In addition to the changes to pension salary sacrifice and incorporation relief there were a number of the measures announced which will impact upon businesses:

Capital allowances

A new 40% first year allowance for expenditure incurred on or after 1 January 2026 will be available to cover expenditure where the annual investment allowance or full expensing relief is not available – this will allow for tax relief to be claimed on 40% of the cost of the relevant assets, with writing down allowances being available on the balance.

The focus of this change is mainly for unincorporated businesses and businesses acquiring assets used for leasing, where they spend in excess of the annual investment allowance, as neither of them qualify for full expensing relief.

With some give, there is also take – alongside this change will be a reduction in the main rate of writing down allowances from 18% to 14% with effect from 1 April 2026 (for corporation tax purposes) and 6 April 2026 (for income tax purposes). This will hit unincorporated businesses and businesses acquiring assets used for leasing more, spreading the relief of the remaining 60% of the cost of the assets over a longer period of time.

Writing down allowances for the special rate pool will remain at 6%.

Vehicles

With the move to electric and hybrid vehicles, and the loss of revenue from fuel duty, a new ‘per mile’ tax charge will be introduced for electric vehicles (3p per mile) and plug-in hybrid vehicles (1.5p per mile) from April 2028.

Enterprise schemes

From 6 April 2026 the thresholds (gross assets, annual investment and lifetime investment) applied to determine the eligibility for companies to meet the criteria for the enterprise investment scheme (EIS) and venture capital trusts (VCT) will increase, but the income tax relief available to an individual investing in a VCT will reduce from 30% to 20%.

Enterprise management incentive (EMI) schemes

From 6 April 2026 the thresholds applied to determine whether companies can offer an EMI scheme to their employees will increase significantly – the level of company options will be increased from £3 million to £6 million; gross asset limit will be increased from £30 million to £120 million; the maximum number of employees will be increased from 250 to 500.

If you would like to discuss this in further detail, please get in touch with your usual contact or e-mail us at experts@tacs.co.uk.