Quick answer: Corporation tax rates remain at 25% and 19%. The changes most businesses should plan for are capital allowances, business rates, wages, benefits reporting, VAT marketplace rules and the timing of a business sale.
This is a general guide to Budget 2026. Some measures still require legislation or detailed HMRC guidance, so do not make a transaction decision without advice on your own facts.
Corporation tax and investment
The main Corporation Tax rate stays at 25% and the small profits rate stays at 19%, with the existing limits and marginal relief rules continuing. For most companies, the planning question is therefore less about a headline rate rise and more about the relief available for expenditure and the date it is incurred.
For eligible investment, the main first-year allowance rises from 40% to 50% for expenditure on or after 1 January 2027. The main writing-down allowance falls from 14% to 12% from 1 April 2027 for companies, and 6 April 2027 for sole traders and partnerships. Full expensing remains available for qualifying new plant and machinery. If a significant purchase is planned, check which allowance applies before committing.
Business rates, wages and payroll
For qualifying retail, hospitality and leisure properties in England, the threshold for 100% Small Business Rates Relief rises from a rateable value of £12,000 to £18,000 from 1 April 2027. The tapered-relief threshold rises from £15,000 to £21,000. Relief for qualifying pubs, social clubs and live music venues rises from 15% to 35%, subject to the published conditions.
From 1 April 2027, the National Living Wage rises by 3.9% to £13.21 an hour. The 18 to 20 rate rises to £11.27 and the 16 to 17 and eligible apprentice rate to £8.31. Build these changes into payroll budgets and pricing plans now.
Mandatory payrolling of benefits in kind begins in phases from 6 April 2027. The first phase covers company cars, car fuel, vans, van fuel and medical benefits; most other benefits are scheduled from April 2028. Employers should check that their payroll software and employee communications are ready.
VAT and online selling
From October 2027, VAT online marketplace liability rules are due to extend to UK businesses. Online marketplaces will become responsible for collecting VAT on qualifying sales by VAT-registered UK businesses and certain other sellers meeting the relevant threshold. Online sellers should review how the rule may affect their invoices, pricing and marketplace records when HMRC publishes detailed guidance.
Thinking of selling a business?
From 6 April 2027, the lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000. Budget 2026 also announced a new Founders' Relief with a 10% rate on up to £10 million of qualifying lifetime gains for founders and early investors in eligible high-growth companies. The rules are narrow and the timing of a disposal can matter, so seek tailored Capital Gains Tax advice early.
Key dates to put in the diary
- 1 January 2027: first-year allowance rises to 50%; temporary banking surcharge increases.
- 1 April 2027: company writing-down allowance falls; National Living Wage and business-rates changes begin.
- 6 April 2027: many benefit-in-kind payroll changes, trading allowance and Business Asset Disposal Relief changes take effect.
- October 2027: online marketplace VAT rules are scheduled to extend to qualifying UK sellers.
Frequently asked questions
Did corporation tax go up?
No. The main rate stays at 25% and the small profits rate stays at 19%. Banking companies are subject to a separate temporary surcharge change.
What should an employer do first?
Review the 2027 wage increase, identify benefits currently provided to staff, and ask your payroll provider how the phased mandatory payrolling changes will be handled.
Where can I get help applying this to my business?
We can review the measures alongside your accounts, tax position, payroll and business plans. See our tax compliance service or send an online enquiry.
Last updated: 1 November 2026. This article is for general information only and is not tax advice.