Budget 2026 for limited companies: what to review now
Budget 2026 brings several decisions into focus for limited company owners: investment in equipment, a possible business sale, research and development claims and the cost of premises. The useful starting point is to separate the rules that apply today from changes announced for 2027.
This guide explains the measures most relevant to small businesses following the Budget on 28 October 2026. It is written for directors and business owners in Bromley, London and across the UK, with a separate section for sole traders and landlords affected by Making Tax Digital.
The announcements below have been checked against primary government publications. Future measures remain subject to the relevant legislation, final conditions and guidance. A Budget headline should prompt a review of your circumstances before you sign a contract, change a tax claim or revise a forecast.
Budget 2026: start with your own business plans
Make a short list of decisions you expect to take in the next twelve months. Are you replacing machinery, opening premises, selling shares, hiring staff or developing a new product? Match each decision to the relevant measure and its start date.
Then assemble the evidence: current management accounts, the last tax computation, the asset register, financing quotations and any proposed transaction documents. This gives your accountant a useful starting point and helps distinguish an immediate action from something to monitor.
Keep company tax and personal tax separate in that review. A company’s equipment purchase, a shareholder’s sale of shares and an individual’s rental business can be affected by different rules even when the same person is involved in all three.
Corporation Tax: familiar rates, individual calculations
The Budget maintains the 19% small profits rate and 25% main rate. HMRC’s Corporation Tax rates guidance explains that companies with profits of £50,000 or less generally pay 19%, while the main rate applies above £250,000. Marginal Relief may apply between the relevant limits.
Those headline thresholds are not suitable for every company. HMRC’s Marginal Relief guidance explains that the limits are reduced for accounting periods shorter than twelve months and for associated companies. Eligibility also has exceptions, including close investment holding companies.
For example, a director who controls more than one company should flag that structure when asking for a forecast. Looking at each company’s profit against the full £50,000 limit in isolation can give a misleading result.
Use a forecast of taxable profit, with the relevant adjustments and reliefs, rather than applying a headline percentage to the bank balance. Our limited company accountancy service covers bookkeeping, annual accounts and Corporation Tax, helping bring those figures together.
Selling a business: review the proposed BADR limit
HMRC’s Business Asset Disposal Relief policy note announces a reduction in the lifetime limit from £1 million to £500,000 for qualifying disposals made on or after 6 April 2027. The current rate on gains qualifying for BADR is 18%.
The lifetime limit concerns qualifying gains, rather than the sale price or a cash payment from HMRC. Past relief claims count towards it. Someone who has already used part of their allowance therefore needs their previous disposal records included in any calculation.
The policy also includes special rules for certain contracts entered into before 6 April 2027 but not completed by then, and for some share reorganisations and exchanges. Do not assume that signing an early contract automatically preserves the old limit.
If a sale is being discussed, collect the share history, ownership percentages, earlier BADR claims, draft terms and proposed timetable. Ask for a transaction-specific review before agreeing the structure. Commercial value, payment security and the wider deal still matter; a tax headline alone is not a reason to rush a sale.
Founders’ Relief: a proposal with conditions to resolve
The Treasury’s Founders’ Relief consultation proposes a 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains. It is aimed at eligible founders and significant early investors in high-growth, innovative UK companies, with a proposed start date of 6 April 2027.
This is not a general 10% rate for everybody who owns a limited company. The consultation covers conditions relating to the individual, company, growth and innovation. The design is to be finalised through consultation and legislation.
Keep evidence of when and how you acquired shares, your role in the business and its development. If a transaction depends on this proposed relief, make that assumption explicit in the planning discussion. Avoid treating an unconfirmed saving as money already available to spend.
Capital allowances: check the asset and the timing
The capital allowances policy note announces two changes: the main-rate first-year allowance rises from 40% to 50% for qualifying expenditure incurred from 1 January 2027; the main writing-down allowance falls from 14% to 12% for periods beginning on or after 1 April 2027 for Corporation Tax, or 6 April 2027 for Income Tax.
