Autumn Budget 2026: what changes if you're growing across borders

The headline from the Autumn Budget, delivered on 28 October 2026, was what didn't happen. The main rate of corporation tax stays at 25%, the small profits rate stays at 19%, and there was no rise in the main rates of Capital Gains Tax, despite a lot of speculation that there would be.

Stable headline rates give you some certainty. But unchanged rates don't mean an unchanged tax bill, and if your business has any kind of overseas dimension, this Budget quietly moved several things that matter more than the rate. Here's what we'd flag.

The rate didn't move. The rules around how you grow abroad did.

Overseas losses are about to stop sheltering UK profit

If you run, or plan to run, part of your operation abroad through a foreign permanent establishment (a taxable presence overseas, which may or may not be what you'd casually call a "branch"), this one has a date on it.

The UK's foreign-PE exemption lets a company elect to leave its overseas PE profits out of UK corporation tax. It has always been optional. The Budget confirmed a change first announced back in May 2026: from accounting periods beginning on or after 1 January 2027, the exemption becomes mandatory for UK companies with a foreign PE.

The catch is a common one for expanding businesses. With the exemption in force, overseas PE profits and losses both fall outside UK corporation tax. Plenty of companies run a new overseas operation as a PE precisely because it loses money in the early years, and set those start-up losses against UK profits to soften the cost of expansion. Once the exemption is mandatory that relief closes for new periods, and there are transitional restrictions, so you can't assume existing losses simply carry on being available.

Two practical points. First, whether you even have a foreign PE is a question to answer, not assume: you can't choose your UK tax treatment just by calling an operation a branch or a subsidiary. Second, if overseas losses were part of how you modelled an expansion, revisit the forecast, and the branch-versus-subsidiary decision, before your next accounting period begins. A PE may still be the right commercial choice; the tax assumptions underneath it may no longer hold.

Selling services across the border? The VAT rules change in April

If you're a UK business that buys services from overseas, or an overseas business that sells services into the UK, there's a change worth getting ahead of.

Today, when a UK business buys services from abroad, the UK customer usually accounts for the VAT itself under the "reverse charge". From April 2027, that reverse charge will apply only where the UK customer is VAT-registered. Where the UK customer isn't registered, the overseas supplier has to charge and account for UK VAT instead, which means more overseas suppliers will need to register for UK VAT.

So if you supply services into the UK from abroad, you'll need to check your customers' VAT status, your pricing and your invoicing before April 2027. If you're a UK buyer that can't recover VAT, your cost on those services could rise. The fine detail is still to come in the Finance Bill, but the direction is set, and it lands squarely on the day-to-day of cross-border trading.

If an exit is on the horizon: read the small print on "Founders' Relief"

Two capital gains changes land on the same date, 6 April 2027.

Business Asset Disposal Relief (BADR) is being cut back. The lifetime limit drops from £1m to £500,000. The relief rate stays at 18%, but with half the allowance the benefit roughly halves: for gains that would otherwise be taxed at 24%, the maximum saving falls from around £60,000 to around £30,000. There are transitional rules for contracts and share reorganisations entered into before 6 April 2027 that complete afterwards.

Alongside it, a new "Founders' Relief" is proposed: a 10% CGT rate on up to £10m of lifetime gains, also from 6 April 2027. On the face of it that sounds generous. In practice, read the conditions before you count on it.

As drafted (it's still at consultation, which closes on 30 November 2026), the company has to clear a demanding bar, not just the founder. It's expected to need at least £10m of turnover and at least 15 full-time-equivalent employees, and to meet two of three growth tests: 25% compound annual growth in turnover, 25% compound annual growth in headcount, or at least £1.5m of qualifying R&D spend, with certain sectors such as property development and financial services excluded. The founder also has to have held at least 25% of the ordinary shares from the start of trading, held them for five years, and been UK-resident for five continuous tax years. And the £10m isn't on top of everything else: it's reduced by any BADR and Investors' Relief you claim.

Our take: this is not the broad entrepreneurs' break the "10% on £10m" headline suggests. It's aimed squarely at high-growth, innovative companies, and most established owner-managed businesses won't meet the growth or R&D tests. For a lot of founders the more immediate story is simply that BADR is shrinking. And that five-year residence condition is the cross-border catch: if you've relocated, spent time non-resident, or are weighing a move, your eligibility is not a given, and timing a sale around 6 April 2027 is something to model rather than assume.

The rest, briefly

• Large groups (worldwide revenue over €750m): the next Finance Bill adds Pillar Two "safe harbours", including a simplified effective-tax-rate safe harbour. Whether a safe harbour actually reduces your UK obligations depends on which one applies, so check rather than assume.
• R&D claimants: the separate R&D claim notification form is being removed for claims made on or after 1 April 2027, a small but welcome cut in admin.

What we'd look at first

For a business with any overseas dimension, four questions decide whether this Budget costs you:

1. Do you run, or plan to run, an operation abroad? Check whether it's a foreign PE and revisit your loss position before 1 January 2027.
2. Do you buy or sell cross-border services? Map which customers are VAT-registered and what changes in April 2027.
3. Is a sale or succession on the horizon? Model the BADR cut, and sense-check whether Founders' Relief is realistically within reach, including the residence test if you're internationally mobile.
4. Are you a large group inside Pillar Two? Re-check your position against the new safe harbours.

The reassuring headline was the stable rate. The value, as ever, is in getting the cross-border detail right before the dates land. If you'd like to talk through where these changes touch your plans, book a call and we'll work it out together.

This article reflects the Autumn Budget 2026 announcements and the commentary available at the time of writing. Several measures, including Founders' Relief and the VAT and permanent-establishment changes, are still subject to consultation or Finance Bill legislation, so treat the detail as indicative and check your own position before acting.