Autumn Budget 2026: what it means for small businesses and how to make the most of it
The Chancellor, John Healey, just delivered the Labour government’s Autumn Budget (28th of October 2026). It sets out plans to support economic growth, ease the cost of living, and encourage businesses to invest in their future.
For small and medium-sized enterprises (SMEs), the announcements bring a mixture of welcome support and changes that need careful consideration.
Expanded business rates relief, additional finance for growing companies, and new incentives for entrepreneurs could create opportunities. Meanwhile, rising wages, changes to taxation, and the continuing uncertainty around energy prices mean business owners still need to plan carefully.
At a glance, the Autumn Budget outlines:
Additional business investment, including a boost to the British Business Bank
Support for entrepreneurs, such as a new Young Entrepreneurs Allowance
An increased commitment to supporting women-led business, which support double to £200 million
Tax benefits and relief for founders and businesses in the retail, hospitality, and leisure sectors
Regional development plans
Measures to cut energy costs for individuals and businesses.
Understanding how these announcements affect your business can help you make informed decisions about investment, recruitment, cash flow, and growth. Not every announcement will apply to every business, and some measures will depend on further guidance or implementation.
However, there are several areas worth examining now.
Here’s what SME owners need to know, what the announcements could mean for your finances, and how you might want to prepare for the year ahead.
The economic outlook: what does the Autumn Budget mean for your business?
The Chancellor presented the Budget against a backdrop of global uncertainty (such as the ongoing wars in Ukraine and the Middle East), rising costs, and pressure on household finances.
The conflict involving Iran and the resulting volatility in international energy markets, as well as the global supply chain, have added to concerns about inflation and the cost of doing business. It comes as environmental factors, such as climate change and this year’s Super El Nino, further increase financial pressures on SMEs.
The government's stated aim is to give households and businesses some immediate breathing space while making longer-term investments to strengthen the UK economy.
For business owners, the important question is not simply whether the economy is growing, but what that growth means for customer demand, borrowing costs, wages, and operating expenses.
Even where the wider economy performs well, individual businesses can experience very different conditions. A retailer may be dealing with cautious consumer spending, while a manufacturer may be managing expensive energy bills or investing in new machinery to meet demand.
What can you do?
Review your business plan and financial forecasts against several possible scenarios.
Consider what would happen if sales grew more slowly than expected, a major customer paid late, or supplier costs increased again.
A cashflow forecast can help you identify potential shortfalls before they become urgent. It can also show whether you have the capacity to invest, take on staff or expand into new markets.
If your business has a viable growth plan but needs additional capital to put it into practice, exploring appropriate funding early can give you more time to assess your options.
Business support and investment: new opportunities for growing SMEs
One of the Budget's central themes is encouraging businesses to start, innovate and scale.
More capacity for the British Business Bank
The government has announced an additional £20.4 billion for the National Wealth Fund and British Business Bank, strengthening the ability of these public finance institutions to support investment across the UK.
The British Business Bank will have additional capacity to support smaller businesses, including through equity investment and a new venture-debt offer. The wider package is intended to mobilise private investment and support sectors including advanced manufacturing, technology, defence, and clean energy.
This is a significant commitment to improving access to finance. However, it does not mean that every small business will receive funding directly from the British Business Bank.
The practical opportunities will depend on the investment programmes, finance providers, and eligibility criteria through which support is delivered.
For SMEs, the key takeaway is to understand the different types of finance available and identify which best fits your business.
For example, a business seeking investment to develop a new product may need a different funding structure from an established company looking to purchase equipment, recruit staff or open another premises.
New incentives for entrepreneurs
The Budget also introduces several measures aimed at encouraging entrepreneurship.
Founders' Relief: Eligible founders of high-growth, innovative companies will be able to benefit from a 10% Capital Gains Tax (CGT) rate on up to £10 million of lifetime gains.
A higher trading allowance: The tax-free trading allowance will increase from £1,000 to £3,000, allowing people to earn more from small trading or miscellaneous activities before needing to pay tax on that income, subject to the applicable rules.
Research and development: The government intends to simplify access to research and development tax reliefs and improve venture capital schemes to help innovative businesses attract investment.
Employee share schemes: Tax-advantaged employee share schemes will be expanded to help ambitious businesses attract and retain talent.
Recruitment and skills: Changes to skilled-worker visa arrangements are intended to make it easier for eligible growing businesses to recruit highly skilled workers.
These measures will not be equally relevant to every SME.
Founders' Relief, for example, is specifically aimed at eligible high-growth, innovative companies rather than all business owners selling a business.
Nevertheless, they reinforce the importance of planning for the next stage of your business rather than focusing exclusively on immediate costs.
More support for female founders
The Budget also includes measures aimed at helping more women-led businesses grow.