Periods spanning the relevant April date use a hybrid writing-down rate. The special-rate writing-down allowance remains 6%. Full expensing and the £1 million Annual Investment Allowance also remain relevant, so the new 50% figure is not automatically the correct claim for every purchase.
Before ordering, ask which allowance applies to the particular asset and business. Check whether the equipment is new or used, how it will be financed, whether it is for leasing and the relevant expenditure date. These details can matter more than the percentage in the headline.
For a simplified illustration, 50% of £20,000 is a £10,000 deduction. That is not a £10,000 tax refund: any tax effect depends on the applicable tax rate and the business’s position. The illustration is arithmetic only and does not establish eligibility.
Build the decision around the equipment’s business purpose, affordability and expected benefit. Compare the cash payment and finance costs with the timing of any tax relief. Buying something unnecessary still consumes cash even where a deduction is available.
R&D: simpler administration is planned for 2027
HMRC’s R&D announcement removes the Claim Notification Form requirement for claims made on or after 1 April 2027. Changes to simplify the Additional Information Form are planned for autumn 2027, with details to be provided in advance.
These are future administrative changes. They do not establish that a particular project qualifies for relief, and they should not be used as a reason to ignore an existing notification requirement.
For a claim already in preparation, confirm its timetable and current obligations. Continue keeping project explanations and supporting cost records. A useful internal handover identifies who can explain the technical work, who holds the financial evidence and which questions still need resolving.
High street premises: England’s relief thresholds change
The government’s business rates information letter sets out higher Small Business Rate Relief thresholds for qualifying retail, hospitality and leisure properties in England from 1 April 2027. Eligible properties can receive full relief up to £18,000 rateable value, tapering evenly to no relief at £21,000, until 31 March 2029.
This is an England-specific measure for qualifying properties, not a blanket exemption for every small business. The thresholds refer to rateable value, not annual turnover or the rent you pay. Eligibility, property use and other relief rules still need checking.
For a Bromley shop, London café or other potentially eligible occupier, gather the latest rates bill and property details. Check the council’s updated calculation when available before building a saving into your budget. If you occupy several premises or are changing how a property is used, flag that too.
Making Tax Digital: the updates remain required
The Budget tax-policy overview, section 2.36, says late-submission penalty points will not apply to quarterly updates for 2027/28 for taxpayers required to join MTD for Income Tax in April 2027. They must still send their quarterly updates before submitting their tax return.
Read that as a specific easing of penalty points, not cancellation of quarterly reporting. It concerns the identified April 2027 entrants and tax year; it is not a blanket statement about every MTD user or every type of penalty.
If you are joining, use the preparation period to organise records, software access and responsibilities. Our Making Tax Digital support includes digital bookkeeping, Sage software and quarterly updates for relevant sole traders and landlords.
A practical checklist for the next month
Turn the announcements into a small, dated action plan that somebody in the business owns:
Refresh the figures. Reconcile the bookkeeping and identify missing records before asking for a revised tax or cash-flow forecast.
List planned investments. Record the asset, commercial purpose, expected order date, finance terms and available allowance information.
Flag ownership changes early. Put possible sales, share transfers and reorganisations on the review list before documents are signed.
Keep existing deadlines visible. Check current filing and claim requirements separately from announcements that start next year.
Review premises and digital reporting. Collect rates notices and identify any MTD preparation work, with a named person responsible.
Schedule a follow-up. Revisit provisional assumptions when legislation, detailed guidance or a revised council bill becomes available.
For each item, record what is known, what is still an assumption and what evidence is needed. A forecast that clearly labels uncertainty is more useful than a precise-looking number built on an unconfirmed relief.
Mysimplytax supports limited companies and sole traders through its Bromley and London offices and across the UK. To discuss how these announcements relate to your business, contact the team with your current accounts and the decisions you are considering.
Sources checked on 30 October 2026. This is a general guide to selected Budget announcements, not an assessment of individual eligibility. Future measures remain subject to legislation and final guidance.
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