For business owners, the useful question after Budget 2026 is: do your plans need to change? A future sale, the income you take from savings or property, and investment in your business all deserve a fresh look.
The announcements on 28 October 2026 include higher taxes on savings and property income, a smaller Business Asset Disposal Relief limit and changes to investment allowances. However, there is some welcome simplification for R&D claims. Here are the measures we think deserve attention from Praxis clients, and the practical steps to consider.
Selling your business? Take note of the smaller BADR limit
The Government plans to reduce the lifetime limit for gains qualifying for Business Asset Disposal Relief (BADR) from £1 million to £500,000, for qualifying disposals on or after 6 April 2027. This is a limit on qualifying gains, not the sale price of your business or the amount of tax saved.
If a sale, succession plan or restructuring is already on your agenda, revisit the expected Capital Gains Tax cost and how much of your lifetime limit you have previously used. The commercial deal still needs to work: an earlier disposal should not be assumed to secure the existing limit. The announcement includes special provisions for certain contracts, share reorganisations and exchanges that are not completed before 6 April 2027.
A separate proposed Founders’ Relief is also being consulted on. Its eligibility and practical operation are still being developed. Do not build a disposal plan on the assumption that Founders’ Relief will replace BADR. The proposal targets founders and early investors in high-growth, innovative UK companies. At this stage, it appears more narrowly targeted than BADR and may offer no relief for your particular transaction.
Savings and rental income: update your personal tax forecast
From 6 April 2027, the Government proposes savings income tax rates of 24%, 44% and 49% for the basic, higher and additional rate bands respectively. Those savings rates apply across the UK.
The same rates are proposed for property income in England, Wales and Northern Ireland, with devolved property tax powers requiring separate consideration for Scotland and Wales. These are personal income tax changes; they should not be applied automatically to rental income received by a company.
For owners receiving taxable savings income from savings or investments, or income from personally held rental property, the practical question is: how much income remains after tax? Dividends and capital gains follow separate tax rules. Your actual liability will depend on your wider income, available allowances and circumstances.
The savings-income changes reach beyond bank interest: they can also affect taxable life-policy gains and the income element of purchased life annuities. If you are considering surrendering an investment bond, including an offshore bond, review the tax consequences and timing with us and your financial adviser before acting.
From April 2027, the previously announced allowance-ordering changes also affect the calculation: available personal allowances must first be set against income other than property, savings and dividends. Any unused balance can then be allocated among those three categories in the most beneficial way. This can change the result even where your total income is unchanged.
Taking money from your company: review the mix
Review how you take money from your company. Salary, dividends, rent and interest on loans to the company need to be considered together, taking account of the company’s tax position as well as your own. Existing arrangements may need a fresh calculation for 2027/28.
Buying equipment: start with the Annual Investment Allowance
For many smaller businesses, the Annual Investment Allowance (AIA) remains the starting point: it can give a full deduction for eligible equipment spending within the available £1 million annual limit. Check eligibility and any shared limit before assuming the Budget’s 50% first-year allowance changes your investment plans.
The Budget also changes the timing of relief for some expenditure:
- The main-rate first-year allowance is set to increase to 50% for qualifying expenditure incurred on or after 1 January 2027.
- The main-rate writing-down allowance is set to fall to 12%, from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.
The first change can accelerate relief on eligible new expenditure; the second slows relief on expenditure left in the main pool. Full expensing also remains relevant where its conditions are met. A tax deduction is not a cash rebate equal to the purchase cost.
Buying an electric car? Check the relief deadline
Planning to buy a new, unused electric car for your business? The current 100% first-year allowance is scheduled to end on 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax. Cars do not qualify for AIA.
R&D claims: less administration, with evidence still important
The Government plans to remove the Claim Notification Form requirement for R&D claims made on or after 1 April 2027. It also plans to simplify the Additional Information Form from autumn 2027. These are separate changes with separate timetables.
This is a useful administrative simplification for eligible companies, including those developing technology or tackling qualifying technical challenges. It is not an announcement that every innovative project qualifies, or that supporting evidence can be dropped.
Making Tax Digital: limited breathing space for new entrants
For people required to join Making Tax Digital for Income Tax in April 2027, the Government will not apply late-submission penalty points to quarterly updates for 2027/28. Quarterly updates will still have to be sent before the tax return can be submitted.
This is a targeted penalty easement, not a general postponement of MTD or a waiver of all penalties. If you are due to join, preparation for digital records and quarterly reporting should continue.
Budget 2026: the dates to keep in view
Selected changes and existing relief deadlines. Use the detail above to check what applies to you.
- 1 January 2027Main-rate first-year allowance rises to 50% for qualifying expenditure incurred from this date.
- 31 March 2027Scheduled end of 100% first-year allowance for qualifying new, unused electric cars for Corporation Tax.
- 1 April 2027Main-rate writing-down allowance falls to 12% for Corporation Tax. R&D Claim Notification Form removed for claims made from this date.
- 5 April 2027Scheduled end of 100% first-year allowance for qualifying new, unused electric cars for Income Tax.
- 6 April 2027BADR lifetime qualifying-gains limit falls to £500,000. Savings and property income tax changes begin, subject to the territorial rules above. Main-rate writing-down allowance falls to 12% for Income Tax.
- Autumn 2027Planned simplification of the R&D Additional Information Form.
Position at 29 October 2026. Measures requiring legislation remain subject to that process; scheduled relief deadlines may change.
What next?
Start with the decisions you already expect to make over the next year: a business sale, an equipment or electric-car purchase, an R&D claim or changes to the income you take from your company. We can help you identify which announcements affect those plans and which can be left alone.
Contact the Praxis team to review the implications for your business and personal tax position.
Prepared on 29 October 2026 from the official Budget tax announcements and Budget report. This is a selected summary, not a complete Budget review. Measures requiring legislation remain subject to that process; individual advice should reflect your circumstances.
