Autumn Budget 2026: What the October 28th Announcement Could Mean for Your Equipment Finance

The UK Autumn Budget will take place on 28 October 2026, and businesses investing in machinery, vehicles and equipment will be watching closely for any changes to tax relief and business funding.

At present, there is no confirmed announcement that the Government will change the current capital allowances framework. However, the Budget could still affect the cost of acquiring equipment through changes to allowances, Corporation Tax, green incentives or the timing of relief.

For businesses planning an investment, the key question is not simply “Should we wait?” It is:

> How can we make a well-informed funding decision while protecting cash flow and keeping flexibility?

At LetsTalk Asset Finance, we help businesses compare tailored funding structures, including hire purchase, finance lease and operating lease solutions.

The current capital allowances landscape

Going into the Budget, the main rules for qualifying plant and machinery include:

• Permanent full expensing: Companies can generally claim a 100% first-year allowance on qualifying new and unused main-rate plant and machinery, subject to the relevant conditions.
• 50% first-year allowance: This may apply to qualifying special-rate assets for companies.
• Annual Investment Allowance: Most businesses can claim 100% relief on qualifying expenditure up to the permanent £1 million AIA limit.
• 40% first-year allowance: Introduced for certain qualifying main-rate plant and machinery acquired from 1 January 2026, particularly where full expensing or AIA is unavailable or unsuitable.
• 14% main-rate writing-down allowance: The main pool rate was reduced from 18% to 14% for relevant accounting periods beginning from April 2026. The special-rate pool remains at 6%.

These allowances do not all apply to the same expenditure. In many cases, a business must choose the most appropriate treatment for each asset.

The Government’s capital allowances guidance confirms that relief can apply to equipment, machinery and business vehicles. However, the precise treatment depends on the asset, the business structure, the finance agreement and when the expenditure is treated as incurred.

We are not tax advisers, so you should always take your accountant’s view before committing to an investment or relying on a particular allowance.

Economic context: funding remains active, but costs still matter

The Bank of England’s current Bank Rate is 3.75%, following the Monetary Policy Committee’s September decision to hold rates at that level. The Bank has also highlighted continuing inflation and energy-price uncertainty.

That makes cash-flow management particularly important. Even if borrowing costs are more stable than they were previously, businesses still need to consider the total cost of finance, repayment commitments and the effect of working capital being tied up in equipment.

At the same time, demand for asset finance remains resilient. According to the Finance & Leasing Association, asset finance new business rose by 15% year on year in June 2026, while first-half new business was up 7%. Plant and machinery finance increased by 17% in June.

That is a useful signal: businesses are continuing to invest, but many are choosing structured finance rather than paying for equipment entirely from cash reserves.

What could realistically change on 28 October?

There are no confirmed changes to the capital allowances regime for this Budget. Any discussion of potential changes should therefore be treated as speculation.

1. Capital allowance rates or timing

The Chancellor could potentially adjust:

• The £1 million AIA limit.
• The availability or rate of first-year allowances.
• The 14% main pool writing-down allowance.
• The qualifying conditions for full expensing.
• The dates on which particular reliefs start or end.

An increase in relief could reduce the after-tax cost of qualifying equipment and encourage businesses to bring forward investment.

A reduction, restriction or delayed relief could make the same asset more expensive in net terms, particularly for businesses unable to use full expensing or AIA.

2. Green investment incentives

The Budget could extend or expand incentives for low-carbon investment, although no new measures have been confirmed.

Existing green-related relief includes first-year allowances for certain zero-emission cars and electric vehicle charge-points, currently extended into 2027 under the relevant rules. A new incentive for energy efficiency, charging infrastructure, battery storage or renewable equipment could improve the business case for investment.

Our green finance solutions can help businesses consider funding for electric vehicles, renewable energy systems and energy-efficient equipment.

3. Corporation Tax

A change to Corporation Tax would affect the value of tax relief. For example, a higher Corporation Tax rate could increase the tax saving from a qualifying allowance, while a lower rate could reduce it.

However, tax relief should not be the only reason to buy equipment. The asset should support productivity, revenue, efficiency or capacity. A tax saving is valuable, but it cannot make an unsuitable investment commercially sensible.

Act now or wait? A practical approach

For businesses with a genuine equipment requirement, there can be advantages to preparing before Budget day.

Why acting ahead may make sense

Getting an approval and supplier quotation in place can help you:

1. Secure the equipment you need, particularly if manufacturer lead times are extended.
2. Understand the monthly cost before the Budget, rather than making a rushed decision afterwards.
3. Protect working capital by spreading the cost through hire purchase or leasing.
4. Move quickly if the current rules remain attractive.
5. Give your accountant the information needed to assess the likely tax treatment.

However, an approval is not necessarily the same as completing the purchase for capital allowances purposes. The relevant date may depend on the contract, delivery, installation, use of the asset and other conditions. Your accountant should confirm whether an order or finance agreement completed before 28 October would achieve the intended tax result.

When waiting could be sensible

Waiting may be appropriate where:

• The asset is discretionary rather than essential.
• You expect a specific Budget measure to affect your sector.
• The supplier has flexible pricing or delivery terms.
• Your business has limited taxable profits this year.
• The proposed finance commitment would put pressure on cash flow.

A sensible middle ground is to obtain a finance comparison now, confirm availability with the supplier and discuss the tax position with your accountant. That gives you options without forcing you to proceed prematurely.

Hire purchase vs finance lease: what is the difference?

The right structure depends on ownership, cash flow, accounting and tax requirements. This short comparison is a starting point only.

If you are comparing hire purchase vs finance lease, do not focus only on the monthly payment. Consider the total cost, VAT treatment, ownership objectives, accounting presentation, tax relief and expected residual value.

Our finance lease guidance and hire purchase information can help you start that comparison.

Worked example: outright purchase versus asset finance

The following is illustrative rather than a quotation or tax calculation.

A construction company wants to acquire £200,000 of new main-rate plant machinery. The business is a limited company with sufficient taxable profits and, subject to its accountant confirming the conditions, the equipment qualifies for full expensing.

Outright purchase

• Equipment cost: £200,000
• Immediate cash outlay: £200,000
• Illustrative Corporation Tax relief at 25%: £50,000
• Net tax-adjusted cost: £150,000, assuming the business can use the full allowance

The £50,000 is not an instant discount from the supplier’s invoice. It reduces taxable profits and may reduce the Corporation Tax payable, subject to the company’s tax position and accounting period.

Hire purchase

• Equipment cost financed: £200,000
• Initial deposit: set according to the agreed structure
• Remaining cost: repaid through scheduled instalments
• Potential capital allowance: potentially the same £200,000 qualifying cost, subject to the relevant rules and accountant confirmation
• Interest and finance costs: considered separately under the applicable tax and accounting treatment

The HP structure may allow the business to put the excavator or other plant into productive use while retaining more cash for wages, materials, fuel and project mobilisation.

The total amount paid under finance will usually be higher than the cash price because of interest and fees. The benefit is liquidity and flexibility, not a free reduction in cost.

Two illustrative business scenarios

Construction firm: replacing ageing plant

A regional contractor has secured several new projects but needs a replacement excavator and compact roller. It is considering construction equipment finance, including plant machinery finance and heavy machinery finance.

Rather than use its entire cash reserve, the business obtains an approval for hire purchase, confirms delivery times with the supplier and asks its accountant to review the capital allowance position before Budget day.

The result could be improved project capacity without exhausting working capital. If the Budget changes the rules, the company can then review whether to proceed, renegotiate or adjust the timing.

Farm business: upgrading machinery

A farm business is considering a new tractor and harvesting attachment ahead of the next season. Through farm machinery finance, it could spread repayments over a term that better matches expected seasonal income.

The owner may compare hire purchase with finance lease, review whether AIA or the 40% first-year allowance could apply and consider how the investment affects taxable profits. The business should also assess utilisation, maintenance, fuel efficiency and resale value, not just the potential tax relief.

What about existing assets and sale and leaseback?

If your business already owns valuable equipment, sale and leaseback UK solutions may release capital without removing the asset from day-to-day use.

This can provide a cash injection for working capital, expansion or a new investment programme. It may be relevant for businesses that have significant value tied up in vehicles, machinery or other operational assets.

However, sale and leaseback changes the ownership and payment structure. It can also affect total long-term cost, accounting and tax treatment, so professional advice is important before proceeding.

Prepare for the Budget with a tailored funding plan

The most practical preparation is to:

• List the assets you genuinely need over the next 6–12 months.
• Confirm supplier prices, lead times and delivery requirements.
• Obtain approval and compare funding structures.
• Ask your accountant how the current allowances may apply.
• Review the Budget announcement before finalising any discretionary investment.
• Reassess rates, incentives and repayment affordability after 28 October.

Whether you are speaking to several equipment leasing companies or considering hire purchase, a broker can help you compare lenders and structures rather than relying on a one-size-fits-all solution.

At LetsTalk Asset Finance, we work with businesses across construction, agriculture, transport, manufacturing and technology. Our extensive lender network, transparent approach and dedicated account management help you move from an equipment requirement to a funding decision with confidence.

Talk to us about tailored asset finance before the Budget, or use our asset finance calculator to begin exploring the options. We will help you understand the choices clearly, before and after 28 October.