As Chancellor John Healey’s Budget 2026 looms, our accountancy firm’s clients — many hundreds of limited companies and a few hundred sole traders — say they don’t want lower taxes; they want fewer surprises. One owner-manager we’ve assisted with both incorporation and disincorporation put it to me this way: “The biggest barrier to investment isn’t always cost; it’s uncertainty.”
An Autumn Budget wishlist for October 28th, based on our sole trader and limited company clients’ sentiment, has five asks. I’ll later rate the chances of these five being Healey announcements:
- Forget the giveaways: Greater certainty for owner-manager businesses trumps tax breaks
- Off-payroll check: A genuine review of IR35’s impact as part of employment status clarity
- Red tape reduction: A slowdown in the pace of additional compliance requirements
- Making Tax Digital: HMRC’s digital tax system has a hefty time cost and admin burden
- Investment incentives: Measures that encourage SME investment and micro-business growth
1. Forget the giveaways: Greater certainty for owner-manager businesses trumps tax breaks
Why does uncertainty matter more than tax breaks?
Much of the pre-Budget speculation (as of Q3 2026) focuses on what taxes may or may not increase. Some of our limited company and sole trader clients are fatigued by regulations, rates and thresholds changing back and forth every time a chancellor gets to their feet each autumn and spring. The dominant theme emerging from those conversations is a dislike of uncertainty.
Our accountancy firm’s clientele is largely consultants and contractors operating through their own limited companies, alongside a broader portfolio of SMEs, including sole traders. The message from all of them is unified: the challenge in the 2026-27 tax year is no longer adapting to a particular tax regime, but planning for the future when the direction of travel remains unclear.
My message to the Chancellor: Clarity and business-as-usual would be worth more to owner-managers, including sole traders, than new tax reliefs or even a reduction in their HMRC bills.
2. Off-payroll check: A genuine review of IR35’s impact as part of employment status clarity
Is a genuine review of IR35 coming at Budget 2026?
No, not according to a Treasury answer in the House of Commons on June 30th 2026, but new ministers have since been installed.
Contractor companies may take some comfort from one thing: unlike its predecessor, the Andy Burnham-led government hasn’t ruled out an IR35 review. On an almost weekly basis, concerns around IR35 continue to feature prominently when we speak with our clients, as part of a general disquiet over employment status.
Most contractors and businesses have adapted to IR35 reform, but there remains a view that genuine independent professionals are often caught out by a framework set up to tackle ‘disguised employment.’ IR35 was introduced in 2000, but it changed on April 6th 2017 in the public sector and on April 6th 2021 in the private sector.
Contractors have tangible doubts about these newer IR35 regulations — the Off-Payroll Working rules (OPW) — and question whether they encourage businesses to engage flexible talent in the most efficient way, with the strong suspicion that they don’t.
My message to the Chancellor: Don’t repeat the disappointing veto on an IR35 review; instead, do relook at the OPW rules in a meaningful way, starting with a genuine review of the longer-term impact of IR35 on both contractors and businesses.
3. Red tape reduction: A slowdown in the pace of additional compliance requirements
Why do sole traders and directors want compliance requirements to slow down?
The Treasury’s new boss has reportedly shown interest in “measures to cut costs for families and businesses” ahead of Budget 2026. That sounds positive, but measures to replace measures is exactly the approach small companies want to get away from.
Just a glance at the Chancellor’s “Growth Speech” of September 7th 2026 will tell anyone that growing the economy is clearly the government’s priority on October 28th. But contractors (whose accounting affairs I’ve specialised in for 16 years) will be looking for evidence from Healey that growth can be achieved without adding further red tape.
Adding cost and complexity on top of years of cost and complexity is no longer an easy trade-off for growth — not after successive governments have repeatedly promised, and failed, to cut red tape for limited company directors and sole traders.
For SMEs more generally, the desire at Budget 2026 is that it boosts their confidence. Business owners remain willing to invest in people, technology and growth opportunities, but they want reassurance that today’s decisions will not be undermined by tomorrow’s tax or regulatory changes.
My message to the Chancellor: Growth targets and policies are admirable, but they should not be unconditional, and a formal moratorium on small business regulations would be welcome, in line with self-employed body IPSE’s call — for a “stability period” rather than Healey “introducing new rules.”
4. Making Tax Digital: HMRC’s digital tax system has a hefty time, cost and admin burden
Would further MTD expansion add to the burden on small businesses?
VAT-registered limited companies and self-employed sole traders — covered by MTD VAT and MTD ITSA respectively — rarely raise either as their first Budget 2026 wish, mainly because, in our experience, most have got on board with the tech.
So HMRC’s customers mainly accept the move towards digital administration, recognise the direction of travel and understand MTD software as part of doing business. However, sole traders and limited company directors would welcome a period of stability before any further expansion of digital tax reporting requirements. The investments that MTD requires, financial and otherwise, aren’t insignificant, so it was a relief that ‘MTD for Corporation Tax’ was dropped in HMRC’s transformation roadmap of July 21st 2025.
My message to the Chancellor: The technology underpinning MTD is much less of a concern than the time, cost and administrative burden that further digital tax compliance would place on smaller businesses, as they’re already finding quarterly reporting under MTD demanding.
5. Investment incentives: Measures that encourage SME investment and micro-business growth
What would encourage SME growth at Budget 2026?
Prime Minister Andy Burnham has been vocal about his dislike of the prior government’s employer NIC changes. Translating that dislike into a reversal on October 28th would unshackle SMEs that want to grow.
For limited companies, my team of qualified accountants has calculated that Budget 2026 reversing the employer NIC changes would save each director £650.
The April 6th 2025 increase in employer NIC to 15%, combined with the threshold cut to £5,000, raised the cost of hiring — and that sits awkwardly against the Chancellor’s three stated aims:
- Growth
- Reducing bureaucracy
- Encouraging long-term investment.
We maintain that owner-managers don’t want measures to replace measures, but a U-turn on previous Chancellor Rachel Reeves’ changes would be significant.
Most small companies can adapt to almost any set of rules, rates or thresholds provided that they understand them. Usually, small companies also need to have confidence that those rules, rates and thresholds will remain broadly unchanged long enough to allow meaningful investment and long-term planning. But the employer NIC changes have had such a depressive effect that they should be reverted.
My message to the Chancellor: Typically, we’d advocate retaining tax rates only just set at the last Budget. But the higher NIC rate and lower threshold must be rectified if the government is serious about backing small business growth.
How likely is Chancellor John Healey to deliver the following on October 28th?
As for the likelihood of seeing any of the following measures delivered, my gut tells me:
- Investment incentives: 6/10
- Support with employment costs: 5/10
- Simplification of tax administration: 4/10
- Meaningful movement on employment status and IR35: 3/10
- Significant softening of Making Tax Digital requirements: 2/10
In conclusion
Many limited company directors feel the cumulative policy impact of recent years from Budgets has been significant, with IR35 reform, reductions in the tax-free dividend allowance, rising compliance obligations and higher employment costs all taking their toll.
Individually, none of these changes to small companies may have been transformational, but collectively they have altered the economics of running a limited company and/or a small business.
Chancellor John Healey’s stated priorities (growth, reducing bureaucracy and encouraging long-term investment) offer some cause for optimism. But Healey’s reluctance to rule out further tax rises suggests uncertainty is unlikely to disappear overnight. Like most accountants at this stage of the Budget cycle, my firm and I are trying to read the Chancellor’s mind with very little to go on, even if his warm words about the self-employed are a good starting point.
