Autumn Budget 2026 Predictions for business owners

Autumn Budget 2026 – What should business owners be watching?

On Wednesday 28 October, the new Chancellor, John Healey, will deliver his first Autumn Budget.

Healey has only been Chancellor since July, while Andy Burnham is still settling into Number 10. The new Government has made some fairly significant promises about giving households and businesses more “breathing space”, but there is still the question of how those promises will be funded.

Government borrowing is running ahead of forecast, the cost of servicing the national debt has risen and geopolitical events continue to put pressure on energy prices and inflation. At the same time, the Government wants to present itself as pro-growth and pro-business. That creates a fairly difficult balancing act for the Chancellor.

Nothing is certain until the Budget is delivered. We may have a new government but the age old policy of “pitch rolling”, where the Government float possible tax changes in the press ahead of the budget to gauge reaction, seems to be business as usual. It is therefore really hard to make a prediction and cut through the many rumours circulating. Many of which will probably come to nothing.

All we can do for now is summarise the main rumours, consider how likely we think they are, and importantly, explain what they could mean for you and your plans if they do happen.

Why might taxes have to rise?

The starting point is the public finances.

Public sector borrowing reached £56.7 billion in the first four months of the 2026/27 financial year. That was lower than the same period last year, but still around £2.3 billion higher than the Office for Budget Responsibility had forecast.

Government debt stood at just under £3 trillion at the end of July, equivalent to around 94% of GDP.

The cost of borrowing has also increased. In early September, 30-year gilt yields reached levels not seen since the late 1990s. Higher borrowing costs mean more Government spending is absorbed by interest payments, leaving less available elsewhere.

The Prime Minister has said the Government intends to honour its manifesto commitment not to increase the main rates of Income Tax, (employee) National Insurance or VAT, while Corporation Tax is expected to remain capped at 25%. However, that doesn’t mean taxes won’t rise in other places or other ways. It simply means the Treasury has fewer obvious places to look, such as capital gains, other duties, investment income (including dividends, savings, pensions and property) and (if they didn’t get burned enough already) IHT.

Frozen tax thresholds

One of the easiest ways to raise money is, of course, not to change the tax rate at all.

Personal allowances and higher-rate tax thresholds have already been frozen for several years. This means as incomes increase, fiscal drag continues to pull more people into higher tax bands even if the headline percentage never changes. We expect the existing threshold freezes to continue, and there is always the possibility that they are extended further. And the higher inflation is, the more effective that freeze becomes at raising money for the Government.

For business owners taking income through a mixture of salary and dividends, the effect can be significant over time so it’s important you get this right. It may not attract the same headlines as a change to Capital Gains Tax, but it can still result in a higher overall tax bill.

Capital Gains Tax

Capital Gains Tax (CGT) is probably the area attracting the most attention ahead of this Budget. It feels like this has been the common prediction / fear before all budgets for the last six or seven years. There is again speculation that CGT rates could increase, potentially moving them to align with Income Tax rates.

If they were fully aligned, the increases could be substantial. The current 18% and 24% rates could potentially rise towards Income Tax rates of 20%, 40% and 45% depending on the individual’s tax band. Those would be some seriously steep tax rises.

CGT has already increased under this Parliament, with the main rates moving from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher and additional rate taxpayers. A further increase is certainly possible, particularly given the Government’s commitment not to increase the main rates of Income Tax, VAT or employee National Insurance.

But there is a problem.

Unlike, Income Tax, increasing the CGT rate doesn’t necessarily mean the Treasury collects proportionately more money. Business owners and investors can often choose when to sell an asset. Make the tax too high and people may simply delay selling.

For that reason, talk of fully aligning CGT with Income Tax appears to have reduced. A smaller increase may be more realistic. (Let’s not tempt fate though – Ed)

What about Business Asset Disposal Relief?

Any changes to CGT would also make Business Asset Disposal Relief (BADR) particularly important for business owners.

