Hello everyone,

There were a host of measures in the Budget designed to raise substantial amounts of tax without breaking manifesto commitments. Whilst there was potential good news for larger families for child benefits and the lower paid with minimum wage increases, there was little of good news for businesses, landlords and many working people. As ever the devil will be in the detail as the legislation is enacted and will become apparent over the coming months with some of the measure not taking effect until 2027 or later.

We set out below a brief summary of some of the main points and will cover some of these in greater depth once the details are known over the coming months.

Kind regards, 
Simon

Taxes on Income from property and dividends is going up by 2%

A new system of separate tax rates will be created for property and savings (interest) income with the new rates applying from 6th April 2027.

• The basic property and savings rate will be 22%
• The higher property and savings rate will be 42%
• The property additional rate will be 47%

The tax rates applied to dividends will be increased for the ordinary and upper rates from 6th April 2026:

• The ordinary rate will increase to 10.75%
• The upper rate will increase to 35.75%

And remember for business owners that this is the money you can take out of the business after you have paid corporation tax…

NICs and Income Tax

National Insurance Contributions (NICs) and income tax thresholds will be frozen for another three years from 2028. This means that as income rises over the coming years more people are pushed in to higher rates of tax.

Mansion Tax

A high value council tax surcharge popularly known as the “mansion tax”  is being introduced on high value homes from 2028. The annual surcharge will be £2,500 for properties worth over £2 million and £7,500 for properties over £7,500.  This is likely to impact most in London and the South East.

ISAs and Venture Capital Trusts

The limit on cash ISAs is being reduced to £12,000 from April 2027 with an exemption for the over 65s who will retain the current £20,000 limit.

Inheritance tax

After the significant changes last year with restrictions on business and agricultural property relief, with 100% relief restricted to £1m and 50% thereafter from 2026 and inclusion of pension funds from 2027 there were no major changes in this Budget. One welcome relaxation is that the £1m allowance for 100% relief for BPR / APR will be transferable between spouses and civil partners.

It was notable that after some speculation, there was no mention of restrictions to life time giving and this continues to be an efficient way to pass on wealth.

Salary sacrifice on pension contributions is being severely restricted from 2029

Salary sacrifice pension schemes (where employees swap salary for pension contributions to save tax) are being restricted. Currently neither you nor your employer pay National Insurance Contributions on the salary sacrificed into extra pension contributions. From April 2029, you and they will pay National Insurance on pension contributions over £2,000 a year. This is likely to mean that employers may reduce the availability of these schemes, and the benefits will reduce. As this does not come in to effect until 2029, people should have until then to make the most of the current benefits.

For business owners your wage bill is about to jump

From April 2026, you’ll be paying more for staff:

• If you employ people on minimum wage (21+), their hourly rate goes up from £12.21 to £12.71. That’s 50p extra an hour.
• Younger workers (18-20) get an even bigger jump – up by 8.5% to £10.85 an hour
• Under 18s and apprentices go from £7.55 to £8.00

This is part of the government’s commitment to establish a single adult rate for minimum wage.

Plus, Employment Tax thresholds, e.g. National Insurance and Income tax, are frozen until 2031. This means as wages naturally rise, more of your employees’ money gets taxed at higher rates. They’ll feel the pinch, which often leads to pressure for pay rises beyond the legal minimum.

New costs and admin coming your way

Keep these dates in your diary:

• April 2028: Electric company cars will start paying a mileage tax (3p per mile for EVs, 1.5p for hybrids). At the moment how this will be administered is still unclear.
• April 2029: All your VAT invoices must be sent electronically in a specific format. When we know more we will tell you. But if you are still invoicing on paper, it is now time to move over to a digital accounting system.
• March 2029: Importing cheap goods under £135? That duty-free relief is being scrapped. This stops the Temu and Shein’s of this world having an advantage against UK high street businesses.

HMRC is coming after small businesses harder

The government is investing money into more tax enforcement hoping to raise £2.3 billion by specifically targeting small businesses. They’re setting up dedicated teams to tackle fraud and evasion. Translation: make sure your books are in good order and you’re not cutting corners on tax. We can help you to make sure your record keeping is up to date and would pass an HMRC investigation. Now may be the time to take out tax investigation insurance. (We can help you with this).

What Should Business Owners Do Now?

1. Review your wage budgets for April 2026 and factor in the increases.
2. Look at whether you have the right balance of PAYE and dividends for your personal remuneration.
3. Look at your pension scheme setup and work out whether the 2029 changes to salary sacrifice schemes will affect you.
4. Get your financial records and tax compliance absolutely watertight – HMRC is watching.

The theme here is simple: your costs are rising, your tax breaks are shrinking, and compliance is getting stricter. Budget accordingly.

What should private individuals and landlords do now?

1. Be aware your tax bill is likely to be rising due to inflation with frozen thresholds and tax rate increases.
2. Review your pension arrangements if effected by salary sacrifice changes and make the most of current rules.
3. Continue to make full use where possible of current tax reliefs whilst available e.g. ISAs, pensions and the current rules on lifetime gifts.

As ever if there are questions do get in touch. The above comments are based on the announcements on Budget, and the details may change before being enacted so confirmation should be sought before taking any action.