Budget 2026 – How will things change? 

Chancellor John Healey delivered his first Budget against a difficult economic backdrop, with the impact of the conflict in the Middle East adding to inflationary pressures, borrowing costs and uncertainty for businesses. The Office for Budget Responsibility has downgraded its forecast for economic growth in 2027 to 1%, from the 1.6% it projected in March, although growth in 2026 is now expected to reach 1.2%. 

For businesses, the Budget comes at a time of continued pressure on operating costs, with the cost of energy and employment key considerations.  

For the key Budget measures likely to affect businesses in our industry (and their customers), read on… 
 

Business tax 

• Reduction of the lifetime limit for gains eligible for Business Asset Disposal Relief (BADR) from £1 million to £500,000, from April 2027. 

• From October 2027, online marketplaces will take responsibility for collecting VAT on qualifying sales by UK businesses using their platforms.  

• The main Corporation Tax rate remains at 25% and the small profits rate at 19% through financial year 2028.  

Business rates 

• A two-year real-terms freeze in business rates bills for all retail, hospitality and leisure properties.  

• Increase to the Small Business Rates Relief (SBRR) thresholds for retail, hospitality and leisure businesses. The threshold will now be £18,000 in rateable value for 100% relief (up from £12,000) and £21,000 for tapered relief (up from £15,000) in England, from April 2027.  

Mandatory wage rates 

• From April 2027, the NMW (for 18-20 year olds) will increase from £10.85 to £11.27 (up 3.9%). This is a slowing of the growth in the NMW, which has grown at double the rate of the NLW in recent years in an attempt to equalise the two by 2029.  

• The NLW (for over 21s) will increase from £12.71 to £13.21 (up 3.9%).   

Business investment  

• The 40% First Year Allowance for main rate expenditure will be increased to 50% from January 2027.  

• Main rate of writing down allowances will be reduced from 14% to 12% from April 2027.  

Transport 

• The 5p fuel duty cut will be extended for 1 July 2027, avoiding a spike in delivery costs. 

• The Approved Mileage Allowance Payment (AMAP) rate for business mileage above 10,000 miles will increase from 25p to 35p per mile, from 6 April 2027.  

Tariff suspensions 

• Suspension of tariffs on all UK imports of over 100 food products.  

Business lending 

• The National Wealth Fund and British Business Bank will receive an additional £20.4 billion (which may be funnelled towards investment in AI, green energy and defence).  

More information 

You can watch the speech here, read a full summary of measures here and access the full set of Budget documents from HM Treasury here. There’s also a set of factsheets, which is still being updated, and which may feature a Factsheet for Businesses along the lines of last year’s.