The Chancellor may have avoided sweeping changes to business taxes in this year’s Autumn Budget, but that doesn’t mean business owners and entrepreneurs got off lightly. In fact, many of the measures announced will have a very real and personal impact, not necessarily in bold headline changes, but in the quiet tightening of allowances, reliefs, and thresholds that determine how much of your income, wealth and investments stay with you.
Here are some of the key areas where the Budget will bite, and what it means for you.
Dividends: Higher tax, lower take-home
If you extract income through dividends, expect a bigger slice to go to HMRC from April 2026. The basic rate of dividend tax rises to 10.75%, with the higher rate jumping to 35.75%, this is a 2% increase in both cases. And with the £500 dividend allowance frozen, even modest dividend income will attract tax.
What this means: You’ll need to revisit how you extract profits from your business. In some cases, drawing a higher salary may become more tax-efficient. Strategic remuneration planning will be more important than ever.
Income tax: Frozen thresholds, stealth increases
There are no headline hikes in income tax rates, but thresholds remain frozen until 2031. That means as your income grows, a greater portion is dragged into higher tax bands, a phenomenon known as fiscal drag.
What this means: You may find yourself paying significantly more tax even without a pay rise in real terms. This is a slow erosion of take-home income, particularly for those close to the higher-rate threshold.
Pensions: NIC changes and estate exposure
From April 2029, the NIC exemption on salary sacrifice pension contributions will be capped at £2,000/year. Contributions above that will attract both employer and employee NICs.
What’s more, from April 2027, unused pension funds will be included in your estate for inheritance tax, even if written into trust. This is a significant shift in how pensions are viewed from a tax planning perspective.
What this means: Pension strategies will need revisiting. High earners relying on pensions for tax efficiency or legacy planning may need to reconsider their approach.
Capital Gains Tax: EOT relief halved
For those considering a sale into an Employee Ownership Trust (EOT), the CGT relief has been halved to 50%, effective immediately. This reduces one of the more generous exit routes for business owners.
What this means: If an EOT was part of your long-term exit strategy, you’ll need to review the numbers. Other routes, such as trade sales, management buyouts, or private equity may now offer better outcomes.
Property ownership: The mansion tax arrives
Own a home worth over £2m? From April 2028, you’ll be hit with an additional annual surcharge starting at £2,500, rising to £7,500 for properties worth over £5m. This is on top of council tax.
What this means: Business owners who’ve invested in prime residential property, often using proceeds from entrepreneurial success, will face rising annual costs, particularly if those assets aren’t income-generating.
So, what can you do?
The message from the Budget is clear: while business tax rates may hold steady, personal tax planning for business owners is entering a more complex and punitive phase. With thresholds frozen, reliefs reduced, and several previously tax-efficient strategies now under pressure, early and proactive planning is essential.
Whether you’re planning an exit, restructuring remuneration, or reviewing your pension and investment strategy, our team is here to help you navigate the changes and retain more of what you’ve built.
