The degree of speculation about this year’s Budget announcements was further compounded when the Office of Budgetary Responsibility uploaded their report on Budget changes prior to Rachel Reeves announcements to Parliament.

However, there are to be no changes to the main rates of Income Tax, NIC and VAT that affect wage earners across the UK, but the Budget Report highlights numerous changes to plug the gap in government finances. We have set out below the most impactful of these changes as they affect business owners and UK taxpayers.

Individuals – what changes and what to watch

Personal tax thresholds remain frozen

• The thresholds for income tax and employer National Insurance contributions will be frozen until at least April 2031 (with earlier freezes extended further by the new Budget).
• This “fiscal creep” means that as wages (or inflation) rise, more people will effectively pay higher rates of tax or move into higher tax bands even though nominal rates remain unchanged. 

Higher tax on investment, property and savings income

• Tax rates on dividends, property income and savings income are being increased by two percentage points. The dividend changes are due to take effect from April 2026 and the property and savings income a year later from April 2027.
• Existing allowances (for example on dividends and savings) will continue to provide protection for people with low to moderate amounts of such income.

ISA reforms will see some limits reduced

• From 6 April 2027, the annual cash limit for ISA savings will be reduced to £12,000. The subscription limits for ISAs overall will remain at £20,000. Savers aged 65 and over will continue to be allowed to save up to £20,000 in a cash ISA each year. 

Two-child limit for Universal Credit (UC) to be scrapped

• The two-child limit introduced back in 2017 is to be scrapped from April of next year. The government has said that removing the two-child limit will lift 450,000 children out of poverty. There had been a concerted campaign over many years to have this cap removed.

Pension contributions via salary sacrifice will be limited

• For individuals using salary sacrifice schemes to contribute to pensions tax-efficiently, the relief will be capped so that only the first £2,000 of pension contributions per person per year remain exempt from National Insurance. Contributions above that threshold will be subject to NICs from 2029.
• This change is likely to hit higher earners and those with larger pensions contributions more heavily.

A new council-tax surcharge for high-value properties

• From April 2028, homes valued at over £2 million will attract a “High Value Council Tax Surcharge”.
• The surcharge will be banded: a property worth £2 million to £2.5 million will incur a surcharge of £2,500; properties worth more will pay higher surcharges (up to £7,500 for properties valued over £5 million).
• The surcharge will be collected locally (with council tax) but the revenue will go to central government.

New taxes on electric vehicles, online gambling and imports

• A new per-mile Electric Vehicle Excise Duty (eVED) will be introduced for battery electric cars and plug-in hybrids from April 2028. This is intended to replace some of the lost revenue from fuel duty. The rate will be 3p per-mile for fully electric vehicles and 1.5p for plug-in hybrids.
• The government is removing the customs-duty relief for low-value imports (£135 or less), a move aimed at levelling the playing field for UK retailers competing with foreign-based online sellers. This change will take effect from March 2029 at the latest.
• There will be tighter rules for VAT on ride-sharing taxi apps (preventing misuse of a scheme intended for tour operators).
• Changes to the taxation of online gambling are also on the way. This includes an increase in Remote Gaming Duty from 21 per cent to 40 per cent from 1 April 2026 and the abolishment of Bingo Duty from the same date.

Other changes with possible future effects

• Some changes to Capital Gains Tax for non-resident individuals, share exchange/reorganisation rules, and inheritance-related trust charges for former non-domicile residents were also announced.

Businesses – what changes and what to watch

Business rates relief and targeted support for certain sectors

• The government plans to make permanent lower business rates for over 750,000 retail, hospitality and leisure properties amounting to nearly £900 million per year from April 2026.
• A support package worth £4.3 billion will help businesses with rate bill increases following revaluations from April 2026.
• For film studios, 40 per cent business rates relief will be maintained for ten years, until 2034. 

Corporation tax, capital allowances and investment incentives adjusted

• Corporation Tax remains capped at 25 per cent for the duration of this Parliament.
• Writing-down allowances (the tax relief businesses claim when they buy capital items not qualifying for “full expensing”) will be reduced from 18 per cent to 14 per cent from April 2026, making it marginally less attractive to invest in some capital items unless they fall under the full expensing rules.
• From 1 January 2026, the government will introduce a new 40 per cent First Year Allowance for main rate expenditure. This will apply to most spending on assets for leasing and expenditure by unincorporated businesses.

