Budget 2026: An accountants perspective on changes for small businesses
Written by Mehmood Rajoka, partner at RR Accountants and founder of Rajoka
I have read the Budget documents so you do not have to. I am an accountant before I am anything else, and most of my clients are small firms within a few miles of Sparkhill. So this is not a list of everything John Healey said on 28 October.
It is eight things that will change a number on a bill you pay, in the order they will hit, and what I would do about each one this month.
1 Payroll from 1 April 2027
The National Living Wage goes to £13.21 an hour, up 3.9 per cent. The rate for 18 to 20 year olds rises by the same percentage.
For one full-time member of staff on the living wage that is roughly £910 a year more in wages, and once you add employer National Insurance and pension on top you are closer to £1,050.
Five staff on the living wage is a little over £5,000 a year you did not have in last year's numbers.
Do it now: open your payroll forecast, change the hourly rate for April, and look at what it does to your cash in the quiet months. If you need to move prices, you want to know that in November, not March.
2 Business rates from April 2027 (England only)
This is the biggest win in the Budget, but only for some of you. If you are retail, hospitality or leisure (a shop, a cafe, a restaurant, a pub, a gym, a salon, a takeaway), the threshold for small business rate relief rises from £12,000 to £18,000 of rateable value. The Treasury says that takes around 70,000 more businesses out of rates altogether.
A unit on Stratford Road or the Coventry Road with a rateable value of £15,000 pays rates today and pays nothing from April 2027. Everyone else in those sectors gets bills frozen in real terms for two years, and pubs and small music venues see their relief go from 15 to 35 per cent. Vape shops and adult gaming centres lose relief.
If you are an office, a workshop or a warehouse, this section is not for you and nothing changes.
Do it now: Find your rateable value on gov.uk (search "find business rates valuation"). If it is under £18,000 and you are in one of those sectors, diarise April to check the relief has been applied. Councils do not always do it automatically.
3 Side income from April 2027
The trading allowance triples from £1,000 to £3,000. That is the amount you can earn from a small trade before you have to register with HMRC and file a return.
I see this one every January: someone selling on Vinted, doing weekend bookkeeping, cutting hair at home, filing a return for £1,400 of income and paying me more in fees than they owe in tax. From April a lot of those people can stop.
Do it now: If you or someone in your family earns under £3,000 on the side, ask your accountant whether you still need to file after this year. Do not just stop; the rule applies from the 2027-28 year.
4 Selling your company from 6 April 2027
Founders' relief: A 10 per cent capital gains tax rate on up to £10 million of lifetime gains for eligible founders of high-growth, innovative companies. The word "eligible" is doing a lot of work and the definition has not been published.
If you think you might sell in the next five years, this could be the difference between 24 per cent and 10 per cent on the sale.
Do it now: Nothing, except make sure your accountant has it on their list. The rules get written over the next few months, and how you hold your shares may matter.
5 Property and savings income
Tax on rental income and savings interest rises two percentage points in every band: 24, 44 and 49 per cent. Wages and dividends are not touched. Around here that matters, because a lot of owners hold one or two rental properties alongside the business.
On £12,000 of rental profit that is about £240 a year more at the basic rate. Not a disaster, but it lands in the January 2029 self assessment bill, which is when people forget it was coming. The £20,000 cash ISA allowance stays, so the cut announced earlier this year is reversed.
6 Self assessment timing and HMRC
The Budget introduces what it calls timely payment, bringing more of what you owe into the year you earn it rather than the January after. The detail is in a factsheet and will arrive in stages.
HMRC also gets more compliance staff and stronger powers to collect from people who can pay but ignore letters.
My reading: the long gap between earning and paying is closing, and the days of the ignored brown envelope are numbered. If you owe HMRC and have been quiet about it, this is the year to make a plan with them rather than wait.
7 Driving for work
The 5p fuel duty cut stays until 1 July 2027. The tax-free mileage rate for business miles in your own car goes up permanently; the Guardian reported one rate moving from 25p to 30p a mile. Check the final figures on gov.uk, then change the rate you reimburse staff, because paying the old rate when a higher tax-free one exists is money left on the table.
8 Selling online, from October 2027
Marketplaces will collect VAT on qualifying sales by UK businesses that trade through them. If you are VAT registered and sell on a marketplace, the mechanics of how your VAT reaches HMRC change. If you are not registered, the sellers who were undercutting you by not charging VAT lose that edge.
Worth knowing, no action yet
Self-employed fathers get paternity pay for the first time. Employee share schemes are widened so smaller firms can use them to keep good people. Non-compete clauses will be restricted by law after a consultation.
A £100 million local apprenticeship service will match young people to local firms, which Birmingham should be first in the queue for. Visa salary thresholds and the Graduate visa are changing in 2027, so sponsor licence holders should expect new rules. Corporation tax, income tax on wages and dividend tax: unchanged.
That is the whole Budget as far as a small business in Birmingham is concerned. Eight numbers, five of them from April 2027. Put them in the diary now and none of them will surprise you.
Mehmood Rajoka is a partner at RR Accountants and founder of Rajoka, the Birmingham company that gives business owners everything they need from one team, on one bill: their accountant, business phone, invoices, and a lawyer when they need one.
Mehmood was the GBYPY Young Professional of the Year 2025 in Start-up & Entrepreneurship. He can be contacted on hello@rajoka.com