On 28 October 2026, HM Treasury released the Autumn Budget 2026 detailing significant business and entrepreneurial tax announcements. The statement, delivered by the Chancellor of the Exchequer, introduces a suite of measures targeting corporate tax rates, capital allowances, research and development incentives, and small business reliefs. These changes aim to stimulate investment, support innovation, and enhance the UK’s international competitiveness following the OECD Pillar Two implementation. The Budget also addresses anti-avoidance provisions, employee share schemes, and venture capital incentives, with most measures taking effect from 1 April 2027 unless otherwise stated. Tax professionals should review the detailed legislation in the forthcoming Finance Bill 2027.
Key Takeaways
- Corporate Tax Rate Stability and Enhanced Capital Allowances: The main corporation tax rate remains at 25%, while the Annual Investment Allowance (AIA) is permanently set at £1 million. A new “Full Expensing” regime for qualifying plant and machinery expenditure becomes permanent, allowing 100% first-year relief for companies subject to corporation tax, significantly improving cash flow for capital-intensive sectors.
- R&D Tax Relief Modernisation and Enhanced Support for SMEs: The merged R&D expenditure credit (RDEC) scheme applies from April 2027, with an increased credit rate of 20%. Loss-making R&D-intensive SMEs benefit from an enhanced payable credit of 14.5%, subject to a qualifying R&D intensity threshold of 30%. The subcontracting and overseas worker rules are tightened to focus relief on UK-based innovation activity.
- Entrepreneurial Incentives and Employee Ownership Expansion: Business Asset Disposal Relief (BADR) lifetime limit remains at £1 million, but the rate increases to 14% for disposals on or after 6 April 2027. The Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes are extended to 2035 with increased annual investment limits. A new Employee Ownership Trust (EOT) tax exemption for gains on controlling interest sales is introduced, promoting succession planning.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement