The UK Budget 2026

The decision to lower business rates for hospitality businesses and provide additional rate relief for small businesses could be the difference between sinking or swimming for those businesses barely keeping their heads above water. This is particularly important given that 22,500 businesses fell into insolvency last year, with small businesses especially affected. However, we have concerns about today’s announcement requiring businesses to set up direct debits for VAT and PAYE liabilities. Direct debit can be a useful option for some businesses, but making it mandatory could put additional pressure on businesses by taking away their ability to manage and predict their short-term cashflow requirements.

After a turbulent couple of years for businesses, I think a period of greater stability is welcome. Businesses need some certainty if they are going to have the confidence to plan, invest and recruit. I also think the focus on helping women-led businesses scale is welcome. As lawyers working with founders and growing businesses, we see the difference that access to investment and the right support can make. If that programme, together with the new reliefs for founders and investors, genuinely helps more people build successful businesses and ultimately realise the value they have created, that has to be a positive.

The announcement on a rise in gaming machine duty is unsurprising and a decision that will have a detrimental impact on the high street gambling sector. The industry has been dealing with an array of financial challenges in recent years with many closing their high street operations and announcing redundancies. Whatever you feel about the betting and gaming industry, many of these venues have been keeping high streets alive – employing staff and occupying premises which would otherwise have remained vacant, whilst contributing tax revenue to the government.

For employers, there are no nasty National Insurance increases, but we do have an increase to the National Minimum Wage for the younger workers. It’s not a massive increase, and it’s something which is trying to right the balance in terms of the age differential which already exists, so I don’t think it's too onerous for businesses. I would have thought the paternity leave change is one of the more interesting aspects of the Budget today – and something I wasn’t necessarily expecting. It will allow those impacted to have two weeks with their new child whilst receiving a state-funded payment of up to £194 per week, helping to alleviate stress during the arrival of a new baby, and reducing any pressure to go back to work too early – making a big difference to people's lives.

“Overall, the Budget was not as bad for business as feared. The particular losers were vape and gambling shops, and the banks. The devil is always in the detail, but there do seem to be opportunities for new investors and businesses to benefit from new tax breaks. The rate of Business Asset Disposal Relief has been left untouched, although the lifetime limit for qualifying gains has been lowered from £1 million to £500,000 from April 2027, so there is a limited opportunity for sellers to benefit from the £1 million limit if they sell before then. There wasn’t much change to real estate tax, although social housing providers should note the new zero rate of VAT for land intended for the construction of social housing, intended to be effective from April 2027.

The policy is apparently designed to support the UK's broader AI strategy, which aims to triple UK computing capacity to 6GW by 2030 and links the support of development of data centres in Britain to the government's artificial intelligence and national security objectives. The devil, as always, will be in the detail, and there are already signs of a potential disconnect between the introduction of stricter tests and the need to keep projects moving. The success of the proposals will depend on whether that balance can be struck without creating further delay and complexity.

Data centres are, by their very nature, land-hungry, resource-intensive and often visually prominent. This understandably results in a great deal of concern amongst a local community whenever a new facility is proposed to be built nearby. Local engagement is fundamental to the preparation of any new development plan and, therefore, early and active engagement in the development plan process is likely to be key towards ensuring that appropriate locations – which balance the locational needs of data centres with the likely desire of residents to ‘protect’ their community – are selected to accommodate that growth.

The Government's proposed Data Centre Covenant is a great example of ESG objectives being embedded into economic growth policy. By tying priority access to critical infrastructure to commitments around local jobs, community investment and environmental stewardship, the policy recognises that large-scale AI infrastructure projects will be more successful where local communities share in the benefits. AI is now essential to a resilient and sovereign economy, and has always been essential to the data analysis required for decarbonisation efforts

As with all these initiatives, it is about delivery. Do we have the right land for the centres? How will they affect the environment? Will they get through planning? We will have the capability as an industry to deliver the design and construction, but it’s the elements around the centres themselves that may cause the greater issues. From a construction perspective, almost anything can be built. The bigger question is whether the supporting infrastructure is in place to make these projects viable. Data centres have significant power and cooling requirements, which place pressure on local utilities and the wider grid at a time when energy security and capacity are already under scrutiny. The ambition is clear, but the challenge will be overcoming the practical barriers that stand between policy announcements and delivery on the ground.

With the details currently available, it looks like similar to the Help to Buy scheme that is now discontinued. That was a positive scheme for the new homes sector. The whole housing market benefits when new buyers are bought into the bottom of a chain so it should be a good thing. As always, it will depend on how well the scheme is run to ensure there are no processing delays at completion that affect chains.

The Your First Home scheme will no doubt help some first-time buyers who are struggling to save for a deposit, but I don’t believe it’ll have the same transformational effect as Help to Buy (HTB). Developers are facing substantially higher construction, regulatory and infrastructure now than when HTB was introduced. While the scheme should provide a boost to demand, which can only be good news, planning constraints, viability pressures and the cost of development are going to be fundamental barriers to increase housing supply.

The Your First Home scheme is better than nothing and it’s a step in the right direction, but I don’t think it’s enough on its own to kickstart the housing market. The devil is in the detail. We still don’t know what the take-up will be from developers, who will need to register for the scheme and pay to participate by December, and we don’t know how many buyers will ultimately qualify. The delayed start date also means it is unlikely to be an overnight market-mover. The regional price caps also mean the scheme’s impact is likely to vary significantly across the country, and I do think they’re quite low area to area. While they’re intended to improve affordability, developers are still contending with rising land, planning, finance and construction costs, so the economics need to stack up for developers if the scheme is going to drive a meaningful increase in supply.