Among the Autumn Budget announcements are three changes that put money back in the pockets of small business owners. Here is how each works and what to do about it.
1. Trading allowance rises to £3,000
From 6 April 2027 the trading allowance rises from £1,000 to £3,000. If your gross self-employed income is £3,000 or less, you generally do not need to declare it. If it is higher, you can deduct either the £3,000 allowance or your real expenses, never both.
Example: you earn £5,000 from a side business and have £800 of costs. The allowance gives you a £3,000 deduction, so you are taxed on £2,000. Your actual costs would only give £800, so the allowance wins. This is mainly useful for side hustles, and it does not apply to income from your own company.
2. Mileage rates
The 55p per mile rate for the first 10,000 business miles is now permanent. Miles above 10,000 go from 25p to 35p from 6 April 2027. Motorcycles stay at 24p and bicycles at 20p. If you pay staff or directors for business miles in their own cars, you can pay up to these rates tax-free, and keep a mileage log to prove it.
3. Capital allowances
For spending from 1 January 2027, the first-year allowance on main rate assets rises from 40% to 50%. The main writing-down allowance falls to 12% from April 2027. Companies can usually still claim full expensing on qualifying new plant and machinery, so the first-year allowance matters most where full expensing does not apply, such as for some unincorporated businesses. Timing a purchase either side of the dates could change your relief, so check before you buy.
Planning checklist
- Decide whether the trading allowance beats your actual costs for 2027/28.
- Start a mileage log now if you do not have one.
- Talk to us before any major equipment purchase near the January or April dates.
This is general information, not personal advice. Figures reflect Budget announcements and may change when legislation is published.
