Budget 2026: what the 28 October Budget means for small limited companies

The Budget was presented to Parliament on Wednesday 28 October 2026, and HM Treasury published the full document the same day. We have read the tax chapters and the policy decisions table with a small limited company in mind: a business that pays Corporation Tax, employs a few people and puts its day-to-day spending on a card. This is a first read of the published document, not tax advice, and most measures still need legislation in a Finance Bill.

Corporation Tax and capital allowances

• The headline rate of Corporation Tax stays capped at 25%, in line with the 2024 Corporate Tax Roadmap, and full expensing is maintained.
• The main rate writing-down allowance falls by two percentage points to 12%, from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax.
• The main rate first-year allowance rises from 40% to 50% for expenditure incurred on or after 1 January 2027.
• The Bank Corporation Tax Surcharge rises temporarily from 3% to 6% between 1 January 2027 and 31 March 2028. It applies to banks, not ordinary trading companies.

Employer costs

The document says there is "no increase to the headline rates of income tax, National Insurance contributions or VAT". We found no change to the employer National Insurance rate, the secondary threshold or the Employment Allowance in it, so the 2026 to 2027 position set out in our earlier Budget diary entry stands. For most small employers the bigger number is the National Living Wage, which rises by 3.9% to £13.21 an hour on 1 April 2027.

Expenses and mileage

• Tax-free mileage for employees and the self-employed using their own car or van stays at 55p a mile for the first 10,000 business miles. That rate was announced as temporary in May; the Budget makes it permanent. Above 10,000 miles the rate rises from 25p to 35p.
• Benchmark Scale Rates, used to reimburse domestic travel subsistence without checking receipts, are to be modernised from April 2028, and Overseas Scale Rates replaced with a simpler tiered system.

Owners and founders

• The lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000 for disposals from 6 April 2027.
• A new Founders' Relief from 6 April 2027 offers a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for founders of high-growth companies.
• The rules on how company distributions to individual shareholders are taxed will be reformed from April 2028, with draft legislation for consultation in 2027. If you take profits as dividends, watch for the detail.
• Tax on savings and property income rises by a further two percentage points from April 2027.
• The Trading Allowance triples from £1,000 to £3,000 from 6 April 2027. That helps sole traders and side businesses rather than limited companies.

VAT and administration

We found no change to the VAT registration threshold. The £90,000 figure in the document is about something else: from October 2027, online marketplaces must collect VAT on sales by UK businesses selling more than £90,000 through a platform. Mandatory VAT e-invoicing is planned from April 2029. People joining Making Tax Digital for Income Tax in April 2027 will not get penalty points for late submission of their first four quarterly updates, and the roll-out to several taxpayer groups is deferred until further notice. In England, retail, hospitality and leisure properties get higher Small Business Rates Relief thresholds from April 2027: £18,000 for full relief, up from £12,000.

What it means for your card

Nothing here changes how a business credit card works or what HMRC accepts by card. The capital allowance changes are the ones to note if you buy equipment on a card and pay it off: expenditure on or after 1 January 2027 attracts the higher first-year allowance. Speak to your accountant before moving a purchase for tax reasons. Our guide to business credit cards for limited companies covers how company card spending, director's loans and expense claims fit together.