UK Autumn Budget: What are the Key Implications for Businesses?

Corporate Tax

Capital Allowances

During the Budget, it was announced that the main rate for writing down allowances will be cut from 18% to 14% from 1 April 2026. Although this means that it will take longer to benefit from writing down the main pool, the relief will still be available over time. In addition, we expect that, given the other capital allowance reliefs available, including the first-year allowance announced last week, it may not significantly impact most businesses, and also only represents a timing difference. Those businesses with significant carried forward balances and large capital expenditure should, however, assess the impact.

The Government will extend the 100% first year allowances (FYA) for qualifying expenditure on zero emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle (EV) charge points until 31 March 2027.

From 1 January 2026, it will also introduce a new 40% FYA for main rate expenditure (including most expenditure on assets for leasing and expenditure by unincorporated businesses), which should make the capital allowance regime more beneficial for those who can access the new FYAs.

Transfer Pricing

Despite adverse feedback which suggested that this will create an extensive administrative burden for businesses, the Government is proceeding with legislation that will require in-scope multinationals to submit an International Controlled Transaction Schedule which will report information annually on cross-border related party transactions. This measure is expected to take effect for accounting periods beginning on or after 1 January 2027 and technical consultation on its design will take place in Spring 2026.

National Minimum Wage (NMW) and Salary Sacrifice changes

Whilst the increase to NMW from 1 April 2026 will be welcome by individuals, this will be an additional cost to businesses, potentially resulting in slower economic growth as arguably already shown by changes made in the last Budget.

In addition, from 6 April 2029, the Government will charge employer and employee National Insurance Contributions (NICs) on pension contributions above £2,000 per annum made via salary sacrifice. Whilst a few years away, it will undoubtedly create an additional cost to businesses and employees who may end up saving even less than they are currently.

Increased Measures for Non-Compliance and Administration

The Government has announced a few changes in this area, which continues the theme over the last few. Perhaps the most relevant of these are below:

• It will introduce new powers to tackle promoters of tax avoidance schemes and tax advisors who facilitate these schemes
• It will double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026
• It intends to modernise HMRC’s inaccuracy and failure to issue penalties
• It will modernise the anti-avoidance provisions relating to share reorganisation reliefs which will be legislated in Finance Bill 2025-2026

EMI, Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) Changes

From April 2026, the Government has announced the following changes which should help small and scaling up businesses to attract and retain the best talent and access funding:

• Companies eligible for EMI criteria will increase to the 500 employee limit, gross asset test of £120 million, and share option limit to £6 million. The holding period will also increase to 15 years
• The VCT and EIS company investment limit will increase to £10 million (£20 million for knowledge intensive companies) with the lifetime limit also increasing to £24 million (£40 million for knowledge intensive companies). In addition, the gross asset test will increase to £30 million before share issues and £35 million after, albeit the VCT income tax relief will decrease to 20%

Dividend Tax Increase

Tax rates on dividend income is set to rise by 2% from 6 April 2026. After this date, the new rates will be 10.75% (basic) and 35.75% (higher rate). For business owners considering whether to extract profits via dividends rather than a salary, this increase will raise the tax cost of doing so.

Changes to Capital Gains Tax (CGT) Relief on Disposals to Employee Ownership Trusts (EOTs)

The cost associated with this relief has increased significantly and is perhaps seen as a relief available to those who are well off. The Government has therefore announced that it will reduce the 100% relief available to business owners on qualifying disposals to EOTs from 100% to 50% effective immediately.

Business Rates

Two new permanently lower business rate multipliers will be introduced for retail, hospitality and leisure (RHL) businesses with rateable values below £500,000 from April 2026. These will be 5p lower than the national multipliers.

Additionally, there will be a 100% business rates relief for eligible electric vehicle charging points and electric vehicle only forecourts.

As a regulated UK Trust and Corporate Service Provider, the VANTRU team specialises in helping foreign businesses to establish a presence in the UK by providing essential corporate, compliance and advisory needs including assisting our clients with their Financial Reporting, Accounting and Tax Requirements in this jurisdiction.

If you have any queries or concerns about how these updates will impact your business, get in touch today.

Email: info@vantru.com.