The Budget for business
As all the news channels have already picked apart the broken promises and sneaky stunts that the Autumn Budget is littered with, there’s no longer any surprises.
Whether there is a black hole or a shortfall (a rose by any other name …?) the Chancellor has had to find ways to prop up the country’s finances, and she’s chosen to do it by penalising people who plan for their future; those who try to earn enough to live on and put a bit by for their retirement, not those who have plenty of spare cash.
She promised not to raise income tax. A promise she kept – sort of. But as all the personal tax bands have been frozen, when you get a rise in salary there’s the potential to go into the next tax band and end up paying more tax anyway. And paying into your private pension will come with national insurance implications too.
Does owning a rental property indicate you are ‘incredibly wealthy’ and can prop up the country? It appears as though the government are trying to put everyone in the employee box. If you are entrepreneurial it’s more like whack-a-mole, with every innovative idea getting smacked with some kind of tax.
However, the economy is still growing and the interest rates have already started to come down, so being an entrepreneur and aiming to grow your business is still a very achievable goal. As the saying goes ‘Work with what you’ve got and start from where you are.’
OK – rant over! Now for the practical part.
Landlords letting income tax goes up
From 6th April 2027, income from letting property will have an additional 2% tax uplift. This means basic rate tax payers will pay 22% tax on profits from letting property, 42% for higher rate tax payers and 47% for additional rate tax payers.
Increased tax on savings income
From 6th April 2027, income from savings will have an additional 2% tax uplift. This means basic rate tax payers will pay 22% tax on savings income, 42% for higher rate tax payers and 47% for additional rate tax payers.
Taking dividends from your business costs more
From 6th April 2026, dividend income will have an additional 2% tax uplift. This means basic rate tax payers will pay 10.75% tax on dividend income, 35.75% for higher rate tax payers and 39.35% for additional rate tax payers.
Salary sacrifice pension contributions now subject to NI
From 6th April 2029, salary sacrifice pension contributions above £2,000 will be subject to employee and employer national insurance. The national insurance rate for employees will be 8% on earnings up to £50,270 and 2% on earnings above £50,270.
Salary sacrifice was an excellent tax planning tool, where an individual wanted to stay either as a basic rate tax payer or keep their income below £100K. They would salary sacrifice part of their salary or an annual bonus into their private pension to keep themselves in the earning threshold they desire. With this new change coming the incentive is not as great as both the employee and employer will now have national insurance implications on the salary sacrifice amount.
Business property relief and Agricultural property relief now transferrable
From 6th April 2026 the £1 million BPR/APR allowance will now be transferrable between spouses.
Under previous rules where a husband and wife owned shares in their own trading company, if one spouse left their shares to the surviving spouse, this would be exempt from inheritance tax under the spousal transfer exemption rules.
When the second spouse was to pass, only their original shareholding would qualify for the £1 million allowance, the shareholding received from the previously deceased spouse would be taxable at 20%. Under the new rules the first spouse’s £1 million allowance is transferred to the second spouse, meaning on the second spouse death £2 million allowance on those shares. Any value to the shares above £2 million is taxable at 20%.
If you have any questions regarding the budget or need just need some advice, then feel free to get in touch today and our team of experts will be more than happy to help!
