Another Budget of Small Measures that Leaves Businesses Bearing the Brunt

The Government presented its 2026 Budget as one focused on supporting businesses and people, but the measures announced by Chancellor John Healey offer limited immediate relief. With many changes not taking effect until next year, and further pressure on investors, entrepreneurs and employers, this is another Budget of small measures that leaves businesses facing many of the same challenges.

Targeted interventions for households, such as the £100 energy payment, are limited to England, creating Barnett consequential funding for Northern Ireland. Support is, however, limited, and businesses struggling with operating costs, taxation, and uncertainty will be looking for more substantial measures.

For investors, the increase in the tax rate on certain investment income from 22% to 24% will add to the cost of generating returns. Changes to Business Asset Disposal Relief will also affect entrepreneurs looking to sell or exit their businesses. For those who have spent years building a company, tax relief on a sale can influence decisions about investment, succession, and retirement.

The Chancellor announced new powers to recover unpaid tax, although there remains little detail about how these will operate. Improving tax collection is a legitimate objective, but businesses and individuals will need clarity on the processes involved. The additional investment in artificial intelligence at HMRC announced may help identify discrepancies and improve compliance, but its practical impact remains to be seen.

Continued fiscal drag is another concern. With tax thresholds frozen as wages increase, more people will find themselves paying higher rates of tax or handing a greater proportion of their earnings to the Treasury. Employers will also feel the effects as wage expectations and employment costs put pressure on margins. Without meaningful movement on thresholds, the cumulative impact will be difficult to ignore.

Coupled with wage increases, Northern Ireland’s small businesses will continue to feel the pressure of taxes that remain unchanged. Raising the threshold for Small Business Rates Relief in England will support some eligible businesses, but the position in Northern Ireland remains uncertain. Any Barnett consequential funding arising from the change will not automatically guarantee equivalent relief here. That decision will rest with the Northern Ireland Assembly.

The timing of these measures also matters. While the Government has set out its intention to support businesses and households, much of the impact will not be felt immediately. Businesses must manage costs and make investment decisions now, rather than wait for measures that may take months to come into effect.

Ultimately, this Budget looks unlikely to deliver the step change in support many businesses need. While individual measures will benefit some households and firms, there is little to address the broader pressures facing employers, workers, and smaller businesses.

The Government may point to a package designed to support people and encourage growth, but many businesses will continue to navigate rising costs and a complicated tax environment. Once again, it is small businesses that risk bearing the brunt.

To discuss any aspect, please get in touch with Neil Armstrong, Tax Partner E: neilarmstrong@bakertillymm.co.uk T: 028 9032 3466.