Withdrawal of certain reliefs and tightening of anti-avoidance rules

• Relief for gains on disposals to Employee Ownership Trusts is being cut, from 100 per cent to 50 per cent. That reduces the appeal of these trusts as a tax-efficient exit strategy or ownership structure for both entrepreneurs and businesses.
• The Budget introduces new anti-avoidance rules addressing certain non-derecognition liabilities, among other technical reforms.

Changes to imports, compliance and VAT arrangements

• The removal of the low-value consignment relief (which previously exempted many foreign online retailers from customs duties on small-value imports) may benefit UK bricks-and-mortar retailers by levelling the playing field.
• More robust HMRC compliance and administrative reforms are planned, which the government expects will reduce the tax gap (the difference between what is owed and what is collected).

Minimum wage changes

• The National Living Wage (NLW) will rise from £12.21 to £12.71 per hour on 1 April 2026, a 4.1 per cent increase. The National Minimum Wage (NMW) for 18-20 year olds will also increase from £10.00 to £10.85, an 8.5 per cent increase, increasing pay by up to £1,500 a year. This change is part of efforts to narrow the wage gap between younger workers and those on the NLW. Additionally, the NMW for 16-17 year olds and the Apprentice Rate will both rise from £7.55 to £8.00 (a 6 per cent increase).

What this means in practice for different types of taxpayers

For a middle-income employee

If you are a typical employee with mainly salaried income and modest savings or investment income, the freeze on thresholds may slowly push more of your earnings into higher rate bands, reducing your disposable income over time. If you rely on dividends or rental income, your after-tax return may suffer due to the higher rates. Pension contributions made via salary sacrifice may lose some of their attractiveness if they exceed £2,000 per year, but modest savers should be relatively unaffected.

For higher earners, property owners, and investors

If you own a high-value home, rental property, or significant investments, these changes may hit you harder. The council-tax surcharge on expensive properties and the higher rates on investment income make clear that future tax burdens will increasingly fall on wealth, capital, and savings rather than earned income. Pension-savings advantages for high earners are reduced. For business owners, particularly those using or considering Employee Ownership Trusts, the reduction in reliefs may diminish some previously attractive exit or succession planning strategies.

For small businesses, investors and growth companies

The maintenance of Corporation Tax at 25 per cent provides some certainty, but reduced capital allowances and fewer reliefs may raise the effective tax cost of certain investments. On the plus side, support for high-streets (lower business rates for retail, hospitality, leisure) and targeted reliefs (e.g., for film studios) offer relief for businesses in those sectors. The removal of import-duty relief for low-value imports could benefit UK retailers by levelling the competitive field.

Broader context and likely economic impact

• The government expects these measures to raise around £26 billion per year by 2029-30, making this among the largest medium-term tax increases in recent decades.
• As a result, the overall tax take is projected to reach a record 38 per cent of GDP by 2030 -31.
• Some planned reliefs and public spending measures are intended to offset cost-of-living pressures: for example, cuts to energy bills, freezing rail fares, and support for households on lower incomes.

What to keep an eye on

• Implementation: Many changes (pension-salary sacrifice cap, high-value property surcharge, vehicle mileage levy) come in over a number of years. The detail of how they will be applied may affect their actual impact.
• Behavioural responses: As thresholds remain frozen and investment incomes are taxed more heavily, individuals may shift the balance of their income (more salary, less dividends, changes to pension contributions) which could reshape personal tax planning strategies.
• Business planning and investment: Reduced writing-down allowances and withdrawal of some reliefs may influence decisions about capital expenditure, timing of investments, and business structure (especially for those considering Employee Ownership Trusts).
• Compliance and administration: The government’s push to tighten compliance and close loopholes may mean higher scrutiny for individuals and businesses, particularly around imports, VAT, and offshore arrangements.

Most business decisions are shaped by the pressure of the moment. Cash flow, deadlines, staffing changes, and new opportunities often push long term questions to one side. Yet the most resilient businesses tend to be those that step back and take a wider view. Long term planning is not an abstract exercise. It is a practical habit that helps owners make clearer choices, reduce risk, and build a more stable future.