BADR has already become less generous and only applies where the qualifying conditions are met. There has been less speculation about another major change here, but it would be unusual for the Treasury to look at the taxation of business disposals without at least considering the reliefs that sit alongside it.

There is also the possibility that a CGT increase could be announced in October but take effect at a later date. If that happens, we could see a rush to complete business sales and other transactions before the new rates apply.

We are already receiving enquiries from clients who have been considering a sale and want to understand whether it would be sensible to proceed before the Budget.

If you are already considering:

• selling your business to 3rd party
• selling business to an Employee Ownership Trust
• property disposal
• selling shares
• reorganising ownership
• bringing another shareholder into the business or
• disposing of a significant investment

it would be sensible to understand your current tax position before 28 October.

That doesn’t mean rushing into selling solely due to Budget speculation, but it gives you the opportunity to make an informed decision if the rules do change.

Property taxes

Property is another area attracting plenty of speculation.

Earlier reports suggested the Government could consider replacing stamp duty and council tax with some form of land value tax, charged annually according to the value of land rather than when a property is sold.

The Prime Minister appears to have ruled out the stamp duty element of that proposal, telling reporters that it “won’t be happening”.

There however continues to be speculation that the Government could look at reforming the current council tax system, which has not been fundamentally revalued in England since the 1990s.

Separately, the High Value Council Tax Surcharge, announced at Autumn Budget 2025, is still due to take effect from April 2028. Homes worth £2 million or more in England will face an additional annual charge starting at £2,500 and rising to £7,500 for the highest-value properties. Anyone affected by this, including those with residential property held within a company, should begin factoring the additional cost into their longer-term planning.

Whether October brings anything further remains to be seen, but property taxation is certainly an area we will be watching.

Could we see further taxes on wealth?

There has also been plenty of discussion about taxing wealth rather than income.

A standalone annual wealth tax has been suggested by campaign groups and some politicians. At this stage, though, we think that remains much less likely than changes to taxes that already exist.

There are significant practical problems with introducing a completely new wealth tax. How, for example, do you value a privately owned business every year? The same applies to property and other assets that don’t have an obvious daily market value.

For owner-managed businesses, we think the more realistic areas to watch are CGT, pensions, property taxation and Inheritance Tax.

Inheritance Tax

Business owners have already had a significant change to Inheritance Tax this year.

From 6 April 2026, 100% Business Property Relief and Agricultural Property Relief became subject to a new £2.5 million combined allowance, with qualifying value above that generally receiving relief at 50%. Any unused allowance can transfer between spouses or civil partners.

For owners of valuable trading businesses, this has already made succession and estate planning more important.

The reforms remain politically sensitive, so another significant reduction in Business Property Relief this October feels less likely.

That doesn’t mean IHT is completely off the table. There has been further discussion around taxing wealth at death and possible changes linked to funding social care, but at the moment we would put these firmly in the possible rather than probable category.

For business owners whose wealth is largely tied up in their company, the wider message hasn’t changed: succession planning should start well before retirement, a sale or an unexpected event forces the issue.

Pensions

Pensions appear in Budget speculation almost every year, largely because the tax relief available makes them an obvious area for the Treasury to review.

Possible restrictions to tax relief on contributions and changes to tax-free pension cash have both been discussed again. Currently, most people can take up to 25% of their pension tax free, subject to the lump sum allowance of £268,275.

Reducing that would be politically difficult and could encourage people to withdraw money before new rules took effect. It has therefore been rumoured many times before without actually happening.

There is, however, already a significant change coming.

From 6 April 2027, most unused pension funds and death benefits will become part of an individual’s estate for Inheritance Tax purposes. Historically, many people have deliberately left pension funds untouched because they could often pass to beneficiaries outside the estate for IHT.

The same date also brings a reduction in the cash ISA allowance for under-65s from £20,000 to £12,000, although the overall ISA allowance remains at £20,000.

We wouldn’t recommend taking pension benefits or making substantial changes purely because of Budget speculation.

But if you’re already approaching retirement, considering a significant pension contribution, planning a business sale or thinking about how your wealth eventually passes to your family, now is a sensible time to look at the whole picture.

