within MTD from April 2027, it’s worth getting your bookkeeping and accounting software organised sooner rather than later. A little preparation now could make the transition much easier.

Self Assessment payments are set to change

A bigger change is planned from April 2029, when the government intends to change the familiar Payments on Account system.

Currently, many Self Assessment taxpayers make significant payments on 31 January and 31 July.

Under the proposed system, taxpayers would instead make smaller, more regular payments throughout the year.

The details are still to be consulted on, but this could be a significant cash-flow change for sole traders, landlords and others within Self Assessment.

VAT and PAYE Direct Debits

Another change planned for April 2029 will require businesses to have Direct Debits set up for their VAT and PAYE liabilities.

That doesn’t necessarily mean you will have to pay every VAT or PAYE bill by Direct Debit. If you’ve already paid by another method before the deadline, there should be nothing further to collect.

However, HMRC would be able to collect an outstanding balance automatically where it remained unpaid.

More HMRC compliance activity

HMRC is also receiving further investment in its compliance operations, with an additional 670 compliance officers planned by 2029/30, on top of previously announced recruitment.

For businesses, this makes good bookkeeping and retaining appropriate supporting records more important than ever.

National Living Wage and Minimum Wage increases

Employers will need to budget for another increase in wage costs.

The Budget announced:

• National Living Wage for workers aged 21 and over: increasing from £12.71 to £13.21 per hour
• National Minimum Wage for 18 to 20-year-olds: increasing from £10.85 to £11.27 per hour

Both represent increases of 3.9%.

For employers, remember that an increase in hourly pay can also have knock-on effects on costs such as employer National Insurance and workplace pension contributions.

New parental support for the self-employed

From April 2029, around 150,000 self-employed dads, partners and adopters are expected to become eligible for parental support.

Qualifying individuals will be able to receive two weeks of support worth up to £194 per week.

The measure is expected to apply throughout Great Britain, but not Northern Ireland.

Changes to capital allowances

There are two important changes for businesses investing in qualifying equipment and assets.

The first-year allowance is due to increase from 40% to 50% for qualifying expenditure incurred from 1 January 2027.

At the same time, however, the main pool writing down allowance will reduce from 14% to 12%.

The reduction will apply from:

• 1 April 2027 for Corporation Tax; and
• 6 April 2027 for Income Tax.

If your business is planning significant capital expenditure, the timing and type of purchase can therefore be important when considering the available tax relief.

Changes for entrepreneurs and business owners

There are also significant Capital Gains Tax changes planned from 6 April 2027.

New Founders’ Relief

A new Founders’ Relief is planned, providing qualifying founders of high-growth, innovative companies with a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains.

The detailed eligibility requirements are still subject to technical consultation.

Business Asset Disposal Relief

There is less welcome news for some existing business owners.

The lifetime limit for gains qualifying for Business Asset Disposal Relief (BADR) is due to reduce from £1 million to £500,000.

This could be particularly important for shareholders considering a future sale or disposal of their business.

If you’re contemplating selling your company or restructuring your affairs, we’d recommend seeking advice before taking action rather than waiting until the point of sale.

Higher tax on property and savings income

Landlords and savers are also affected.

From April 2027, Income Tax rates applying to property rental income for taxpayers outside Scotland are set to become:

• 24% at the basic rate
• 44% at the higher rate
• 49% at the additional rate

Savings income rates for UK taxpayers will also become 24%, 44% and 49%.

For landlords in particular, this could materially change the tax position and makes forward tax planning increasingly important.

Trading allowance increasing from £1,000 to £3,000

There is better news for people with smaller self-employed businesses and side hustles.

From 6 April 2027, the trading allowance will increase from £1,000 to £3,000.

Someone earning less than £3,000 a year from self-employment will generally not need to register with HMRC or pay tax on those earnings under the announced changes.

Where income exceeds £3,000, individuals will still need to register, but could choose between using the £3,000 trading allowance or claiming their actual allowable business expenses and capital allowances.

You can’t claim both, so we’ll always want to consider which gives the better result.

