Budget 2026: What micro business owners need to know
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When you run a small business, Budget announcements come down to practical questions: what will cost more, where can you save, and what should you do next?
Here are the key points for sole traders, small limited companies and business owners.
Higher wages from April 2027
The National Living Wage increases to £13.21 an hour from 1 April 2027. If you employ staff, budget for the increase alongside any associated pension contributions and employer National Insurance. Reviewing your staffing costs and pricing now will help you prepare.
More generous business mileage rates
The 55p-per-mile rate for the first 10,000 eligible business miles in your own car or van becomes permanent, applying from 6 April 2026. The rate above 10,000 miles increases to 35p from 6 April 2027.
If you travel to clients regularly, make sure you record your journeys, business purpose and mileage so you can claim correctly.
A higher trading allowance
The trading allowance increases from £1,000 to £3,000 from 6 April 2027, helping individuals starting out or earning small amounts through a side business. This applies to individuals, rather than limited companies, and whether claiming it benefits you depends on your circumstances and expenses.
Savings and rental income: a four-point tax increase
The additional two-percentage-point increase announced in this Budget comes on top of the two-point increase already planned.
From 6 April 2027, the resulting rates will be 24%, 44% and 49%, compared with the current 20%, 40% and 45%. That is a total increase of four percentage points.
Savings rates apply across the UK; the announced property rates apply in England, Wales and Northern Ireland. If you receive taxable personal savings interest or rental income alongside your business earnings, factor the higher rates into your personal tax budget.
Good news: the cash ISA reduction has been scrapped
The planned reduction in the cash ISA allowance has been reversed. The overall ISA allowance remains £20,000 per person, per tax year, and can be used entirely for cash savings.
With tax on savings interest rising, consider making full use of your available ISA allowance before building up taxable personal savings, where affordable and suitable. Interest within an ISA remains tax-free. A couple could put away £40,000 between them each tax year, using their individual allowances.
Business rates support
Eligible retail, hospitality and leisure businesses in England will benefit from increased relief and a two-year freeze on bills in real terms. This means an inflation-adjusted freeze, so your actual bill could still rise. Check how the measures apply to your premises before budgeting for a saving.
What should you do now?
Update your cashflow forecast, review employment costs and check your personal tax position. Keeping your records current will make it easier to identify savings and prepare for changes before they affect your bank balance.
At Kings Oak Accountancy, we help micro business owners turn tax announcements into practical next steps. Get in touch to discuss what the Budget means for you and your business.
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