How business owners take money from companies

Another area we’re watching is the taxation of money extracted from owner-managed businesses.

Business owners generally have more flexibility than employees over how and when income is taken. Salary, dividends, loans and capital distributions can all receive different tax treatment. Those differences naturally attract attention when the Treasury is looking for additional revenue.

HMRC is already reviewing the treatment of corporate distributions and situations where amounts paid out of a company can be treated as either income or capital.

There is also ongoing scrutiny of loans to shareholders and directors. This is relevant because business owners generally have more flexibility than employees over how and when income is taken.

There is no confirmed major change at this stage, so we wouldn’t put this at the top of our prediction list. But it is an area worth watching, particularly for owner-managed businesses.

VAT

It’s not all doom and gloom! The Government has already announced the removal of VAT from domestic electricity bills from October, and there has also been speculation around further targeted VAT reductions, including a possible lower rate for hospitality.

For small businesses, another interesting suggestion is an increase in the VAT registration threshold from £90,000 to £100,000. That would certainly be welcome to many businesses operating close to the threshold.

We would, however, make the same point we regularly make to clients: deliberately restricting turnover simply to stay below the VAT threshold is not always the best commercial decision.

If the additional work is profitable and VAT can be properly priced into the business, tax should not necessarily prevent a good business from growing.

Business rates

Business rates reform looks more likely than many of the other measures being discussed. The Government has already indicated that it wants to reduce rates for some high-street and hospitality businesses, while potentially increasing the burden on larger warehouses and distribution premises.

A 20% business rates cut for pubs, clubs and music venues has already been announced as part of the Government’s early cost-of-living measures. We may get more detail on the wider business rates system in October.

For businesses with significant premises costs, changes here could have a greater impact on profitability than many of the headline tax measures.

Corporation Tax

At this stage, we think an increase in the main Corporation Tax rate is relatively unlikely. The main rate remains 25%, with the small profits rate at 19%, and the Government has repeatedly indicated that the headline rate will remain capped at 25%.

But that doesn’t mean the overall tax burden on businesses can’t increase.

Changes to allowances, reliefs, employer costs, dividend taxation, investment incentives and CGT can all affect what a business and its owners ultimately pay without the headline Corporation Tax rate moving at all.

So, for owner-managed businesses, the more useful question isn’t simply: “Will Corporation Tax go up?”

It’s: “What will it cost me to run, invest in and eventually take value out of my business after the Budget?”

Could there be some good news?

It would be surprising if the Chancellor stood up on 28^th October and announced nothing but tax rises.

The Government has repeatedly said that it wants to support growth and investment, and the change in leadership creates additional pressure to demonstrate a different economic approach. We would therefore expect some measures intended to support businesses alongside any tax increases.

Possible areas include business rates, infrastructure, housebuilding, skills, regional investment and incentives for businesses investing and growing in the UK.

As always, though, the detail will matter. Some measures will make a meaningful difference to businesses. Others may sound rather more generous during the Chancellor’s speech than they prove to be once we’ve read the small print.

Should you do anything before 28 October?

We wouldn’t recommend making significant financial decisions solely on the basis of Budget rumours. But there is an important difference between changing your plans because of a rumour and reviewing something you were already planning to do.

If you were already considering selling your business, restructuring ownership, making a substantial pension contribution, passing shares to the next generation or disposing of a significant asset, it makes sense to understand your current position before 28 October.

You can then answer three fairly simple questions:

1. What happens if I act before the Budget?
2. What happens if I wait?
3. And what is the potential risk if the tax rules change?

You may decide to do absolutely nothing but at least it will be an informed decision rather than one made in a panic after the Chancellor sits down.

There will be plenty more speculation between now and 28 October, and we’ll continue to update our guidance if anything particularly relevant to owner-managed businesses emerges.

Once the Chancellor has delivered the Budget, we’ll publish our usual summary explaining what has actually changed, who it affects, when it takes effect and, most importantly, whether you need to do anything about it.

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