Was Andy Burnham’s First Budget Really Pro-Manchester?

From a proposed new Founders’ Relief to changes that could increase the tax cost of selling an established business, Budget 2026 presents opportunities and challenges for entrepreneurs. John McCaffery of Alexander & Co examines what the announcements mean for Greater Manchester’s owner-managed businesses, their advisers and the regional economy.

It is not every day that a former Mayor of Greater Manchester oversees his first Budget as Prime Minister. For those of us advising the region’s entrepreneurs and owner-managed businesses, it was interesting to see whether Andy Burnham’s much-discussed ‘Manchesterism’ would influence national economic policy.

Of course, a Budget cannot be judged simply by the Prime Minister’s postcode. What matters is whether Chancellor John Healey’s announcements encourage people to start businesses, invest, employ people and ultimately realise the value they have created.

The Budget documents reveal some interesting contradictions. The Government appears keen to encourage innovative, high-growth companies, yet other announcements may be less welcome to established business owners who have spent decades building successful enterprises.

That distinction matters in a region whose economy depends as much on longstanding owner-managed businesses as its thriving technology and start-up community.

Encouraging the next generation, but what about the current one?

One eye-catching announcement is the proposed Capital Gains Tax Founders’ Relief from April 2027, offering a 10% tax rate on qualifying gains of up to £10 million over an individual’s lifetime, subject to consultation and potentially onerous qualifying conditions.

For Greater Manchester’s growing technology, life sciences and advanced manufacturing sectors, this could be significant. Encouraging founders to establish and scale businesses here would be positive, although the eligibility criteria will be crucial.

The proposed relief targets founders and significant early investors in innovative, high-growth companies. Whether established businesses that underpin our regional economy will benefit remains uncertain. Indeed, the proposed conditions appear particularly restrictive, raising questions about how many entrepreneurs will realistically qualify for what initially appears to be a generous relief.

There is an interesting contrast with the reduction in the Business Asset Disposal Relief (BADR) lifetime limit from £1 million to £500,000 from April 2027.

For an entrepreneur selling a qualifying business with a £1 million gain, this could mean an additional £30,000 in Capital Gains Tax, assuming the current 18% BADR and 24% higher CGT rates apply. That is meaningful for someone who has invested much of their working life and personal wealth in a business.

It raises a question about the message being sent to entrepreneurs. We want people to take risks, create employment and build successful businesses, but should we not also recognise those who have already done precisely that?

For owners considering retirement, succession or a management buyout, early planning is increasingly important. Transaction timing, shareholder structures and available reliefs all warrant careful consideration, particularly where a sale may straddle April 2027.

Investment, people and the realities of running a business

The Budget includes measures intended to encourage investment. The main rate first-year capital allowance will increase to 50% from January 2027, while the main writing-down allowance will reduce to 12% from April 2027.

For Greater Manchester’s manufacturers and engineering businesses, investment in machinery, automation and technology remains essential. These changes may influence expenditure decisions, although existing reliefs, including the Annual Investment Allowance and full expensing, remain important.

As advisers, we regularly see that tax incentives are only part of an investment decision. Cash flow, financing costs, demand and productivity matter just as much. An attractive allowance achieves little if businesses lack confidence to invest.

Changes to business rates will also be relevant, particularly for Greater Manchester’s retail, hospitality and leisure sectors. While increased relief thresholds and measures to limit increases in bills will be welcomed by some smaller businesses, many others will continue to face significant property costs. The proposed greater local retention of business rates revenues could also benefit the region, provided it translates into meaningful local investment.

There is some encouraging news for companies seeking to retain talented people. Changes to employee share schemes will increase the individual Company Share Option Plan limit to £120,000, extend its exercise period to 15 years and provide greater flexibility within Enterprise Management Incentives arrangements. CSOP will also be renamed EMI2.

For growing owner-managed businesses, employee ownership can help retain key individuals, incentivise management and support succession planning. These measures could be particularly valuable in a region competing for skilled people in technology and professional services.

Smaller announcements also deserve attention. Increasing the trading allowance from £1,000 to £3,000 from April 2027 could help those developing additional income streams, while simplifying R&D claim administration should benefit businesses undertaking qualifying innovation.

However, simplification does not necessarily mean less administration overall. The phased introduction of mandatory payrolling of benefits in kind from April 2027, with remaining benefits following in April 2028, will require employers and advisers to adapt their processes. For smaller businesses without substantial finance teams, the cumulative compliance burden remains important.

The business owner, their wealth and the Manchester question

One point often overlooked is that the finances of an owner-managed business and its shareholders are closely connected. Measures affecting personal taxation can have significant consequences for business owners.

From April 2027, increased tax rates on savings and property income of 24%, 44% and 49% will affect those with relevant investment income or personally held property interests.

Previously announced changes bringing most unused pension funds and pension death benefits within Inheritance Tax from April 2027 also remain important. Alongside changes to Business Property Relief, they reinforce the need to consider business ownership, personal wealth, pensions and succession together.

For family businesses, succession is about more than minimising tax. Ownership must pass to the next generation without undermining financial stability or creating unexpected liabilities. A valuable business does not necessarily have substantial cash reserves, making joined-up advice essential.

So, was this a Budget for Manchester? Measures such as Founders’ Relief, employee share incentives and R&D simplification could benefit sectors in which the region excels, while capital allowances remain relevant to manufacturing and engineering.

Equally, reduced BADR and changes affecting personal wealth present challenges for established entrepreneurs. Business rates changes will offer some support, although the benefits will not be felt equally across the business community. We should also distinguish UK-wide tax measures from policies specifically supporting Greater Manchester.

The wider regional picture matters. Transport, infrastructure, skills, access to finance and commercial property influence whether businesses invest and expand here. Tax incentives cannot compensate for shortcomings elsewhere, and regional investment must ultimately deliver tangible improvements.

Manchesterism has often been associated with ambition, partnership and creating opportunities through economic growth. Translating those principles into national policy is considerably more complicated.

For owner-managed businesses, the priority is to examine how these changes affect investment, employee ownership, succession and potential exits. Decisions should reflect individual circumstances rather than Budget announcements alone.

Ultimately, whether Andy Burnham’s first Budget proves pro-Manchester will not be determined by where the Prime Minister began his political journey. It will depend on whether the entrepreneurs and businesses behind the region’s success have the confidence, incentives and opportunities to continue growing.

John McCaffery is Tax Partner and Head of Tax at Alexander & Co, advising owner-managed businesses, entrepreneurs and their shareholders.