The Chancellor called it a Budget for Breathing Space. In Part 1, I set out the seven things business really asked for. Here is what the 2026 Budget actually delivered - where it helped, where it fell short, and what it means if you're a founder running a small or growing business in Britain today.
Within hours of the Chancellor sitting down, Tina McKenzie, National Chair of the Federation of Small Businesses, gave her verdict.
"This Budget should have been the moment to help small businesses with the soaring costs holding them back, and the taxes restricting job creation. Instead, they got nothing to ease sky-high energy bills and nothing to make hiring someone more affordable, while the increase in business rates relief excludes too many."
The FSB's formal assessment was blunt: the Budget misses the mark.
If you read Part 1, you will know that the organisations representing British business had been remarkably consistent in what they asked for. Seven priorities, backed by detailed evidence, submitted to HM Treasury by the British Chambers of Commerce, the Institute of Directors, the FSB, the ICAEW, Make UK, UK Finance, the Home Builders Federation and UKHospitality. Let’s now look at how much of what business asked for did business actually get?
The Breathing Space Budget
The Chancellor, John Healey, framed the Budget against a backdrop of global economic turbulence - the conflict in the Middle East, the illegal invasion of Ukraine, and the pressure these have placed on costs for families and businesses.
He called it a Budget for Breathing Space. Immediate action today alongside the big structural changes needed for the future. No broad-based tax rises. Protection for most individuals and businesses from tax increases. Devolution of economic power to local leaders. A new wave of wealth creators. Energy bills brought down. Social housing built. National security boosted.
The language was careful and deliberate - and much of it echoed exactly what business had asked for. The question is whether the delivery matched the words.
Where Business Got Real Help
High street rates relief
This was the clearest win. The Chancellor raised Small Business Rates Relief thresholds for retail, hospitality and leisure properties to £18,000 for 100% relief and £21,000 for tapered relief - taking 70,000 additional businesses out of rates entirely. Pubs, social clubs and live music venues saw their relief expanded from 15% to 35%. A two-year real-terms freeze on business rates bills for qualifying properties was introduced for 2027-28 and 2028-29.
For a pub, the saving is around £3,000 a year. For the 70,000 businesses coming out of rates altogether, it is transformative.
Energy pricing for manufacturers
The British Industrial Competitiveness Scheme was confirmed from 1 April 2027, giving eligible energy-intensive manufacturers a 20-25% discount on electricity bills - over 10,000 firms - with backdated payments for 2026-27. The planned Gas Shipper Obligation levy on industrial gas was scrapped entirely, with hydrogen contracts funded from general taxation instead. The Climate Change Levy on electricity was frozen from April 2028, and the government introduced a new Cost Control Framework pledging no new policy costs on bills in the interim.
Manufacturers welcomed this strongly. Make UK noted, however, that BICS still covers only around 1 in 10 manufacturers, leaving 90% of the manufacturing supply chain exposed.
Planning, housing and devolution
This was one of the strongest areas of delivery. The government confirmed £4.7 billion for the Your First Home equity loan scheme, providing up to 20% equity loans for 70,000 first-time buyers. £1.5 billion was allocated for 10,000 social rent homes. Planning documents will be digitised and the PlanAssist AI planning tool rolled out across England by 2027.
Perhaps most significantly, the Budget delivered the first wave of Mayoral Strategic Authority Business Rates Retention Zones - allowing Mayors to retain 100% of rates growth for 25 years - alongside £285 million in Good Growth Funds. This was a genuine devolution of economic power, closely matching what the regional chambers had asked for.
Regulation
A new Better Regulation Executive was established, with £640 million in annual administrative savings identified and the Small Business Regulatory Taskforce recommendations adopted - including the Tell Us Once system that the ICAEW had championed. A Regulation for Growth Bill was introduced with cross-economy regulatory test-beds.
Where Business Was Left Empty-Handed
Employment taxes - the number one ask
This was the single most urgent priority across every major business submission. It was the cost pressure that Frankie Dyer, owner of Barbakan bakery in Manchester, described in her open letter to Andy Burnham - a letter that reached one million views in two days and drew thousands of messages from fellow SME owners living the same story. It was the pressure the British Chambers of Commerce called catastrophic for recruitment, the one the IoD said was deterring investment.
