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Announced on 28 October 2026, the Budget pairs enhanced upfront allowances (including a 50% first-year capital allowance from 1 January 2027) and expanded business rates relief with a 3.9% National Living Wage increase and a temporary rise in the bank surcharge to 6%. Businesses can navigate these changes by planning asset investments around allowance deadlines and exploring non-bank commercial finance to safeguard working capital.
At a Glance: Key Autumn Budget 2026 Measures
The Autumn Budget delivered on 28 October 2026 maintains the headline corporation tax rate while adjusting the mechanics of capital investment and employment overheads. Understanding effective dates is essential for timing asset acquisitions and managing upcoming liquidity demands.
| Policy Area | Legislative Change | Commercial Cash Flow Impact |
|---|---|---|
| Capital Allowances (Outside Full Expensing) | First-year allowance rises from 40% to 50% on 1 January 2027; main pool writing-down allowance falls from 14% to 12% on 1 April 2027. | Accelerates tax deduction for non-corporate assets and leasing; penalises holding off investments into existing pools. |
| Business Rates Relief | 100% relief threshold expands from £12,000 to £18,000 rateable value (taper to £21,000) from April 2027 for retail, hospitality, and leisure. | Lowers fixed premises overheads for eligible high-street occupiers; excludes vape shops and adult gaming centres. |
| Payroll & Living Wage | National Living Wage increases 3.9% to £13.21/hr on 1 April 2027; Employer NIC rate remains at 15% with thresholds frozen to 2031. | Drives up recurring operational wage bills and statutory payroll overheads across labour-intensive sectors. |
| Bank Tax Surcharge | Bank Corporation Tax Surcharge doubles from 3% to 6% for 15 months from 1 January 2027. | May encourage major clearing banks to preserve margin by tightening underwriting appetite or repricing debt facilities. |
| Entrepreneur Reliefs | Business Asset Disposal Relief lifetime allowance drops from £1,000,000 to £500,000 from 6 April 2027. | Significantly restricts capital gains relief on exit or succession, requiring earlier structural planning. |
Sources: [1] Grant Thornton
Capital Allowances: Timing Asset Purchases Before Pool Reductions
While full expensing remains available for qualifying limited companies purchasing new plant and machinery, unincorporated firms, partnerships, and leasing businesses receive an improved first-year allowance of 50% (up from 40%) for eligible expenditure incurred on or after 1 January 2027.
Crucially, the annual writing-down allowance for existing main pool balances will decrease from 14% to 12% on 1 April 2027. This structural shift shifts fiscal rewards heavily toward prompt upfront investment rather than holding aging equipment on the balance sheet. Businesses planning fleet upgrades or plant renewals should review delivery schedules with their accountants to ensure invoices land inside optimal accounting periods.
Sources: [1] Grant Thornton
Managing Payroll Pressures and Real-Time Benefit Costs
SME cost bases face direct pressure from 1 April 2027, when the National Living Wage rises by 3.9% to £13.21 per hour for staff aged 21 and over. With Employer National Insurance Contributions (NIC) pegged at 15% and national thresholds frozen until April 2031, wage drift will compound statutory overheads.
Compounding this is the phased introduction of mandatory payrolling for benefits in kind starting April 2027. Transitioning company cars, fuel benefits, and private medical cover to real-time payroll reporting requires businesses to remit Class 1A NIC liabilities each month rather than settling an annual liability post-year-end, introducing an immediate working capital adjustment.
Conversely, administrative requirements ease slightly for innovators: the requirement to submit a separate advance R&D claim notification form is abolished for claims made from 1 April 2027, removing an unnecessary procedural hurdle for genuine claims.
Sources: [1] Grant Thornton
Commercial Lending Realities Under the Bank Surcharge
For business borrowers, the temporary increase in the Bank Corporation Tax Surcharge from 3% to 6% across a 15-month window starting 1 January 2027 introduces new friction. High-street clearing banks facing higher corporation tax burdens often adjust return targets, which can manifest as stricter underwriting limits, longer turnaround times, or increased facility arrangement charges.
As an independent credit broker rather than a lender, Nexgen works with a broad network of over 100 specialist debt funds, challenger banks, and independent asset finance providers. These non-bank and alternative lenders are frequently unaffected by clearing-bank surcharge constraints, offering flexible hire purchase, finance lease, and working capital solutions designed to preserve day-to-day liquidity while acquiring qualifying assets.
Sources: [1] Grant Thornton
Practical Preparation Steps for SME Directors
To position your business effectively before these measures take effect throughout 2027, management teams should execute the following operational and financial steps:
Sources: [1] Grant Thornton
Sources, context and caveats
[1] Grant Thornton
Grant Thornton UK tax analysis of the Autumn Budget delivered 28 October 2026, outlining corporate, capital allowance, employment, and property tax reforms.
Caveat: Based on initial policy announcements; precise statutory rules are subject to the Finance Bill and final HMRC secondary legislation.
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