Chancellor John Healey delivered his first Budget on 28 October, and with the headlines settled, we can look at what actually changed for SMEs rather than what was rumoured.
The short version: this was not a Budget that rewrote the rules for business investment. Several major measures were announced beforehand, and the allowances that matter most to equipment and vehicle purchases were largely left alone. There are still changes to capital allowances, wages, business rates and VAT worth understanding before your next finance decision.
A note on sources: this draws on published Budget summaries from accountancy and small business publications. Some effective dates weren’t clear in them, and we’ve flagged those below. Please check the detail against HM Treasury and HMRC guidance, and speak to your accountant before acting.
Capital Allowances
For businesses buying equipment and vehicles, this is usually the part of a Budget that matters most:
- Full expensing was maintained, with no reported change.
- The Annual Investment Allowance was reported as unchanged at the existing £1 million.
- The main rate writing down allowance falls from 14% to 12%, following April 2026’s cut from 18% to 14%. One summary gives an April 2027 start; another gives no date.
- The first-year allowance for main-rate assets rises from 40% to 50%, with no start date in the summaries we reviewed. It is reported to mainly benefit unincorporated businesses and some leasing businesses, so its relevance depends on your structure.
In practice: for most limited companies, the allowances that drive purchase decisions look broadly stable. Whether the changes affect you depends on the asset, your structure and your profits, so this is one for your accountant.
Wages and Employment Costs
- National Living Wage (21+) rises 3.9%, from £12.71 to £13.21 an hour from 1 April 2027.
- National Minimum Wage (18–20) rises from £10.85 to £11.27 an hour from the same date.
- No new employer National Insurance rate change was reported in the summaries we reviewed.
- Business mileage: the 55p rate on the first 10,000 miles is locked in, while the rate above 10,000 miles rises from 25p to 35p (no date given).
In practice: higher labour costs lift running expenses, particularly for labour-heavy businesses. For some, that strengthens the case for investing in equipment or technology that improves productivity, with the cost spread to protect cash flow.
Business Rates
For premises-based businesses in England, from April 2027:
- Small business rates relief for qualifying retail, hospitality and leisure properties rises from £12,000 to £18,000, with the upper taper threshold rising from £15,000 to £21,000.
- No above-inflation rates increases for retail, hospitality and leisure properties.
- Pubs, clubs and live music venues get a larger rates reduction (previously announced at 20%; one summary reports it rising to 35%).
- The Supporting Small Business Scheme is extended by a year for existing recipients.
In practice: lower fixed costs from April may free up capacity for refurbishment, equipment or fit-out plans that had been on hold.
VAT
- Online marketplaces will become responsible for collecting VAT on certain sales by UK sellers (no start date given). Check the detail if you sell through a platform.
- VAT e-invoicing: a roadmap aims to make it mandatory from April 2029.
- VAT registration thresholds were unchanged.
In practice: VAT remains a major cash flow pressure point, especially when a quarterly bill lands during a busy period or a big investment. Spreading it can help.
Other Measures Worth Knowing
- Business Asset Disposal Relief: the lifetime limit falls from £1 million to £500,000, which matters to owners planning an exit.
- Founders’ Relief: a new relief with a £10 million limit and a 10% rate from April 2027, aimed at higher-growth businesses.
- Trading allowance: reported to rise from £1,000 to £3,000 from April 2027.
- Energy: around 10,000 energy-intensive manufacturers will get a 20–25% electricity discount from April 2027.
- Fuel duty: the freeze is extended to July 2027.
- Bank surcharge: rises temporarily from 3% to 6% for 15 months from 1 January 2027. We’re not drawing conclusions about its effect on SME lending, but it’s one to watch.
The summaries we reviewed also contain no clear guidance on interest rates or borrowing costs, so we won’t guess. Finance pricing depends on the lender, the asset and your own business profile, not just the headlines.
What Should You Do Now?
1. Speak to your accountant about whether the allowance changes matter for your structure and planned purchases.
2. Build the April wage rises into your 2027 forecast now.
3. Don’t pause sensible investment on the Budget’s account. With the main allowances broadly stable, the decision should rest on what your business needs and whether the numbers work.
4. Plan year-end and Q1 funding early. Lenders tend to be busy after a Budget, and starting early gives you room to compare options.
Talk to Us About Your Plans
If you’re weighing up an equipment purchase, vehicle upgrade, refurbishment or cash flow gap, we can compare options across our panel of lenders and find a structure that suits your business.
Get in touch to speak to one of our brokers about funding your next investment.
This article is for general information only and does not constitute tax, legal or financial advice. Please speak to your accountant or tax adviser about how Budget measures affect your own circumstances.
Ready to Make Asset Finance Work for Your Business?
Partner with MacManus Asset Finance Ltd, an independent broker established in 2005, helping UK SMEs access tailored finance solutions. Our friendly, professional, and consultative team works across all industries and can guide you through hire purchase, leasing, and finance lease options. With access to over 60 finance companies and full FCA authorisation, we ensure your business finds the right solution for growth.
