Chris Connors, a corporate tax specialist with national law firm Clarke Willmott LLP looks at the key takeaways from this year’s Autumn Budget for corporate and commercial B2B clients.
The Autumn Budget 2026 introduced a series of changes affecting business owners, investors and companies, from a new tax relief for founders selling their businesses to changes to capital allowances, employee share schemes and business rates.
While the Budget contained relatively few major surprises, several measures could have significant implications for businesses and their future plans. Some will create opportunities, while others will require companies and shareholders to review their tax positions ahead of changes taking effect.
Here are the key developments for businesses, including those in property, retail, hospitality and leisure.
New Founders’ Relief for qualifying business owners
One of the most significant announcements was the introduction of Founders’ Relief, a new capital gains tax relief intended to reward qualifying founders who build and grow successful businesses.
From 6 April 2027, the relief will allow eligible individuals to pay capital gains tax at 10% on up to £10 million of qualifying gains. It is intended to complement existing Business Asset Disposal Relief (BADR) and Investors’ Relief, although the eligibility criteria are considerably more restrictive than the headline allowance might suggest.
To qualify, an individual must have held at least 25% of the company’s ordinary share capital when trading activity, or preparations for trading, commenced. They must also have held those shares for at least five years and been UK-resident for at least five consecutive tax years.
The company must be within the scope of UK corporation tax, be a trading company and have had no major change in trade. It must also have generated turnover of at least £10 million and employed at least 15 qualifying employees in the accounting period before disposal.
In addition, at least two of the following three conditions must be met:
- Turnover growth: Average compound annual turnover growth of at least 25% over three consecutive accounting periods within the 10 years before disposal, with turnover of at least £10 million in the accounting period before the first of those three periods.
- Employee growth: Average compound annual growth of at least 25% in qualifying employees over the same period, with at least 15 full-time employees in the accounting period before the first of the three periods.
- Innovation: Qualifying research and development expenditure of at least £1.5 million, together with other conditions relating to R&D.
The relief can apply to shares in a holding company of a trading group. It is also not restricted to the shares acquired when the company was established, potentially allowing shareholders to increase their holdings over time without automatically losing eligibility.
The detailed rules remain subject to consultation and will need to be considered carefully before shareholders rely on the relief when planning a disposal.
Business Asset Disposal Relief: a reduced lifetime limit
While Founders’ Relief offers a potential benefit to a relatively narrow group of business owners, others looking to sell their companies face a reduction in the amount of gains eligible for BADR.
From 6 April 2027, the lifetime limit on gains qualifying for BADR will fall from £1 million to £500,000.
This will reduce the amount of gain on which qualifying business owners can claim the relief. Anyone considering a sale should review their position alongside the new Founders’ Relief criteria to establish which, if either, may be available.
The changes underline the importance of considering the tax implications of a business disposal well in advance, particularly where a transaction is being planned around a particular date.
Capital allowances: a mixed picture for investment
The Budget announced changes to capital allowances that will affect businesses investing in qualifying assets.
The main rate first-year allowance will increase from 40% to 50% for qualifying expenditure incurred on or after 1 January 2027. This will allow businesses to obtain a larger deduction in the first year for eligible expenditure.
However, the writing-down allowance for the main rate pool will fall from 14% to 12% from April 2027.
The combined effect is a more generous first-year deduction for qualifying new investment, alongside a slower rate of relief for expenditure remaining in the main pool.
Businesses planning significant capital expenditure should consider the timing of their investments and how the changes may affect their tax position.
Business rates: support for retail, hospitality and leisure
The Budget included several changes to business rates in England, with measures aimed at supporting qualifying retail, hospitality and leisure businesses, as well as pubs, social clubs and live music venues.
From April 2027:
- Pubs, social clubs and live music venues: Business rates relief for qualifying premises will increase from 15% to 35%. The largest live music venues, with a rateable value of £1 million or more, will not receive the increased relief but will continue to benefit from the existing 15% relief in 2026-27 and real-terms freezes in 2027-28 and 2028-29.
- Small Business Rates Relief: The rateable value threshold for 100% relief for qualifying retail, hospitality and leisure properties will increase from £12,000 to £18,000. Tapered relief will apply thereafter up to £21,000.
- Limits on increases: Increases in business rates for qualifying retail, hospitality and leisure properties will be capped at CPI inflation for 2027–28 and 2028–29, subject to the stated exclusions.
There will also be changes for certain businesses. From April 2027, adult gaming centres in England will no longer qualify for retail, hospitality and leisure multipliers, while vape shops will lose eligibility for those multipliers and Small Business Rates Relief.
Businesses should check how the changes affect their individual circumstances, particularly where reliefs or rateable values are changing.
Property taxation: changes for developers and property businesses
Several property-related measures will be of interest to businesses, developers and investors.
Stamp Duty Land Tax
Two changes to Stamp Duty Land Tax (SDLT) were announced.
First, SDLT will be removed from rents payable under assured shorthold tenancies in England, with effect from 1 May 2026. The relevant legislation is expected in the Finance Bill 2026–27.
Second, SDLT group relief will be withdrawn in circumstances where a purchaser leaves the group after the vendor group company has been wound up, or potentially as a result of the winding-up. The change is intended to address situations in which group relief has remained available following certain corporate restructurings.
The government intends the change to apply immediately, although the relevant legislation is still to be introduced.
Businesses undertaking group reorganisations should consider the potential SDLT implications and take advice where necessary.
Annual Tax on Enveloped Dwellings and HVCTS
The Annual Tax on Enveloped Dwellings (ATED) will increase by 3.5% for the 2027–28 charging period.