The government will introduce a new scale-up programme for female founders, while the British Business Bank will double its commitments to women-led businesses and funds to £200 million.
For women looking to take an established business to the next level, access to investment, and the right support can make a difference. Whether you're planning to recruit, expand into new markets, invest in equipment or develop a new product, understanding your funding options can help you turn ambitious plans into a realistic growth strategy.
The additional commitment from the British Business Bank is not a direct grant available to every woman running a business. The opportunities will depend on how the funding is delivered, which investment providers participate, and the eligibility criteria attached to individual programmes.
Read more: Why women entrepreneurs often wait longer to take business risks — and what that can cost
A helping hand for young entrepreneurs
Starting a business often means taking a financial risk before you have a reliable income. For younger entrepreneurs without substantial savings or financial support from family, covering everyday living costs while building a business can be a particular challenge.
To help address this, the government has announced a new Young Entrepreneurs Allowance, intended to cover a year of living costs for young people starting businesses.
This measure could help aspiring entrepreneurs take their first steps towards self-employment and give new ventures more room to develop. However, the detailed eligibility criteria and arrangements for the new allowance will determine who can access the support and how it can be used.
If you're thinking about starting a business, it's worth combining any support you're eligible for with a clear business plan, realistic financial forecasts, and an understanding of your startup costs.
You may be eligible for funding, such as a Start Up Loan, to help launch your business venture.
It could help cover eligible business expenses, from equipment and stock to marketing and working capital, where the repayments are affordable.
How can you use the additional business support outlined to your advantage?
If you're planning to launch a business, develop a new product or scale an established company, review whether your project could qualify for a relevant tax incentive, investment programme or funding opportunity.
Keep records of research and development activity, prepare realistic financial projections and make sure you understand the conditions attached to any relief or investment.
It's also worth reviewing your business plan before approaching a lender or investor. A clear explanation of what you want to achieve, how much capital you need, and how the investment will generate a return can help you assess your options and prepare for a funding application.
Remember: support is out there for your business. It’s important you take advantage of it.
Business taxes and rates: where could your costs change?
Tax changes can affect both your immediate cash flow and the amount of money available to reinvest in your business. The Budget includes measures intended to support high streets, alongside changes that business owners should discuss with their accountant.
Business rates relief for retail, hospitality, and leisure
One of the most significant announcements for high-street businesses is an increase in the Small Business Rates Relief (SBRR) threshold from £12,000 to £18,000 in rateable value.
The government estimates that around 70,000 additional retail, hospitality, and leisure businesses will be taken out of business rates altogether, meaning approximately half of properties in these sectors will pay no business rates.
Eligible retail, hospitality, and leisure properties will also benefit from a two-year real-terms freeze in business rates bills. This builds on the previously announced additional 20% business rates reduction for eligible pubs, clubs, and live music venues, excluding the very largest live music venues.
For independent shops, cafés, restaurants, gyms, and other eligible businesses, these changes could reduce a significant fixed operating expense. However, eligibility matters. The relief is not a universal business rates reduction for every sector, and the treatment of individual properties will depend on the applicable rules and rateable values. Businesses outside the eligible categories may not benefit from the same measures.
What could retail, hospitality, and leisure business owners choose to do?
You may want to check your property's current rateable value and business rates bill. If your business falls within retail, hospitality or leisure, confirm how the revised threshold and other reliefs will apply to your premises.
If your rates fall, consider how the saving could be used most effectively. It might help strengthen your cash reserves, cover recruitment costs, invest in equipment or contribute towards a planned refurbishment.
Don't commit the anticipated saving to new expenditure until you've confirmed the amount and when it will take effect.
Changes to business taxation
The Budget also introduces changes to the taxation of savings and property income, alongside measures affecting company owners and online sellers.
From April 2027, tax rates on savings and property income will increase by a further 2% across all bands. The Government says 84% of taxpayers will see no increase in their overall tax bill, although the effect on an individual will depend on their circumstances and the income they receive.
From October 2027, online marketplaces will become responsible for collecting VAT on qualifying sales by UK businesses using their platforms. The aim is to improve compliance and ensure that businesses selling through online marketplaces are treated more consistently.
The government has also announced changes to the rules governing company distributions to prevent certain complex arrangements from being used to extract profits at lower tax rates.
For business owners, these measures are a reminder that the way you structure your business, hold assets, and draw income can have important tax consequences.
How can you prepare?
Speak to your accountant before making significant decisions about extracting profits, selling business assets or changing how you receive income. Review your financial forecasts to understand how any changes could affect the money available to your business.
Online sellers should also monitor the detailed VAT guidance and check whether their sales arrangements will be affected by the new marketplace rules.
Tax planning is not simply about reducing a bill. It's about understanding your obligations and making decisions that leave your business in a stronger position.