The Budget did not touch it. The £5,000 employer NIC secondary threshold stayed exactly where it was. There was no under-25 exemption, no NEET hiring relief, no indexation of the Employment Allowance. Instead, the Chancellor confirmed a 3.9% increase in both the National Living Wage and the National Minimum Wage, adding further pressure to wage bills.
The British Chambers of Commerce, the Institute of Directors and the ICAEW all expressed deep disappointment. The IoD reiterated that the cumulative impact of recent employment cost increases and the Employment Rights Act is deterring recruitment, with business investment intentions subdued.
For a founder employing people - and of the UK's 5.7 million private sector businesses, around 1.5 million do - the single biggest cost pressure in the business was left exactly where it was.
Skills
The Chancellor committed £100 million over two years for Mayors to expand local apprenticeship services and launched a Young Entrepreneurs Allowance. These are welcome steps. But the core ask - unlocking the Growth and Skills Levy for modular, non-apprenticeship training and raising apprenticeship funding bands - was largely deferred. The £2.14 billion in unspent levy funds remains retained by Treasury.
Where Business Got the Opposite of What It Asked For
The bank surcharge
UK Finance had explicitly lobbied for tax stability in the financial services sector, warning that further increases risked widening the competitiveness gap with New York and Frankfurt. The Budget temporarily doubled the Bank Corporation Tax Surcharge from 3% to 6% for 15 months - from January 2027 to March 2028 - to raise approximately £1.47 billion to fund household energy rebates.
The financial sector was, in effect, singled out to pay for one of the Budget's headline announcements.
Capital investment clawbacks
The Budget maintained full expensing and increased the First Year Allowance from 40% to 50% - both welcome. But in a move that received less attention, the Chancellor cut the general writing-down allowance from 14% to 12%, clawing back over £1 billion annually from corporate investment budgets. This is the allowance that covers the slower depreciation of longer-lived assets - precisely the kind of steady, patient capital investment that growing businesses make.
Alongside this, the lifetime limit for Business Asset Disposal Relief was halved from £1 million to £500,000 - though a new CGT Founders' Relief was introduced, offering a 10% rate on up to £10 million of lifetime gains for qualifying high-growth firms.
How the Chancellor Paid for It
One of the more revealing aspects of this Budget is the fiscal arithmetic underneath it. The Chancellor constructed a self-funding package in which every major relief measure was directly matched by a designated revenue raiser.
The £2.6 billion household energy payment - £100 for up to 20 million households - was funded by the bank surcharge. The high street rates relief was funded by shifting VAT collection onto online marketplaces for UK sellers with turnover above £90,000 (raising £320 million by 2028-29), increasing Machine Games Duty from 20% to 25% (raising £135-150 million annually), and extending the transitional relief supplement for two more years.
The capital allowance increase was self-financed by the writing-down allowance cut - in fact, the cut raises substantially more than the increased costs. And a broader package of taxes on property income and savings income (up 2 percentage points from April 2027) raises over £1 billion.
The logic is clear: targeted relief for those under the most visible pressure, funded by targeted levies on sectors and income types the Treasury judged could absorb it. Whether you agree with the choices depends, in large part, on which side of the ledger your business sits.
What This Means If You Are a Founder
The Chancellor used the right words to describe Budget 2026. Breathing Space is exactly what business asked for - and in certain areas, that is exactly what was delivered. If you run a pub, a restaurant, a high street shop, the rates relief is real and immediate. If you are an energy-intensive manufacturer, BICS is a genuine structural shift. If you are building housing or investing in infrastructure, the planning reforms and devolution measures are substantive and welcome.
But if you are a founder employing people - building a team, hiring entry-level staff, trying to grow - the single biggest cost pressure in your business was left untouched. The employer NIC threshold stayed at £5,000. The minimum wage went up. The skills system was not meaningfully reformed. And the writing-down allowance was quietly cut, making the patient, long-term investment that growing businesses depend on slightly more expensive.
The Chancellor said that he was offering two things: breathing space today, and fresh hope for the future. The first arrived more convincingly than the second.
References
This article draws on the pre-Budget representations submitted to HM Treasury by the following organisations:
Budget 2026 framing: Chancellor John Healey's Breathing Space Budget statement.
See also: Before the Budget: What Business Really Asked For, Part 1.
I work with purpose-led founders and leaders at every stage of growth. If this piece has sparked something - and you'd like to think about what it means for your business, I'd welcome a conversation.
