On November 26th, 2025, the UK Government announced its Autumn Budget. Here is a breakdown of what it means for businesses and companies:

Capital Gains Tax (CGT) & Business Sales

CGT is a UK-wide tax.

• Standard CGT rates remain at 18% for basic rate taxpayers and 24% for higher/additional rate taxpayers
• From 6 April 2026, the CGT rate on gains qualifying for Business Asset Disposal Relief (BADR) rises from 14% → 18%

The timing of business disposals is increasingly important, especially where significant value is involved.

 

Employee Ownership Trusts (EOTs)

Effective immediately:

• CGT relief on disposals to EOTs has been cut from 100% to 50%
• 50% of the gain is chargeable now
• The remaining 50% is held over and may be taxed on a future disposal by the trustees

The chargeable portion:

• Cannot benefit from BADR or Investors’ Relief
• Will be taxed at the full CGT rate

This significantly changes the tax profile of moving a company into employee ownership.

 

Incorporation Relief – Claims Now Needed

From 6 April 2026, incorporation relief will no longer be automatic when transferring a business into a company in exchange for shares.

Instead:

• A formal claim must be made in the self-assessment tax return for the year of transfer
• The claim must include brief details of the transaction, tax computations and the type of business

 

IHT for Business Owners and Farmers (APR & BPR)

From 6 April 2026, the government will change Agricultural Property Relief (APR) and Business Property Relief (BPR). This is particularly important for farmers and family businesses.

Key changes:

• Relief at 100% will apply only to the first £1 million of combined agricultural and business property
• Above £1 million, relief drops to 50%

Good news for couples:

• Any unused APR/BPR allowance can be transferred to a surviving spouse or civil partner
• Together, this could allow up to £3 million of qualifying assets to be passed without IHT.

From the same date:

• BPR on AIM shares and similar investments will reduce from 100% to 50%
• The £1 million APR/BPR cap does not apply to AIM shares

Transitional rules are complicated – gifting assets before 6 April 2026 may not always give the outcome you expect. It’s crucial to take advice before making large transfers.

 

Paying IHT by Instalments

From April 2026, the option to pay IHT in interest-free instalments over 10 years will be extended to:

• All property which qualifies for APR or BPR

This will help estates that are asset-rich but cash-poor (for example, farms, trading businesses or large landholdings).

Capital Allowances & Investment

These rules are UK-wide.

Annual Investment Allowance & Full Expensing

For 2026/27:

• AIA remains at £1 million, giving 100% relief on most plant and machinery (excluding cars)
• The full expensing regime for companies continues (100% FYA on most new main-rate plant and machinery, 50% on special rate items)

Writing Down Allowances

From:

• 1 April 2026 (companies), and
• 6 April 2026 (unincorporated businesses):
• Main rate WDA: 18% → 14%
• Special rate WDA: remains at 6%

Businesses whose accounting periods straddle the change will use a hybrid rate.

New 40% First Year Allowance (from 1 Jan 2026)

• A new 40% FYA will be available on qualifying new plant and machinery
• Available to both companies and unincorporated businesses
• Not available for cars or second-hand assets
• Can apply to assets used for leasing (but not overseas leasing)

Electric Vehicles & Charging Points

• 100% FYA on qualifying new electric vehicles and charging infrastructure extended to April 2027

 

VAT

From 1 April 2026 (UK-wide):

• VAT registration threshold remains £90,000
• Deregistration threshold remains £88,000
• Standard VAT rate: 20%

 

Electronic Invoicing & Real-Time Reporting

• The government plans to make electronic invoicing mandatory for all VAT invoices from 2029
• A detailed implementation roadmap is expected at Budget 2026
• Real-time reporting (RTR) is being explored, but will not start in 2029* and would only be introduced once e-invoicing is fully embedded.

* Useful for businesses to note for future systems planning.

 

Corporation Tax Rates & Investment Schemes

Corporation Tax Rates (from 1 April 2026)

• Main rate: 25% on profits over £250,000
• Small profits rate: 19% on profits up to £50,000
• 5% marginal rate between these limits

Limits are split where there are associated companies or group structures.

 

EIS & VCT – Company Limits Up, VCT Relief Down

From 6 April 2026:

• Gross assets test:
  • Before issue: £15m → £30m
  • After issue: £16m → £35m
• Annual investment limit:
  • Standard: £5m → £10m
  • Knowledge-Intensive Companies (KICs): £10m → £20m
• Lifetime investment limit:
  • Standard: £12m → £24m
  • KICs: £20m → £40m

At the same time:

• The VCT income tax relief rate for individual investors will drop from 30% to 20%
• EIS relief remains unchanged

This could make EIS relatively more attractive than VCTs for some investors, while widening fundraising options for growing Scottish companies.

 

HMRC Admin, Penalties & Digital Changes (Business-Facing)

Corporation Tax Penalties

From 1 April 2026:

• Late filing penalty doubles to £200, rising to £400 if more than 3 months late
• If three consecutive returns are filed late:
  • Penalty increases to £1,000, or
  • £2,000 if more than 3 months late

The government will also consult on wider changes to HMRC penalties, aiming to be more lenient on genuine mistakes but tougher on deliberate non-compliance.

 

Digital Letters by Default

From spring 2026:

• If you use HMRC’s digital services, you’ll start to receive digital letters by default, not post
• You can choose to opt out if needed

 

Reporting Serious Tax Evasion – Rewards

HMRC’s strengthened reward system means:

• If your report helps HMRC collect £1.5 million or more in unpaid tax, you could receive 15%–30% of the tax recovered
• Rewards are not guaranteed but may be significant where serious evasion is uncovered

 

Cryptoasset Reporting

From spring 2026:

• UK-based cryptoasset service providers must report tax-relevant data about UK-resident users to HMRC, in a similar way to how banks report on ordinary bank accounts.

 

Tax Debt & Collections

HMRC is looking at ways to reduce unpaid tax, including:

• Possible mandatory Direct Debit for PAYE and VAT payments for some businesses
• Hiring more staff focused on debt recovery
• Greater use of external debt collection agencies, particularly for older or more difficult debts