Capital investment and tax relief
The Budget also continues the government's focus on encouraging business investment through capital allowances and support for innovation.
If you're considering new machinery, equipment or technology, discuss the available capital allowances with your accountant before committing to a purchase. The tax treatment can influence the overall cost of an investment and the timing of any relief.
However, tax relief should not be the sole reason to spend money. Any investment should make commercial sense for your business, with a clear understanding of its costs, expected benefits, and impact on cash flow.
Energy and operating costs: what support is available?
Energy remains a major concern for many businesses, particularly manufacturers, and other organisations that rely heavily on electricity.
The Autumn Budget includes measures intended to ease some immediate pressures while reducing the UK's exposure to volatile international energy markets over the longer term.
Support for energy-intensive businesses
From April 2027, the new British Industrial Competitiveness Scheme will support more than 10,000 eligible businesses in electricity-intensive industrial sectors and their supply chains.
The scheme is intended to reduce eligible businesses' electricity bills by up to 25%, helping improve their competitiveness against businesses operating in other European economies.
For manufacturers and qualifying industrial businesses, this could make a meaningful difference to operating costs and investment decisions. However, the scheme is targeted rather than universal, so businesses should check the eventual eligibility criteria before factoring any savings into their budgets.
Wider energy measures
The government is extending the temporary removal of VAT on domestic electricity bills until the 1st of July 2027. This is a household measure rather than a general VAT reduction for business electricity supplies.
It will also ask Ofgem to abolish gas standing charges and move those costs into unit rates. This could give households greater control over their bills, although the actual effect will depend on energy consumption and tariff arrangements.
For businesses, the wider policy direction is to make energy more secure and affordable over time. However, SMEs should not assume that household energy measures will automatically reduce their own commercial utility bills.
What can your business do?
Start with an energy-cost review. Look at how much you use, when you use it, and whether your current contract remains competitive. For energy-intensive businesses, assess whether improvements to equipment, insulation, production processes or energy management could reduce consumption.
If upgrading equipment or investing in energy efficiency requires capital, build the expected savings into your financial projections. This can help you compare the upfront investment with the potential long-term reduction in running costs.
The Autumn Budget also includes a new Energy Wealth Fund within the National Wealth Fund's additional capital. This is intended to support investment in energy infrastructure and projects, although businesses should not assume it represents a direct grant or loan entitlement.
The important point is to combine any support you may qualify for with a practical plan to manage your energy use and operating costs.
Regional development: what could investment mean for the Midlands?
The Budget places considerable emphasis on spreading economic growth across the country, with investment in strategic industries, local infrastructure, and greater powers for regional leaders. It continues on from the government’s previously announced plans for continued devolution to local authorities and governing bodies.
For businesses in the East and West Midlands, several announcements are worth watching.
Investment in industry and innovation
The government has announced more than £1 billion in new public-private life sciences investment, including £200 million for Kindeva's investment in Loughborough. It has also committed to a £2.5 billion, 10-year programme with Rolls-Royce to develop next-generation gas turbine technology for civil and defence aerospace.
These investments could create opportunities for businesses within manufacturing, engineering, research, and specialist supply chains. However, the benefits will depend on how projects develop and whether local SMEs can secure contracts or participate in their supply chains.
Businesses interested in supplying larger organisations should consider reviewing their capabilities, accreditations, capacity, and cash flow.
Winning a substantial contract can create opportunities for growth, but it can also require investment in materials, equipment, staffing, and working capital before payment arrives. A Business Loan might provide a solution in this scenario.
Talk to our investment team about your options and how your business could use funding to help work towards securing a vital contract.
More power for local leaders
The government is also progressing its plans to devolve greater financial powers to regional authorities.
Mayors will begin receiving a share of business rates revenue from 2027, with the Government intending for local and regional government to retain all business rates income before the end of the decade. Mayors will also receive assigned income tax revenue from 2028.
The aim is to give local leaders greater control over the resources available to support economic development, skills, infrastructure, and local priorities.
For SMEs, this could influence future investment in business support, transport links, skills programmes, and local enterprise initiatives. However, the practical benefits will depend on how individual authorities allocate their resources.
How can you prepare?
Keep an eye on announcements from your local authority, combined authority, and business support networks. Look for opportunities involving business grants, training, supply-chain development, innovation, and regional investment.
If you have plans to expand, recruit or invest in new equipment, investigate the support available in your area before committing your own capital.
First Enterprise works with businesses across the Midlands, helping owners explore their funding options and consider how finance could support their plans. We also work with a wide range of local business support partners who might be able to further assist with your planning.
Household measures that could affect you and your business
Business owners do not operate in isolation from their customers, employees, and communities. Household finances influence spending, recruitment, staff retention, and the costs of running a business. They’re also likely to impact your home life.