Business mileage rates increasing

The 45p per mile rate increased to 55p per mile from 6 April 2026 for the first 10,000 business miles in a tax year, and the government has now said this increase will be permanent.

From 6 April 2027, the rate applying after the first 10,000 miles is also set to increase from 25p to 35p per mile.

This applies to both employees and the self-employed, subject to the relevant mileage rules.

For anyone who does significant business mileage, keeping an accurate mileage log remains essential.

Fuel duty remains frozen

Fuel duty will remain frozen until 1 July 2027, with the existing 5p duty reduction also continuing until that date.

That will be welcome news for North East businesses that rely heavily on cars and vans.

Extra help for shops, pubs, hospitality and leisure businesses

There were several announcements relevant to high street businesses in England.

Additional support for qualifying retail, hospitality and leisure businesses is planned, including relief for pubs, social clubs and most live music venues from 1 April 2027.

For qualifying retail, hospitality and leisure businesses, the threshold for 100% Small Business Rates Relief is also due to increase from £12,000 to £18,000 from April 2027.

The upper threshold for tapered relief will increase from £15,000 to £21,000.

For relevant businesses that don’t qualify for Small Business Rates Relief, business rates bills are also due to be frozen from April 2027 to April 2029, subject to the announced exclusions.

Changes to company share schemes

The existing Company Share Option Plan (CSOP) is set to be expanded and renamed EMI2.

The individual employee option limit will double from £60,000 to £120,000, while the exercise period will increase from 10 years to 15 years.

The interaction between CSOP and Enterprise Management Incentives limits is also being removed, potentially making the schemes more flexible for qualifying growing businesses.

Proposed close company reporting put on hold

There is also some welcome administrative news for owner-managed limited companies.

The government has confirmed that the proposed additional reporting requirements for close companies will not be introduced for now.

The proposals would have required close companies to provide additional reporting around transactions involving participators.

Company profit withdrawals: an important change to watch

Perhaps one of the most important areas for owner-managed limited companies is the government’s proposed reform to the taxation of company profit withdrawals, expected to take effect from April 2028.

The measures are intended to reduce opportunities for accumulated company profits to be extracted under Capital Gains Tax rules in circumstances where dividend Income Tax would otherwise apply.

The detailed legislation is still to come, with draft legislation expected in 2027 for technical consultation.

For directors and shareholders, this is definitely one to watch. The eventual rules could affect the tax consequences of extracting accumulated profits from a company, so planning before making significant withdrawals or restructuring a company will be important.

What should you do now?

Not every announcement requires immediate action. In fact, several aren’t coming into effect until 2027, 2028 or 2029.

But there are some areas worth thinking about now:

• Sole traders and landlords: check whether MTD for Income Tax will affect you from April 2027.
• Employers: factor the new minimum wage rates into payroll and cash-flow forecasts.
• Landlords: consider the impact of higher tax rates on future rental profits and cash flow.
• Company directors and shareholders: take advice before significant profit extraction, restructuring or selling a business.
• Businesses buying equipment: consider the timing of capital expenditure and the capital allowances available.
• Side hustlers: the increased £3,000 trading allowance from April 2027 could simplify your tax affairs.
• Businesses with employees travelling for work: make sure mileage records are complete so the correct relief or reimbursement can be considered.

Speak to KP Simpson

Budgets inevitably create plenty of headlines, but the important question is what the changes mean for you personally and for your business.

At KP Simpson Ltd, we’re here to help our clients understand the numbers behind the announcements and plan ahead.

Whether you’re a limited company director, sole trader, landlord or employer, if you’re unsure how any of the Autumn Budget changes could affect you, get in touch with the KP Simpson team and we’ll talk you through it.

Important information

This article is intended as a general overview based on the information provided following the Autumn Budget 2026 and should not be treated as personalised tax advice. Tax treatment depends on individual circumstances, and announced measures may be subject to consultation, detailed legislation or subsequent change. Please contact KP Simpson Ltd for advice relating to your particular circumstances.