5 Budget Changes London Business Owners Should Act on Before April 2027

The Autumn Budget, delivered on 28 October 2026, left headline rates on wages, dividends and VAT alone. The detail underneath is different. Among the UK Budget 2026 tax changes for businesses in London, several measures start between 1 January and 6 April 2027. Some reward owners who plan early, while others quietly raise the cost of leaving decisions late.

For London businesses, where payrolls are large, premises are expensive and company sales are frequent, the next few months are a genuine planning window. Whether you rely on accounting and bookkeeping services in-house or an accounting service in London, now is the time to review your numbers. Tax Planning services in London can show which measures help you and which add cost, before deadlines arrive.

Accounting services for small businesses make this review easier, particularly when paired with cash flow management and forecasting in London that shows how each change affects monthly cash. Without a finance lead, a virtual finance director in London can turn the costs into a plan.

1. Capital allowances: the timing of your equipment spend now matters

The Budget changes two capital allowance rates, and they pull in opposite directions. The main rate first-year allowance (FYA) rises from 40% to 50% for qualifying expenditure incurred on or after 1 January 2027. It covers new main rate plant and machinery, including equipment bought for leasing, but excludes second-hand assets and cars.

At the same time, the main rate writing-down allowance (WDA) falls from 14% to 12%, from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax. The cut applies to existing pooled expenditure as well as new purchases, so relief on assets you already own is spread out more slowly. Bookkeeping and Accounting Services that keep your asset register accurate show what sits in each pool, and the same records feed your tax return services in London. Tax return accountants in London can model the effect for you.

What to do:

• List the equipment, IT hardware and fit-out you plan to buy over the next 12 months.
• Check whether a December purchase could sensibly move into January to attract the 50% FYA.
• Use business tax planning tips for London small businesses: let cash flow and real need for the asset come before tax.
• Ask your accountant to model the lower WDA as part of corporation tax planning for small businesses in London.

2. Selling or restructuring: Business Asset Disposal Relief is being halved

This change carries the biggest potential cost for owner-managers considering an exit. From 6 April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) falls from £1 million to £500,000 of qualifying gains. Planning early matters because the limit applies to lifetime gains, not each sale. According to the GOV.UK costings, gains above that are charged at headline Capital Gains Tax rates: 24% for higher rate taxpayers and 18% within any unused basic rate band.

Founders’ Relief will introduce a 10% Capital Gains Tax rate on up to £10 million of lifetime gains from 6 April 2027 for founders of high-growth, innovative companies. Individuals must hold at least 25% of the company at the start of trading, and the company must meet turnover and employment thresholds and satisfy two of three growth and innovation tests. The design is subject to technical consultation, so most ordinary trading businesses should not assume they qualify. Outsourced accounting services can track shareholdings and growth tests, and some owners outsource tax preparation services in London so evidence is ready for a claim. Reliable accounting and bookkeeping services also smooth due diligence.

For employers who reward staff with share options, the Budget also doubles the individual Company Share Option Plan limit from £60,000 to £120,000 from 6 April 2027. Your accounting services for small business should now cover option valuations, so ask your outsourced accounting services provider or accounting service in London how a scheme would work for you.

What to do:

• If a sale or buyout is on the cards, compare a disposal before 6 April 2027 with one afterwards.
• Do not rush a sale for tax alone; price and buyer readiness matter more.
• Review the business tax reliefs available for London companies in 2027, including Founders’ Relief and EMI2.

3. Benefits in kind must be payrolled from 6 April 2027

Mandatory payrolling of benefits in kind has been delayed once already. Budget changes for small businesses in London now include firm dates for this: from 6 April 2027, employers must report and pay tax through payroll on company cars, vans, fuel and medical benefits. The rest follow from 6 April 2028.

That is a big shift for any London employer that reports benefits on a P11D after the tax year. Tax will be collected in real time, so your payroll software, processes and people must be ready. Bookkeeping and Accounting Services that reconcile payroll monthly will catch errors early, and cash flow management and forecasting in London matters more when tax moves through payroll each month. Some firms outsource tax preparation services in London to handle the extra reporting.

What to do:

• List every benefit you provide and flag the 2027 group.
• Ask your payroll software provider how payrolling works, and register with HMRC early.
• Gather car and van values, emissions and medical cover data.
• Tell employees their tax codes and take-home pay may change.

4. Staffing costs: a higher minimum wage and a new mileage rate

How will the 2027 Budget affect small businesses in London? Staff are the largest cost for most service firms, and two changes land in April 2027. The National Living Wage for workers aged 21 and over rises by 3.9% to £13.21 an hour from 1 April 2027. London employers often pay above the minimum already, but the rise can compress pay differentials and increases pension and employer National Insurance costs.

Second, approved mileage rates are changing. The 55p-per-mile rate for the first 10,000 business miles is confirmed, and the rate above 10,000 miles will rise to 35p from 6 April 2027. Reimbursing at the approved rate raises costs for high-mileage staff, while those paid less can claim relief on the difference. Add these figures to your Tax Planning services in London review, and to the tax return services in London you use if you are a sole trader or partner. Tax return accountants in London can confirm the treatment, and a virtual finance director in London can build them into your 2027-28 budget.

What to do:

• Check who will fall below the new minimum and update payroll forecasts.
• Budget for knock-on effects on pay bands, overtime and on-costs.
• Decide whether to match 35p for high-mileage staff.

5. Business rates: bigger relief for high street, hospitality and leisure

Business rates changes for London businesses in 2027 mainly help retail, hospitality and leisure. From 1 April 2027 in England, the threshold for 100% Small Business Rate Relief on qualifying properties rises from a rateable value of £12,000 to £18,000, and the tapered relief threshold from £15,000 to £21,000. Relief for pubs, social clubs and most live music venues rises from 15% to 35%. Bill increases for qualifying properties are capped at CPI in 2027-28 and 2028-29, and the 2023 Supporting Small Business scheme is extended a year. Vape shops and adult gaming centres lose some reliefs.

How Budget 2026 affects London retail businesses depends on rateable value. London values are among the highest in the country, so many premises sit above these thresholds. Check your own position rather than assume, and build it into your cash flow plan.

What to do:

• Look up your rateable value on the Valuation Office Agency website.
• Check your property is classed correctly as retail, hospitality or leisure.
• Do not wait for your bill; check whether you must apply for relief.

Read More: What Is Payroll in the UK and How Does It Work?

Other dates worth diarising

Smaller measures also start around April 2027. Small business tax allowances in London for 2027 improve as the Income Tax Trading Allowance rises from £1,000 to £3,000 on 6 April 2027, when Making Tax Digital for Income Tax also begins for those required to join. On 1 April 2027, the VAT reverse charge on overseas services applied only where the UK customer is VAT-registered, and the R&D Claim Notification Form was removed. Property and savings income tax rates rise by 2 percentage points. Small business tax changes in Barking follow these same national rules, so these April 2027 tax changes for businesses in London are worth putting in the diary. VAT invoices must be in a structured electronic format from 1 April 2029.

Read More: Most Business Owners Find Out They Overpaid Tax After the Deadline Has Passed

Book Your Budget Review with Fred Michael & Co Ltd

The Budget has changed the rules, but the right plan can turn those changes into savings and better cash flow. Our team will review your equipment plans, exit options, payroll, staffing costs and business rates position, then give you a clear, prioritised action list before April 2027. There is no need to work through the details alone. Contact Fred Michael & Co Ltd today to book your Budget review, speak with a friendly adviser and find out exactly which changes affect your business. Call us, email us or complete our online enquiry form this week, and let us help you plan with confidence while there is still time to act.

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