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Policy · Budget briefing · October 2026
A briefing for business leadership teams. We set out the pressures small and medium-sized businesses faced going into the Budget of 28 October 2026, what it delivered for them and when each measure takes effect — and the actions leadership teams can take now.
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We have produced this Budget briefing for our clients from the small and medium-sized business sectors.
Our aim is to set out the pressures these businesses faced going into the October 2026 Budget, explain clearly what the Budget delivered for them and when each measure takes effect, and give leadership teams a practical view of their prospects and the actions they can take now.
In addition to this business briefing, we will be publishing a Post-Budget Checklist to help our clients, and the wider business community of which we are a part, act to future-proof themselves and their businesses.
In this briefing
This briefing is general information, not tax, legal or financial advice. Leadership teams should take professional advice before acting.
Small and medium-sized businesses went into the Budget under sustained cost pressure. The British Chambers of Commerce’s Quarterly Economic Survey of over 4,300 firms, 92% of them SMEs, found turnover confidence improving but investment stuck: only 17% planned to increase investment, a post-pandemic low. Inflation (60%) and taxation (52%) were the leading concerns, and labour costs were the main reason firms expected to raise prices.
Energy dominated cost concerns. In early October the ONS reported that 72% of businesses were concerned about energy prices and 73% about fuel prices, the highest levels since those questions were introduced. Late payment remained a drag on cash flow, costing the economy an estimated £11 billion a year.
Business groups asked for broad help: wider business rates relief (the FSB sought a £25,000 Small Business Rate Relief threshold), support with energy bills, and lower employment costs.
of firms planned to increase investment over the next three months, a post-pandemic low (survey of 18 August to 15 September 2026)
of businesses were concerned about energy prices in early October, and 73% about fuel prices: the highest levels since the questions were introduced
ONS, Business insights and impact on the UK economy, 8 October 2026
a year: the estimated cost of late payment to the economy
Department for Business and Trade, research published July 2025
The Budget of 28 October 2026 offered targeted help rather than broad relief. The briefing groups what it delivered for small and medium-sized businesses into eight areas, and when each measure takes effect matters as much as what it does. Measures remain subject to legislation, consultation and change; dates and thresholds may be revised.
From April 2027, retail, hospitality and leisure properties in England get full Small Business Rate Relief up to £18,000 of rateable value (from £12,000), tapering to £21,000, plus a two-year real-terms freeze on their bills. Other sectors get no new relief.
The British Industrial Competitiveness Scheme will cut electricity bills by up to 25% for over 10,000 eligible manufacturers from April 2027. Most other firms get only the fuel duty cut, extended to 1 July 2027, and higher mileage rates.
The National Living Wage rises 3.9% to £13.21 an hour from April 2027, with no change to employer National Insurance.
The main-rate first-year capital allowance rises to 50% for spending from 1 January 2027, but the main writing-down capital allowance falls to 12% from April 2027.
The Business Asset Disposal Relief lifetime limit halves to £500,000 from April 2027, though the Treasury says three-quarters of claimants will still receive relief on their whole gain. A new Founders’ Relief (10% on up to £10 million of gains, with its design under consultation), a doubled EMI2 option limit and a £3,000 Trading Allowance target start-ups and scale-ups.
EMI2 is the new name for the Company Share Option Plan (CSOP), a tax-advantaged scheme that lets a company give employees options to buy its shares at today’s market value. When the scheme’s conditions are met, employees pay no Income Tax or National Insurance on the options, and any gain is normally taxed as a capital gain when the shares are sold. It is aimed at growing companies that have moved beyond, or do not qualify for, the original Enterprise Management Incentive (EMI) scheme. From 6 April 2027, the limit on options each employee can hold doubles from £60,000 to £120,000, the exercise period extends from 10 to 15 years, and the limit no longer reduces what employees can receive under EMI.
From October 2027, online marketplaces will collect VAT for UK sellers with more than £90,000 of marketplace sales (personal sales through marketplaces aren’t affected), and HMRC gains stronger collection powers.
The British Business Bank gets £5 billion of extra capacity, and a Scale UK Connect pilot will support 200 high-growth firms.
Delivered free by London & Partners for the Department for Business, Innovation, Science and Trade, with local partners in Greater Manchester, the West Midlands, Scotland, Yorkshire and the South West, the pilot offers a business diagnostic and growth plan, specialist expertise, peer learning, introductions to investors, customers and corporate partners, and international market visits.
It is open to firms registered and based in the UK with at least £2 million of annual turnover and/or investment, at least 10 employees including founders, and ambitions to scale or expand internationally. Firms can register interest at business.gov.uk/campaign/scale-uk/connect.
