Autumn Budget 2026 – Main tax announcements

This blog discusses some of the key tax changes announced in Autumn Budget 2026.

The Chancellor, John Healey, delivered his first Budget on Wednesday 28 October 2026. Billed by the government as providing “breathing space for today, hope for the future”, the Budget again contained a broad range of targeted measures rather than headline-grabbing changes. For businesses, the most notable announcement is a significant expansion of the Company Share Option Plan (CSOP), which is being rebranded as “EMI2”, alongside a new Founders’ Relief and a halving of the Business Asset Disposal Relief lifetime limit.

The main tax announcements made by the Chancellor are summarised below.

If you would like further information on any of these announcements, please contact the Tax team.

1. Business & Corporate Taxes

1. Capital allowances: the main rate first-year allowance will increase from 40% to 50% for expenditure incurred on or after 1 January 2027. The main rate of writing-down allowances will be reduced from 14% to 12% from 1 April 2027 for corporation tax (6 April 2027 for income tax).
2. Foreign permanent establishment exemption: as announced previously, the foreign branch exemption regime will become mandatory for accounting periods beginning on or after 1 January 2027.
3. Pillar Two: Multinational Top-up Tax and Domestic Top-up Tax will be amended to implement the OECD’s Side-by-Side package for accounting periods beginning on or after 1 January 2026, together with further technical amendments.
4. Bank surcharge: the corporation tax surcharge on banking companies will be temporarily increased to 6% for 15 months, from 1 January 2027 to 31 March 2028.
5. Advance Tax Certainty Service: following its launch in July 2026, the entry threshold for qualifying investment projects will be lowered from £1 billion to £300 million from 4 November 2026.
6. SDLT group relief: with effect from 29 October 2026, a winding up of the vendor will no longer prevent group relief from being clawed back if the purchasing company leaves the group within the usual three-year period.
7. Securities Transfer Tax: as announced at Budget 2025, legislation will be included in Finance Bill 2026-27 to introduce the Securities Transfer Tax, which will replace Stamp Duty and SDRT. It will come into force in late 2027 via a commencement order. The £1,000 de minimis for non-electronic transfers will be retained and, for employee share schemes, the employer will be liable to report and pay.
8. Taxation of distributions: the government has published its response on modernising the taxation of distributions and repayments of capital, with changes expected from April 2028. The reforms could restrict the use of capital reduction demergers and bring distributions and loans from non-UK companies within a broader income tax regime.
9. R&D: the requirement to submit a Claim Notification Form will be removed for claims made on or after 1 April 2027, and the Additional Information Form will be simplified from autumn 2027.
10. Corporate Interest Restriction: from 1 January 2027, Audio-Visual Expenditure Credits and Video Games Expenditure Credits will be excluded from the calculation of taxable earnings.
11. VAT: online marketplaces will be responsible for collecting VAT on sales by UK businesses (subject to a £90,000 per-platform threshold for non-registered sellers) from October 2027. From April 2027, the reverse charge on services received from overseas will apply only where the UK recipient is VAT registered. Mandatory e-invoicing will be introduced from April 2029.

2. Business Incentives & Investment Schemes

1. CSOP rebranded as “EMI2” and expanded: from 28 October 2026, CSOP will be rebranded as “Enterprise Management Incentives 2” (EMI2), positioning it as a complement to EMI and a follow-on scheme for companies that have outgrown EMI (the CSOP name will remain in legislation). From 6 April 2027:
   • the individual CSOP option limit will double from £60,000 to £120,000;
   • CSOP options will no longer count towards the £250,000 EMI individual limit, so an employee could hold up to £250,000 of EMI options and £120,000 of CSOP options; and
   • the maximum CSOP exercise period will increase from 10 to 15 years, in line with EMI. HMRC has confirmed that existing CSOP option agreements can be amended to benefit from the longer period without losing their tax advantages.
2. EMI changes: from 6 April 2027, the window for exercising EMI options following a disqualifying event will be extended from 90 to 180 days, and the Employee Ownership Trusts (EOT) exception will be extended so that companies arranging to become controlled by an EOT can continue to grant qualifying EMI options. As announced at Budget 2025, the separate EMI grant notification requirement will be removed for options granted on or after 6 April 2027, with grants instead reported in the annual return.
3. Founders’ Relief: a new CGT Founders’ Relief will provide a lower rate of CGT for founders and early investors in high-growth, innovative UK companies on qualifying disposals of shares or securities on or after 6 April 2027. A 10% rate on up to £10 million of lifetime gains will apply. A technical consultation closes on 30 November 2026.
4. Business Asset Disposal Relief: the BADR lifetime limit will be reduced from £1 million to £500,000 for qualifying disposals on or after 6 April 2027. Special rules apply to contracts entered into, and certain share reorganisations and exchanges not completed, before that date.
5. US LLCs and other reverse hybrids: following consultation, the government will introduce a new elective domestic foreign tax credit for UK-resident individual members of US LLCs, US S-Corps, Jersey LLCs and French SCIs, to address the double taxation that can arise. Distributions will be taxed at dividend rates, with credit for foreign taxes paid by the member. Claims will be possible from early 2028, following a technical consultation.
6. Venture capital schemes: minor technical issues affecting the SEIS, EIS and VCT rules will be fixed, mostly from 6 April 2027, and the government will engage with stakeholders on improving Advance Assurance and the transparency of fees.