In his first Budget as Chancellor, John Healey announced new measures impacting oversight, rates and investment for small and medium-sized businesses across the UK. We’ve done the deep-dive to bring you the four top-line changes with the biggest impacts for you and your business.
HMRC granted more funding and sweeping powers
The Announcement: HMRC will receive more funding and greater powers to upgrade its ability “to collect overdue tax from those who can clearly afford to pay but ignore repeated contact”, according to Healey. That includes the power to deduct funds and interests from bank accounts of businesses and individuals from July 2029.
The Impact: An expansion of HMRC’s powers means businesses might face more pressure to stay on top of their regulatory obligations. Tax concerns were already at the top of the agenda for SMEs in our Q3 Business Confidence Report, with nearly 4 in 10 saying they would struggle to meet their next VAT or corporate tax payment from the cash they hold today.
With HMRC stepping up its oversight, it may be time to think even more seriously about your accounts and cash flow.
Small business rate relief threshold rises
The Announcement: The threshold for 100% small business rate relief will rise from £12,000 to £18,000, and the threshold for tapered relief will rise from £15,000 to £21,000 from April 2027, for eligible retail, hospitality and leisure properties.
The Impact: Under this new framework, the government estimates that 70,000 more small businesses will pay no business rates. This could reduce overheads for business owners, freeing up cash for investment or other spending. It’s worth checking your eligibility to see where you fall in relation to the updated thresholds. (link to hospitality assets)
The main rate first-year allowance for eligible plant and machinery investing is also increasing from 40% to 50% from January 2027, and main rate writing-down allowance is coming down from 14% to 12%. If you’re investing in kit, you might benefit from more tax relief – though if you are already using the Annual Investment Allowance, you might not see much difference in real terms.
National Living Wage to get a boost
The Announcement: From April 2027, National Living Wage for workers aged 21 and over will increase by around 3.9% to £13.21 per hour. Minimum wage for 18 to 20-year-olds will rise to £11.27 per hour. The boost is expected to affect around 2.3 million people in the UK.
The Impact: That means someone working 37.5 hours a week on National Living Wage will earn nearly £1,000 a year more before deductions. Since our Q3 Business (add link) Confidence Report found that rising wage expectations were the biggest staffing challenge for SMEs, people-powered businesses might need to think about the impact of new minimums on payroll. If operating costs jump up, the pot for other spends might be squeezed.
British Business Bank and National Wealth Fund get cash injection
The Announcement: The National Wealth Fund and the British Business Bank will receive a further £20.4bn in funding through public financial institutions in the coming year, designed to grow UK SMEs and support 140,000 jobs.
The Impact: SME growth through investment is clearly high on the government agenda. Healey aims to drive competition and raise profits in the British business landscape, meaning more SMEs will be looking to scale up.
Now is a good time to think about your investment plans and potential sources of funding for your business. Do you have the resources to keep up with an increasingly ambitious SME landscape?
At Capify, we help UK businesses access the funding they need to grow, so you can act on opportunities when they arise.
Ready to discuss how these changes will affect your business?
With changes in the pipeline, cashflow and investment confidence will remain key for SMEs. You want to know you can embrace opportunities as they emerge, and remain resilient to new challenges.
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