Just remember, it's important not to get too attached. Chancellors have the longevity of mayflies these days. That must have been somewhere on the mind of fresh-faced newbie John Healey as he stood up to speak. So is he going to use his time in the spotlight to make long-term decisions? Or will he focus on short-term politicking? The answer, for the most part, seems to be the latter.
There were some significant announcements here, and as usual I don't really comment on macro-economic stewardship or spending. But in terms of stewardship of the tax system as a whole, this didn't give me hope that he's going to pass it on in better shape than it is currently. Which is to say: battered, bruised, and overly complex. For example: from a business point of view one of the most eye-catching announcements today was the new 'founders' relief' for capital gains tax. It superficially sounded great! (Read on to find out if it actually is great). But it's not a reform of existing reliefs, it's a byzantine bolt-on.
With that out of the way, let's get down to the key tax announcements, focussing on businesses and entrepreneurs.
Companies and Corporate Transactions
Not much was announced in relation to the actual taxation of corporate profits. Writing down allowances on certain assets have been reduced from 14% per annum to 12% per annum while first year allowances were increased from 40% to 50%. While the relief increases might look bigger than the decreases, they apply to different stock and this ends up being a substantial tax-raising measure, expected to net approximately £1bn a year in the medium term.
The bigger announcements were around company transactions and sales of shares. The Business Asset Disposal Relief (BADR) lifetime allowance was cut from £1m to £500k, meaning that the maximum individual benefit goes down from £60k to £30k (for most taxpayers it amounts to just a 6% CGT saving, from the standard 24% down to the BADR rate of 18% now). BADR is a shadow of its former self.
But we weren't given time to mourn before a very flashy announcement was made: a new founders' relief for sales of shares by founders! A special 10% CGT rate! With a lifetime individual limit of up to £10m! Wowee! What's the catch? The catch is massive unfortunately. At this stage the Government is only consulting on it, but the conditions for qualifying for it look to be very narrow. It only applies to businesses of a certain turnover, with demonstrated growth trajectories and potentially needing to meet certain innovation expenditure requirements. And it's only available to founders who (at least at some point) held 25% of the shares and have held their shares for 5 whole years prior to sale. A completely different beast to the existing BADR rules. I will no doubt be returning to this in future as the rules take shape but just as an indication of how narrow it is: for all the flashy headline numbers, the Exchequer expects this to cost roughly the same amount as it saves on the cuts to BADR.
In less flashy news, the Government has updated us on the progress of its consultation into the reform of company reorganisations, loans by close companies, demergers and company buybacks. At the heart of this consultation is a professed desire to tax the substance of a transaction and draw a fairer distinction between what is taxed as income and what is taxed as capital gain. The Government will launch a more detailed technical consultation in the new year with a view to legislating with effect from April 2028.
Employers and employees
The Chancellor announced what he excitedly referred to as 'EMI 2' – some sort of expansion of tax-efficient employee options. When the documents actually came out it emerged that EMI 2 (2Incentivising2Furious) was the new name for what we have been calling 'CSOP'; a less generous employee share option scheme aimed at larger companies where those companies don't meet the entry requirements of its sibling share option scheme, EMI (EMI 1?). It's all very confusing but fortunately our employee share plans whizz Michael Birchall is on hand to demystify it here.
We also saw a number of smaller employment tax announcements, some of which are welcome such as the news that certain visa charges borne by companies won't be treated as taxable benefits in kind for the relevant employee. The Budget describes this as a change in the law. We prefer to think of it as a clarification, but we won't fall out over it.
Venture Capital Schemes
A relatively quiet year for schemes like the Seed Enterprise Investment Scheme, the Enterprise Investment Scheme and Venture Capital Trusts. However the Government did announce some simplifications and modernisations which are individually relatively minor but just make these schemes a bit easier to work with (e.g. making it easier to claim relief when taking investment under different schemes on the same day, and making the notoriously complex disqualification rules less binary). Some tinkering is welcome, and this falls into that category.
Property Taxes
No major changes to the structure of (for example) stamp duty land tax but the Chancellor did announce a bunch of business rate tweaks broadly aimed at protecting the high street. So there was additional support for pubs, clubs and music venues, as well as small retail, hospitality and leisure (RHL) businesses generally and a real-terms business rates freeze even for larger RHL businesses. Carved out from all this largesse were vape shops and gambling establishments, which will also be taken out of the favourable RHL rules altogether.
More generally there were some changes focussed around housing and helping people get housing, including zero-rated VAT for sales of land to registered providers of social housing (from 1 April 2027), and initiatives aimed at first-time buyers such as a new first-time buyer's ISA to replace the existing Lifetime ISA from 2029.
Personal Taxes
Of relevance to some entrepreneurs will be the steady increase in taxes on property and savings income. From 2027, property and savings income tax rates rise by a further 2% on top of the 2% increases announced at the last Budget (20% to 24% at basic rate, 40% to 44% at higher rate, 45% to 49% at the additional rate). These are some of the few outright increases the Chancellor can justify as not being an extra tax on 'working people' per manifesto promises. The saving grace is that dividend taxes have not been increased further (over and above the changes announced at Budget 2025).
The surprising money raiser, helping the Chancellor balance the books, is the proposed introduction of more regular self-assessment tax payments, in-year, from 2029. This isn't of course a tax increase in the traditional sense but it accelerates an awful lot of tax and is projected to net the Government approximately £1.36bn in 2029-30.
VAT
There was a mixed bag of smaller VAT announcements.
On the B2C side: from October 2027 the Government plans to extend the online marketplace rules so that online platforms must collect VAT on sales of goods in the UK by UK businesses (as well as overseas businesses that are already caught) where the UK seller is VAT-registered or has annual sales of more than £90k on that platform. The rules will not apply to B2B sales, personal sales or sales of second-hand goods. The hope is that these rules level the playing field somewhat with physical retail where VAT evasion is harder.
There were also announcements focussed more on B2B sales. From April 2027 the Government is proposing to tighten the rules on the 'reverse charge' which applies when an overseas business supplies services to a UK business. Previously the overseas business could rely on simply checking whether its customer was in business, in which case all VAT responsibility fell on the business customer. Under the new rules, the reverse charge only applies if the business customer is actually VAT-registered. If it isn't then the overseas business may have to register and account for UK VAT.
The Government also published a roadmap for the implementation of 'e-invoicing' on (generally) B2B supplies from April 2029, to modernise reporting.
The rest of the medley
I have seen today's Budget described as a medley – which is the polite way of describing a Budget that tinkers with dozens of areas of the tax system without ever holding to a consistent tune. The rest of the medley (such as it is) is too varied to cover in detail but the announcements included:
- Alongside some tariff suspensions aimed at the domestic sector to help with the cost of living, a number of more business- and energy-focussed tariffs were suspended (including on fertiliser) and existing suspensions extended.
- We had confirmation that stamp duty on shares is indeed on its way out (as discussed here) and the plan is to introduce the new system from 'late 2027'.
- In line with its approach to gambling shops on the high street, the Government also signalled its disapproval by increasing Machine Games Duty on certain gambling games machines from 20% to 25%.
- The Government has published the response to its consultation on the treatment of UK-resident holders of interests in US limited liability companies (and other 'reverse hybrids'). I've touched on this consultation previously here and we have now been given a teaser for the likely direction of the reform (a credit system to reduce the ludicrous effective tax rate experienced by UK individuals) but no real detail. Further consultation is promised until morale improves.