A tax on bank profits, used to fund household energy support, doubles to 6% for 15 months from January 2027. The British Chambers of Commerce warned that it could affect the price and availability of credit.
| Area | What changes | Takes effect | Who it affects |
|---|---|---|---|
| Measure 1: Business rates | Full Small Business Rate Relief up to £18,000 of rateable value (from £12,000), tapering to £21,000, and a two-year real-terms freeze on bills, for retail, hospitality and leisure in England | April 2027 | Retail, hospitality and leisure properties in England |
| Measure 2: Energy | Electricity bills cut by up to 25% for over 10,000 eligible manufacturers; the fuel duty cut extended and mileage rates raised | April 2027 (registration for the electricity discount closes 30 November 2026); the fuel duty cut runs to 1 July 2027 | Eligible manufacturers; for most other firms, only fuel duty and mileage rates |
| Measure 3: Employment | The National Living Wage rises 3.9% to £13.21 an hour; no change to employer National Insurance | April 2027 | Every employer with staff on or near the National Living Wage |
| Measure 4: Investment | The main-rate first-year capital allowance rises to 50%; the main writing-down allowance falls to 12% | 1 January 2027 (first-year allowance); April 2027 (writing-down allowance) | Firms investing in plant and machinery |
| Measure 5: Owners and founders | The Business Asset Disposal Relief lifetime limit halves to £500,000; a new Founders’ Relief (10% on up to £10 million of gains, under consultation), a doubled EMI2 option limit and a £3,000 Trading Allowance | April 2027 (EMI2 and the Trading Allowance from 6 April 2027); Founders’ Relief under consultation until 30 November 2026 | Owners selling a business, founders, and employees holding share options |
| Measure 6: Compliance | Online marketplaces collect VAT for UK sellers with more than £90,000 of marketplace sales; HMRC gains stronger collection powers | 1 October 2027 (marketplace VAT); the new HMRC debt-recovery powers are planned from 2029 | UK businesses selling through online marketplaces |
| Measure 7: Finance and scale-up support | £5 billion of extra capacity for the British Business Bank; a Scale UK Connect pilot for 200 high-growth firms | Registrations of interest for the pilot are open until January 2027; first cohort February 2027 | High-growth firms with £2 million or more of turnover and/or investment, and at least 10 employees |
| Measure 8: The bank surcharge | The surcharge on bank profits doubles to 6% to fund household energy support | 1 January 2027, for 15 months (to 31 March 2028) | Banks; the BCC warns that borrowers could feel it in the price and availability of finance |
Select a measure to read it in full.
When the measures in this briefing take effect
Most measures start in January or April 2027, giving leadership teams a planning window of about five months from the Budget. Two deadlines come sooner: registration for the manufacturers’ electricity discount and the Founders’ Relief consultation both close on 30 November 2026. Dates and thresholds remain subject to legislation and may be revised; the briefing (PDF, 11 pages, 0.7 MB) gives the Budget paragraphs the measures are drawn from in its sources.
The BCC judged that “most businesses won’t notice this budget at all”, and the OBR expects growth to slow to 1.0% in 2027. The two biggest pressures, energy and wages, are largely unaddressed outside manufacturing and the high street; the FSB, IoD and CBI all said help with energy and hiring costs was missing. Advisers caution that Founders’ Relief may reach few firms, and the BCC warned that the bank surcharge could affect the price and availability of credit.
The more useful reading is about timing. Most measures start in January or April 2027, giving leadership teams a planning window of about five months. Firms that act early on eligibility, capital spending, pay and succession can capture most of the value on offer.
The Small Business Protections Bill, now before Parliament, would cap payment terms from large customers at 60 days, make interest on late payments compulsory and give the Small Business Commissioner powers to fine persistent late payers.
It is not expected to take effect until 2027, but it could do more for many SMEs’ cash flow than any single Budget measure.
Most businesses won’t notice this budget at all.British Chambers of Commerce, Budget response, 28 October 2026
Budget for the wage rise and its knock-on effect on pay differentials, and assume energy stays expensive.
Rates relief, capital allowances, Business Asset Disposal Relief, share schemes and the minimum wage all change around that date.
Mayors and local authorities are gaining powers and funds, including Good Growth Funds, local apprenticeship services and AI adoption pilots. Building relationships now will matter: get to know your local mayor and their team, and the actual initiatives.
We will be publishing a Post-Budget Checklist to help business leaders and their teams navigate their way through the outcomes and impacts of the October 2026 Budget. Ask to hear when it’s published. This briefing is general information, not tax, legal or financial advice: leadership teams should take professional advice before acting.
Budget briefing
The briefing in full: where SMEs stood before the Budget, what it delivered and when each measure takes effect, prospects for the year ahead, thoughts for leadership teams, and the sources behind every figure.
Checklist
A practical checklist to help business leaders and their teams act on the outcomes and impacts of the October 2026 Budget, with a section on costs.
The Post-Budget Checklist is publishing soon. Ask to hear when it’s published, or request a briefing on what the Budget means for your organisation. You can also email buildresearchclients@outlook.com.
This briefing is general information, not tax, legal or financial advice. It summarises measures announced in the Budget of 28 October 2026 and commentary published around that date; measures remain subject to legislation, consultation and change, and dates and thresholds may be revised. Leadership teams should take professional advice before acting.
For media enquiries, or the briefing in another format, email buildresearchclients@outlook.com.
BuildResearch (2026) After the Budget: what it means for small and medium-sized businesses. A BuildResearch Budget briefing for business leadership teams. BuildResearch Limited, October 2026. Available at: https://buildresearch.co.uk/policy-after-the-budget
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