Rachel Reeves delivered her Autumn Budget this afternoon, and if you’re a small business owner, you’re probably wondering what it all means for you. Let’s cut through the noise and focus on what actually matters for your business.
The Headlines (Briefly)
Here’s what’s changing:
The not-so-great news:
- Income tax and National Insurance thresholds are frozen until 2030-31 (that’s a stealth tax rise as your profits grow)
- Dividend tax is going up by 2% from April 2026
- If you’re contributing over £2k to your pension through salary sacrifice from 2029 you’ll face National Insurance charges (making extraction less efficient)
- A new EV mileage tax is coming from 2028 (higher running costs if you drive electric)
The silver linings:
- Under-25 apprenticeships in SMEs are now fully funded (cheaper to hire and train young talent)
- 40% investment allowance plus wider investor schemes (better support if you’re raising capital or investing in equipment)
What This Actually Means for You
Your Take-Home Pay Is Under Pressure
Between frozen tax thresholds, higher dividend tax, and changes to pension extraction, it’s going to cost more to pay yourself from April 2026. The optimal salary-dividend mix that works for you now? It’s probably going to shift.
We’ll be running the numbers for all our clients in the coming weeks to work out the most tax-efficient approach for each situation. Every business is different, and getting this right could save you hundreds (or thousands) each year.
Growth Just Got More Expensive
If you’re planning to hire or scale up, factor in higher employment costs. The frozen thresholds mean you’ll pay more tax as your profits grow, and the dividend tax rise hits harder if you’re extracting larger amounts.
The good news? If you’re thinking about taking on apprentices under 25, now’s the time. Full funding makes this a genuinely affordable way to grow your team.
Investment and Capital Spending Gets a Boost
The 40% investment allowance and wider investor schemes are genuinely helpful if you’re looking to invest in equipment, technology, or raise capital. This is where the Budget actually supports growth, so if you’ve been putting off that investment, it might be worth revisiting your plans.
HMRC Is Getting Tougher
There’s a big compliance and debt collection push coming. If you’ve got any outstanding tax issues or you’re behind on filings, now’s the time to get ahead of it. HMRC will be more aggressive about chasing debts and conducting enquiries.
What Should You Do Now?
- Review your salary-dividend mix
Don’t wait until April 2026. Start planning now so you’re not caught off guard. If you want to go through your specific circumstances and work out the best approach for you, book a Power Hour with me and we’ll crunch the numbers together. - Look at your hiring plans
If you’re thinking about growing your team, consider whether apprenticeships could work for you. The full funding for under-25s makes this a cost-effective option. - Get your tax affairs in order
With HMRC stepping up enforcement, make sure everything’s up to date. If you’re behind or uncertain about anything, sort it out now rather than waiting for them to come knocking. - Review your investment plans
If you’ve been considering capital investment or raising funds, the new allowances and schemes might make this the right time to move forward.
The Bottom Line
This Budget makes it more expensive to employ people and pay yourself, but it does offer some support for investment and hiring younger workers. The key is to plan ahead rather than react when the changes hit.
Every business is different, and the right strategy for you depends on your specific circumstances, your growth plans, and your personal financial goals. That’s why we’ll be working through the calculations with each of our clients individually in the coming weeks.
If you’re not a client but want to understand how these changes affect you specifically, book a Power Hour and we’ll work through your situation together. It’s better to plan now than to be caught out later.
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