Autumn Budget 2026: Wow analysis

This was John Healey’s first Budget as Chancellor, delivered just over three months after he was appointed by new Prime Minister Andy Burnham. It came against a tight fiscal backdrop, with borrowing running above forecast, meaning less headroom for the Chancellor to make spending pledges. The Wow team has been analysing the report closely to help you understand what changes matter to you and what they mean for you, your family and your business.

The Wow View

Small businesses had little to cheer in this Budget. The initial excitement about Founders Relief (a 10% Capital Gains Tax rate for business owners disposing of qualifying assets) was soon dashed when it became apparent that it applies only to businesses with turnover over £10m.

It was an alluring headline that hid the fact that the tax break most owners use when they sell their business is being cut in half. More on that below.

While pro-business measures were hard to find in this Budget, at least there weren't any changes that significantly increase the tax burden on businesses. After a succession of Budgets where that has happened, its absence at least provides some relief for embattled business owners, if only a small amount.

The key headlines

Selling your business: the tax break most owners use when they sell is being halved from 6 April 2027. A new Founders’ Relief offers a much lower tax rate, but only 0.01% of businesses will qualify.
Share options for your team: a new scheme, EMI2, launches in April 2027, so more businesses can offer staff share options with tax advantages.
Buying equipment: the tax relief rules are changing slightly, but for most limited companies the impact should be small.
Rental and savings income: tax is going up again, to 24%, 44% or 49% depending on your income tax band.
Cash ISA: the planned cut is scrapped, so you can still save £20,000 a year tax-free.

Selling your business

Business Asset Disposal Relief is halved

When you sell your business, or shares in it, you pay Capital Gains Tax on the profit you make. Business Asset Disposal Relief (BADR) cuts that tax rate from 24% to 18%, on profits up to a set amount over your lifetime.

From 6 April 2027, that lifetime amount is halved, from £1 million to £500,000. The 18% rate stays the same.

In real terms, the most BADR can save you drops from £60,000 to £30,000. The government expects three in four people who use it to be unaffected, because their profits fall under the new limit.

New Founders’ Relief: less than it seems

From 6 April 2027, a new Founders’ Relief will let qualifying founders pay just 10% tax on up to £10 million of profit from selling their business, over their lifetime. Compared with the usual 24%, that’s a saving of up to £1.4 million.

The catch is in the detail. The government has published its draft rules, and the bar is very high. As they stand, you’d need to tick every box below. The turnover criteria alone will discount 99.99% of UK businesses.

You, as the founder, must have:

Owned at least 25% of the company from the day it started trading (or started getting ready to trade)
Held your shares for at least five years before selling
Lived in the UK for at least five tax years in a row before selling

Your company must:

Be a genuine trading business, still doing what it was set up to do. Some types of business are excluded, such as property development, dealing in land and financial services
Be properly based in the UK, and have been for at least five years before the sale
Have turnover of at least £10 million in the year before the sale
Have at least 15 full-time employees in that year. They must work 35+ hours a week and earn at least the minimum wage. Directors, contractors and agency staff don’t count

And your company must pass two of these three tests:

Fast sales growth: turnover growing by an average of 25% a year over three financial years in a row, at some point in the ten years before the sale, starting from at least £10 million
Fast team growth: full-time headcount growing by an average of 25% a year over three financial years in a row, at some point in the ten years before the sale, starting from at least 15 people
Innovation: spending at least £1.5 million on research and development, and claiming R&D tax relief on it in the three years before the sale

A few other things to know:

It shares a limit with BADR. Any BADR (or the similar Investors’ Relief) you use from 6 April 2027 comes off your £10 million Founders’ Relief limit.
Only individuals can claim, but several founders of the same company can each claim.
Your R&D claims matter. If HMRC later changes an R&D tax relief claim that the relief depended on, you’d lose it and have to pay the extra tax, plus interest.
Rules to stop people gaming it are coming, such as restructuring a company just to qualify.

The rules are open for feedback until 30 November 2026, so they could still change. They don’t yet say whether shares owned by your spouse, children or a family trust would count.

What this means for you

Owning 25% from day one, £10 million turnover, 15 full-time staff and a track record of rapid growth is a tough combination. As it stands, that puts Founders’ Relief out of reach for a lot of agencies. The BADR cut is much more likely to affect you.

If you’re thinking about selling your business, or part of it, timing matters. Sell before 6 April 2027 and you keep the full £1 million BADR limit. After that, it’s £500,000, unless you qualify for Founders’ Relief. We’d suggest not changing who owns your shares until the final rules are out, and talking it through with us before you make any plans.

