Business Tax
Capital allowances for plant and machinery
From 1 January 2027, the permanent main-rate First Year Allowance (FYA) for qualifying new plant and machinery will increase from 40% to 50%. It is mainly intended for expenditure that is not fully relieved through the £1 million Annual Investment Allowance (AIA) or, for companies, full expensing (the 100% deduction available for qualifying new main-rate plant and machinery).
The main-rate FYA is available to companies and unincorporated businesses and, unlike full expensing, can apply to qualifying assets acquired for leasing. Assets used for overseas leasing, most cars and second-hand assets are excluded.
From 1 April 2027 for companies and 6 April 2027 for unincorporated businesses, the main-rate writing-down allowance (WDA) will reduce from 14% to 12%. This will slow the rate at which relief is obtained on existing main-pool balances and on expenditure that does not qualify for a 100% upfront allowance. The special-rate WDA (available on certain items, including plant integral to buildings) remains unchanged at 6%.
Zero-emission cars and electric vehicle chargepoints
The dedicated 100% FYAs for qualifying new zero-emission cars and electric vehicle chargepoints will expire on 31 March 2027 for companies and 5 April 2027 for unincorporated businesses.
After these dates, new zero-emission cars will generally receive relief through WDAs at 12% rather than being deducted in full in the year of purchase. Most cars are excluded from the AIA, full expensing and the new 50% main-rate FYA.
Although the dedicated 100% allowance for electric vehicle chargepoints will also end, most qualifying chargepoint expenditure may still receive full relief under the £1 million AIA or full expensing.
Business rates
From 1 April 2027, additional support will be available for qualifying retail, hospitality and leisure (RHL) properties in England. The rateable value threshold for 100% Small Business Rate Relief (SBRR) will increase from £12,000 to £18,000, while tapered relief will apply to properties with a rateable value of up to £21,000 rather than £15,000. The government estimates that around 70,000 more high street businesses will pay no business rates as a result.
Business rates relief for pubs, social clubs and most live music venues will increase from 15% to 35%. The additional relief will not apply to live music venues with a rateable value of £1 million or more.
For other qualifying RHL properties, increases in business rates bills will be capped at CPI inflation in 2027/28 and 2028/29, providing a two-year freeze in real terms. The cap will not apply to increases caused by property improvements or the loss of other reliefs.
From April 2027, vape shops and adult gaming centres will no longer qualify for the RHL multipliers or SBRR.
For 2027/28, the small business multiplier will be 44.7p and the standard multiplier will be 49.7p. The small business and standard RHL multipliers will be 39.7p and 44.7p respectively. The high-value multiplier, applying to properties with a rateable value of £500,000 or more, will be 52.5p.
Machine Games Duty
The rate relief measures will be funded in part by increasing the rate of Machine Games Duty from 20% to 25%, but only for higher-stakes machine games (stakes over £1 or maximum prizes over £100), in order to protect pubs and seaside arcades. The new rate will apply from April 2027.
Trading allowance
Since April 2017, individuals have been able to earn £1,000 of income before expenses from a self-employed business without having to report or pay tax on a profit. Unlike the savings allowance for interest income, the trading allowance extinguishes the income completely – it does not use up any of the basic rate band, so it does not affect the tax on other sources of income. If the turnover is more than £1,000, it is possible to claim a fixed deduction of £1,000 instead of the actual expenses incurred, which is simple and also beneficial if the expenses are a lower amount.
From 6 April 2027, the trading allowance will be increased to £3,000.