Autumn Budget 2026: What could it mean for business tax?

What are businesses worried about?

For most business owners, the biggest concern is uncertainty. Tax planning becomes significantly more difficult when reliefs, allowances and thresholds are regularly changed. Many entrepreneurs feel they are being squeezed from multiple directions. Corporation tax has increased in recent years, dividend taxation is less attractive than it once was, and a growing number of individuals are being caught by frozen thresholds and stealth taxes. Add the major worry about Inheritance Tax reliefs being capped for business owners (which has a significant impact for planning) they are therefore looking for signs of whether the Government intends to continue raising revenue through the tax system or whether it will focus on policies designed to stimulate growth.

A further concern is the increasing complexity of the UK tax system. Successive governments have introduced new reliefs, restrictions and anti-avoidance measures, often with the best intentions, but the result is a system that many taxpayers struggle to understand and impacts decisions. If I could urge the government to do one thing, it would be not to add complexity and look to reduce it. There are however a few themes that could come up.

Capital Gains Tax

Capital gains tax (CGT) is likely to remain one of the most closely watched areas of the Budget. Many business owners spend decades building their businesses and ultimately expect to realise value through a sale or succession event. We have an odd CGT regime which does not bake in inflation into the tax take, a person can make a theoretical gain on paper but after accounting for inflation make a loss, but have CGT to pay. A better regime would be to possibly have a higher rate of CGT that gives inflation relief. Business owners that start a company from scratch would be hit, but if growth is the aim we could provide a better form to roll over the gain and avoid CGT into the next company business (at present we have a complex EIS regime to try to do this but its complexities do not give the desired result).

This would in principle be fairer and align with the growth aim. It would be fair for someone to say, a person can simply move abroad and stay non-UK resident for 5 years to remove themselves from UK CGT on a business exit (we can all point to individuals in the press that have done this) which is why it would be sensible to have a form of deferred (until realised) exit tax which many other countries have.

Investment Incentives and Corporation Tax

While a further increase in corporation tax appears unlikely, businesses will be looking closely at investment reliefs. Full expensing has been one of the most significant business tax measures introduced in recent years, allowing companies to obtain immediate tax relief on spend. The policy has encouraged investment and provided greater certainty for businesses planning major expenditure. Removing or restricting these reliefs could raise revenue in the short term, but risks damaging business confidence at a time when economic growth remains challenging. This is therefore a call to not complicate a good policy.

Employers’ National Insurance Contributions (NIC)

With National minimum wage rises, the rise in Employers NIC has caused issues. The cost of employing people, especially young people is having an effect. I do wonder if tax policy here is keeping up with the real world. The tax system now rewards businesses for investing in AI and technology to replace humans, and punishes businesses that are keeping humas. 15% Employment tax compared to AI with no tax will become increasingly a no brainer decision for employers. For the long term future, this must be changed, I wonder if the government can recognise this and if they are brave enough to take it on.

VAT

This is likely controversial, but I have thought it is a key area restricting growth in the economy. The current VAT threshold sits at £90,000 and evidence indicates it restricts growth. Too many very good businesses could take on more but choose not to, all because of tax policy. It is also telling that many competing countries have much lower VAT thresholds than the UK. The government could fix this, but they would have to be brave to do so, noting the headlines it would surely create, but growth is required. The simplest solution would be to drastically lower the VAT threshold which would remove the incentive not to work to the limit. If that is not desirable, a phasing approach from 0% to 20% between say £30,000 and £90,000, but that adds complexity which would go against my overarching position of a simpler tax system. I suspect the government will use the fiscal drag approach to this and keep the £90,000 threshold fixed for a while and let inflation make the decision so they do not have to.

Final thoughts

With any budget over the years I have been working in tax, I have championed simplicity, yes complexity increases my workload, but I am more interested in helping individuals and businesses and I think this is the best approach. So in short, I would urge the government to remove some of the complexities and barriers to growth (mentioned above and dare I say the ridiculous system of £100,000 tax trap where 60% is applied). Maybe this year is the time.