The Budget includes several measures that could have an indirect effect on SMEs.
Wages and employment costs
The National Living Wage will increase by 3.9% to £13.21 an hour from April 2027. The government estimates that a full-time worker earning the National Living Wage will receive an additional £910 in gross annual earnings.
Higher wages can help employees manage rising living costs, but they also increase payroll expenditure for employers.
If you employ staff, review your wage budget before April 2027. Remember to account for the wider costs of employment, including employer National Insurance contributions, pension contributions, and any changes to staffing requirements.
For some businesses, this may mean adjusting prices, reviewing productivity or delaying recruitment until the additional costs can be supported. For others, investing in equipment or improving processes may help the existing team handle more work efficiently.
The key is to model the full cost of employing people rather than considering hourly pay in isolation.
Support for drivers and self-employed workers
The government is extending the 5p fuel duty cut for another six months, with the planned increase in fuel duty deferred until the 1st of July 2027.
It is also making the more generous tax-free mileage rates permanent. The standard rate remains 55p per mile for the first 10,000 business miles, while the rate for additional miles will increase from 25p to 35p from April 2027.
These measures could help employees and self-employed people who use their own vehicles for business travel, including tradespeople, care workers, and mobile service providers.
If your business involves regular travel, review how mileage is recorded and reimbursed. Make sure your policy reflects the relevant rates and that business journeys are documented properly.
Household spending and consumer confidence
The government is also suspending tariffs on more than 100 products to reduce import costs on selected household goods and essentials.
This may help ease some household pressures, although the extent to which consumers benefit will depend on whether businesses pass the savings on through lower prices.
For retailers, hospitality businesses, and other consumer-facing SMEs, the wider effect on customer spending is worth monitoring. Lower household costs could leave some customers with more money to spend, but this is not guaranteed and should not be treated as an immediate increase in sales.
Continue to monitor your customers' behaviour, review your pricing, and maintain realistic sales forecasts.
Turning the Autumn Budget into a practical business plan
The Budget provides several reasons for SMEs to review their plans, but announcements alone will not improve a business' finances. The benefit comes from understanding which measures apply to you and using that information to make better decisions.
Here are five practical steps to consider taking over the coming weeks.
1. Review your cash flow
Update your cashflow forecast to reflect changes to wages, energy costs, business rates, and any relevant tax obligations. Test what would happen if sales fell short or a customer paid late.
2. Identify your next investment
If you have been considering new equipment, additional staff, a larger premises or a new product, revisit the plan. Establish how much it will cost, what it should deliver, and whether the investment remains affordable.
3. Check your eligibility for support
Investigate relevant business rates relief, industrial energy support, tax incentives, and regional programmes. Confirm the criteria and application timelines before including anticipated savings in your budget.
4. Speak to your accountant
Changes to property and savings income taxation, capital allowances, and other tax arrangements may affect your decisions. Professional advice can help you understand your obligations and avoid costly assumptions.
5. Explore funding before you need it urgently
If your business has a viable opportunity but lacks the capital to pursue it, investigate your options early. Allow time to prepare financial information, compare suitable products and understand the repayments involved.
Could funding help you take the next step?
For some businesses, the most important question following the Budget will be how to make their plans affordable.
A business may have a strong customer base and a realistic growth opportunity but lack the cash to buy equipment, recruit staff, increase stock or move into larger premises. Another may need to invest in energy efficiency or restructure existing borrowing to make its finances more manageable.
In these circumstances, appropriate funding could help bridge the gap between where a business is today and where it wants to be.
A conversation with our advisors could help you understand your options, identify what information you need, and decide on the next steps.
To get in touch, simply complete the form below or give us a call at 0345 602 7355.
The bottom line: the Autumn Budget creates opportunities for some businesses, but making the most of them starts with understanding your own finances and priorities. Don’t be afraid to seek out support and explore new ways of tackling issues, as well as supporting long-term growth.
Please note:
This article is for general information only and does not constitute advice. It is based on our current understanding of announcements within the 2026 Autumn Budget. Certain aspects may change as the government reveals more details. All information is assumed correct at the time of writing and may subject to change in the future.
Please do not act based on anything you might read in this article. All content is based on our understanding of HMRC legislation, which is subject to change.
We always recommend that you seek direct financial advice from a relevant expert or professional before making any financial decisions.
The Financial Conduct Authority (FCA) does not regulate tax planning.
First Enterprise is a not-for-profit, FCA-regulated finance provider offering loans from £500 to £250,000 for startups and growing businesses across the UK.
We support businesses that struggle to access mainstream finance, with a focus on underrepresented groups. Funding is delivered through government-backed national and regional programmes.
We offer human-made lending decisions, a dedicated advisor for every applicant, and no penalties for early repayment.
