In his first Autumn Budget as chancellor, John Healey promised ‘breathing space for today, hope for the future’.
Through the Budget, the government has declared its ambition to make the UK the ‘best place in the world to start a business, scale it, and stay here for the long-term. But, for SMEs and entrepreneurs, the question that helps decide the truth behind the claim is whether it makes it easier to invest, hire and grow.
While much of the detail is yet to follow, Ramona Derbyshire, Thrings’ Head of Business Growth takes a look at some of the Budget’s key features following the announcement.
A friendlier place to start and scale
A new “Founders Relief” will cut Capital Gains Tax to 10% on up to £10million of lifetime gains for those founding innovative, high-growth companies, with the tax-free trading allowance tripling from £1,000 to £3,000. Under the Budget proposals employee share schemes will also be expanded, and it was announced that improvements would be made to simplify venture capital schemes and R&D tax relief.
The announcement also brought good news for businesses looking to hire, with new legislation to prevent non-compete clauses from obstructing startups and scaling firms being able to recruit the people they need. The chancellor confirmed that detail on wider restrictive practices would come in early 2027.
Retail, hospitality and leisure businesses will also benefit through an increase to the Small Business Rates Relief threshold, which will impact around 70,000 further businesses – a move the government claims will result in half of the businesses in those sectors paying no business rates.
More opportunity for SMEs to win public contracts
The Budget has also sought to make procurement easier to access, with the chancellor announcing a new ‘British’ supplier definition, so that preferential treatment goes to firms creating genuine investment and jobs in the UK. This is accompanied by a target to spend more than £7billion directly with SMEs by 2028.
Easier access to capital
The National Wealth Fund and the British Business Bank will share an extra £20.4billion, which the government claims will aid their role in supporting reindustrialisation, regional growth and Britain’s strategic industries. In the Budget, it was also announced that the latter would be getting more equity capacity and a new venture-debt offer, with a particular focus on smaller firms.
For growing businesses that struggle to raise funding at the right time, more choice beyond traditional bank lending will be welcome, with the Treasury claiming the extra capital will help create or support 140,000 jobs.
The other side of the ledger
One challenge owners planning an exit will need to be aware of is a further cut to Business Asset Disposal Relief (BADR). While the 18% rate remains in place, from 6 April 2027 the lifetime limit on qualifying gains will be halved from £1 million to £500,000, cutting the maximum saving from £60,000 to £30,000.
It is expected that three in four claimants will see no change. However, with the £1 million limit still applying to qualifying sales before April 2027, business owners with an exit strategy will need to be aware of the change and consider what it could mean for their plans.
Despite the government complying with its own pledge to reject broad-based tax rises and commitments on corporation tax, as with any Budget, there are also costs for business owners to weigh up.
This includes the National Living Wage rising by 3.9% to £13.21 an hour and tax rates on savings and property income rising by 2% - both from April 2027.
The chancellor also confirmed that rules on company distributions will be ‘modernised’ to stop ‘complex arrangements’ being used to take profits at lower tax rates, and that, from October 2027, online marketplaces will collect VAT on qualifying sales by UK businesses using their platforms.
Thrings’ Business Growth team draws on expertise from across the firm’s specialist sectors to provide tailored commercially aware advice that supports businesses to grow and thrive. Get in contact to find out how they can help you achieve your commercial objectives.