The High Value Council Tax Surcharge, announced previously and due to come into force in April 2028, will also be subject to further arrangements following the government’s consultation. These include a deferral scheme, discounts and exemptions, and a 100% premium for properties left empty and unoccupied for 12 months or longer.
VAT and social housing development
A significant development for the social housing sector is confirmation that the sale of land to registered providers of social housing will benefit from VAT zero-rating.
The change is intended to simplify the VAT treatment of land sales and could remove the need for some of the complex arrangements currently used in social housing development, including golden brick structures. It may also help free up financing arrangements for development schemes.
There will still be technical issues to resolve, including how the rules will apply to mixed-use developments.
Secondary legislation is expected in early 2027, with the change due to take effect from 1 April 2027.
VAT: new responsibilities for online marketplaces
From October 2027, online marketplaces will become responsible for collecting VAT on sales made through their platforms by UK-registered businesses and other UK businesses meeting a minimum annual sales threshold of £90,000 per platform.
The measure will not apply to non-business sales, second-hand goods or business-to-business sales.
Businesses selling through online marketplaces should review their arrangements and establish whether the changes will affect how VAT is accounted for on their sales.
Banks: an increased corporation tax surcharge
Banks will face an increase in the Bank Corporation Tax Surcharge from 3% to 6% for the period from 1 January 2027 to 31 March 2028.
Although the increase is temporary, it will affect the tax liabilities of banks during the period and should be factored into relevant tax planning.
Employee share schemes: changes to EMI and CSOP
The Budget included changes to tax-advantaged employee share schemes, which can help businesses attract, retain and incentivise employees by offering opportunities to acquire shares in the company.
The changes are intended to improve the operation of existing schemes and give growing businesses greater flexibility.
Enterprise Management Incentives
The exercise window for Enterprise Management Incentive (EMI) options following a disqualifying event will increase from 90 days to 180 days.
This will give employees more time to exercise their options while retaining the relevant tax advantages following a disqualifying event.
The government will also relax EMI option grant reporting requirements and the interaction between Employee Ownership Trusts, EMI and the disguised remuneration rules, making it less likely that certain EMI awards under employee ownership trusts will be taxed as disguised remuneration.
Company Share Option Plan
The government also announced enhancements to the Company Share Option Plan (CSOP), which it has referred to as the newly-named “EMI2 scheme”.
The changes will include:
- Increasing the individual option limit from £60,000 to £120,000.
- Extending the option exercise period from 10 years to 15 years.
The changes are intended to make the scheme more useful for businesses that have grown beyond the size or eligibility limits associated with EMI.
All the employee share scheme changes are due to take effect from 6 April 2027.
Companies operating existing schemes, or considering introducing one, should review the changes to understand how they may affect their arrangements.
Electronic invoicing and tax administration
The Budget also included measures to modernise tax administration and improve compliance.
From 1 April 2029, VAT invoices will need to be issued in a specified electronic format. An implementation roadmap has been published, with further details on the policy and technical design expected by April 2028.
Businesses should monitor the developing requirements and consider whether their invoicing systems will need to be updated.
The government is also seeking views on modernising corporation tax administration, with a call for evidence on how the system could better support companies in reporting and paying the correct amount of tax at the correct time.
These changes form part of the government’s continuing efforts to improve compliance and reduce the tax gap.
Further changes to corporate taxation
Several other reforms referred to in the Budget document were effectively previous announcements, revisited.
Stamp Duty on shares
The government intends to replace Stamp Duty and Stamp Duty Reserve Tax with a new Securities Transfer Tax, with the changes expected to take effect in late 2027.
Legislation is due to be included in the Finance Bill 2026–27.
The reform will modernise the tax framework applying to securities transfers and represents a significant change to a system that has been in place, in its current form, for more than a century.
Modernising the distributions framework
The government plans a broad reform of the tax treatment of company distributions and related rules.
The aim is to provide greater consistency across different legal forms, company sizes and transaction structures, while preserving capital treatment for genuine changes in ownership, including family business succession and certain reorganisations.
The proposals are intended to prevent arrangements that convert what is economically a profit extraction into a capital receipt. They will also seek to align the treatment of payments and loans from overseas companies with equivalent transactions involving UK companies.
Further changes are planned to the rules governing purchases of own shares and demerger reliefs, with the aim of facilitating genuine shareholder exits, business separations and commercial reorganisations.
Existing anti-avoidance provisions may also be replaced or simplified to provide greater clarity and certainty.
The details will need to be followed closely as the proposals develop, particularly by companies considering restructurings, shareholder exits or changes to their ownership arrangements.
Advance Corporation Tax
The government has confirmed that it will repeal the Advance Corporation Tax legislation on 1 April 2031, extinguishing any remaining surplus ACT balances. Legislation will be introduced in a future Finance Bill.
Although this is unlikely to affect the majority of businesses directly, it will be relevant to companies with remaining ACT balances or historical tax arrangements involving the regime.
Planning ahead
The Autumn Budget contains a mixture of opportunities and additional costs for businesses.
The introduction of Founders’ Relief may offer a significant tax benefit to some qualifying founders, while the reduction in the BADR lifetime limit means others may need to reconsider their plans for a future disposal. Changes to capital allowances and employee share schemes could influence investment and reward strategies, while businesses in property, retail, hospitality and leisure will need to consider the measures relevant to their sectors.
Some of the reforms will not take effect until 2027 or later, and several remain subject to further consultation or legislation. Businesses should therefore keep developments under review and consider the potential implications when making decisions about investment, restructuring, employee incentives and future disposals.
For further information about the Budget and how the changes may affect your business, please contact the corporate team by submitting an online form or by calling 0345 209 1000