Running your business

Tax relief on equipment

When your business buys equipment, like laptops, machinery or vans, you can usually take some or all of the cost off your taxable profits.

From 1 January 2027, businesses that can’t claim the full cost in one go, such as sole traders, will be able to claim 50% of it in the first year, up from 40%.
For equipment that’s claimed bit by bit over several years, the amount you can claim each year drops from 14% to 12% of what’s left. This starts on 1 April 2027 for companies and 6 April 2027 for sole traders and partnerships.

Since 2023, most limited companies have been able to claim the full cost of most equipment straight away under what’s known as ‘full expensing’. So we expect the impact on clients to be small.

EMI2: share options for more businesses

Share options let your team buy shares in your business in the future, at a price set today, with tax advantages. EMI is the scheme most business owners know. From April 2027, a second scheme, EMI2, will sit alongside it. It’s an updated version of an existing scheme called CSOP.

Each employee can hold up to £120,000 of options, double the current £60,000.
Options will last 15 years, the same as EMI.
The rules on which companies can use it are looser than EMI, so more businesses can offer it.
You can run EMI and EMI2 at the same time, so your team can hold more tax-advantaged options overall.

Minimum wage

From 1 April 2027, the minimum wage rises by 3.9%. If any of your team are paid at these rates, build the extra cost into your forecasts now.

Age 21 and over (National Living Wage): £12.71 an hour now, rising to £13.21
Age 18–20: £10.85 now, rising to £11.27
Age 16–17: £8.00 now, rising to £8.31
Apprentices: £8.00 now, rising to £8.31
Accommodation you provide (counted towards pay, per day): £11.10 now, rising to £11.53

Mileage

If you or your team use your own car for work, you can claim a tax-free amount per mile. From April 2027, the rate for miles over 10,000 a year rises from 25p to 35p. The rate for the first 10,000 miles stays at 55p, and that rate is now permanent.

Personal tax

Rental and savings income

The 2025 Budget put up the tax on rental income and savings interest by 2 percentage points. Today the Chancellor added another 2. That means rental income and savings interest will be taxed at 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate.

Cash ISA

A U-turn here. The amount you can save tax-free in a Cash ISA each year was due to drop to £12,000 from April 2027. It’ll now stay at £20,000. Good news for savers, especially as tax on savings interest is going up.

Sole traders

If you’re a sole trader, you can claim a flat allowance against your income instead of adding up your actual costs. That allowance trebles to £3,000. It’s handy if your costs are low or you don’t track them, and it’s the first increase since it was introduced in 2017.

Parental pay for the self-employed

Announced a few days before the Budget, self-employed fathers, partners and adoptive parents will get parental pay for the first time, from April 2029. More detail is expected in early 2027.

Other announcements

Here are the other changes that might make a difference to you or your team:

Pensioners whose only income is the State Pension will get a higher tax-free allowance of £13,036, so they won’t pay income tax on it.
The income levels at which each income tax rate kicks in will stay frozen again.
January’s planned rise in fuel duty (the tax on petrol and diesel) has been cancelled.
The daily standing charge on gas bills will be scrapped, saving around £27 a year on a typical bill.
Households in council tax bands A to D will get a £100 energy payment.
A new First Time Buyer ISA will replace the Lifetime ISA.
HMRC will be able to take tax you owe directly from your bank account.
Taxes on banks rise from 3% to 8%, the Budget’s biggest money-raiser, and taxes on gambling are going up too.

There was nothing new on Inheritance Tax or R&D tax relief.

The full Autumn Budget 2026 is published on the government website and details everything the Chancellor delivered in his statement today. The Budget can be read in full here, and news coverage can be found on the BBC website.

Where Wow can help

Planning a sale? Timing now matters. Sell before 6 April 2027, and you keep the full £1 million BADR limit, so please talk to us as soon as you can. Book a time with our exit specialist.

Earn income from property or savings? The higher tax rates make it worth reviewing how you take that income, including whether owning property through a company would save you tax. Book a call with our remuneration specialist.

Want a wider check? Our tax diagnostic looks at your personal and business tax set-up in light of today’s changes. You’ll get clear, practical recommendations you can act on with Wow, or in whatever way works for you. Take the tax diagnostic.

Further advice

This article is general information, not advice. If you’d like advice on your own situation, or to chat about your tax and plans for the future, get in touch. We’d love to help.