Greater clarity about direction
A long term plan gives the business a sense of direction. This does not need to be complex. Even a simple outline of where you want the business to be in three or five years can help guide current decisions. When owners have a clear destination, it becomes easier to judge whether an opportunity fits the wider aims or whether it is a distraction.

Better use of resources
Planning ahead encourages a more thoughtful use of cash and time. Businesses that work year to year often react to events rather than shaping them. A longer view helps identify the investments that matter, whether that is new equipment, staff development, or a marketing push. It also highlights areas where resources may be stretched, allowing the business to prepare before a problem becomes urgent.

Reduced exposure to risk
Long term planning helps businesses understand their risks in a calmer way. Instead of responding only when circumstances force action, owners can assess what might affect them over time. This includes changes in regulation, shifts in customer behaviour, or possible pressures on margins. Identifying these in advance gives the business time to adapt.

Better decision making at key moments
Most businesses face pivotal points, such as taking on new premises, reviewing pricing, or considering a change in ownership structure. A long term plan provides a framework that supports these decisions. When the wider direction is understood, choices become more consistent and less reactive.

A clearer route to exit or succession
Whether an owner intends to sell, pass the business to family, or gradually step back, the process takes time. Long term planning ensures that records, profitability, systems, and staff structures evolve in a way that supports a smooth transition.

Long term planning is not about predicting the future with certainty. It is about giving the business a steady foundation. A small investment of time now can bring clarity, reduce stress, and support growth over the years ahead.

From 18 November 2025, Companies House introduced major identity verification requirements for all company directors and people with significant control. This is part of a wider shift towards greater corporate transparency and a stronger response to economic crime. The changes may appear administrative at first glance, but they carry real implications for businesses of all sizes.

What has changed

The new rules introduce several important obligations.

First, anyone newly appointed as a director or as a person with significant control must complete identity verification at the time of appointment. This applies to individuals taking up roles in existing companies as well as those forming a new company.

Second, existing directors must confirm they have verified their identity when filing their next confirmation statement. This forms part of a transitional period, giving current directors time to complete verification without delaying their normal filing cycle.

Third, existing persons with significant control will need to submit a verification statement within a set timeframe once the process applies to them. The exact deadline varies according to their date of birth or appointment.

Failure to meet these obligations is a criminal offence and may lead to penalties or, in serious cases, referral for enforcement action.

Why it matters for your business

These changes strengthen the accuracy of the public register. For businesses that rely on Companies House information when checking customers, suppliers, or potential partners, this increase in reliability is a noticeable improvement.

The aim is also to limit the use of “bogus” directors and stop companies being used as fronts for criminal activity. Regulators have made clear that enforcement will be more active, and businesses should expect closer scrutiny of the accuracy of their filings.

For directors, the rules underline the personal responsibility attached to the role. Failing to complete verification may affect the filing of confirmation statements, the company’s standing, or even the director’s own legal position.

What you should do now

Start by checking who in your business is a director and who qualifies as a person with significant control. Confirm whether each individual has already completed verification.

If your business expects to appoint new directors or shareholders, build the verification process into your appointment procedure.

Review your next confirmation statement date so you know when the verification statement must be filed. It may also be helpful to update any internal governance notes or compliance guides to reflect these new responsibilities.

Artificial intelligence has moved rapidly from being a futuristic idea to an everyday business tool. For small firms, AI now offers genuine, low-cost benefits that save time, reduce stress, and improve decision-making. Many of these tools are already built into accounting, marketing, and communication systems that businesses use daily.

Below are ten practical ways AI can help small business owners manage their operations more effectively and make better use of their time.

1. Faster and smarter customer responses

AI-driven chat tools and automated responders can manage routine customer questions instantly, even when the office is closed. That means fewer missed enquiries and faster service. These tools can also track the most common questions, helping businesses improve their online information and reduce repeat calls or emails.

2. More effective marketing campaigns

AI systems built into email and social media platforms can analyse past interactions, purchase history, and interests to send messages that are genuinely relevant. Campaigns can be scheduled for the time of day when readers are most likely to respond. This helps small businesses reach the right audience with less effort and higher response rates.

3. Time-saving content generation

AI writing tools can produce first drafts of blog posts, newsletters, or product descriptions within minutes. Business owners can then fine-tune the content to match their tone and brand. Used sensibly, this approach helps maintain a steady online presence without taking time away from day-to-day operations.

4. Better cash flow planning

Modern accounting systems are starting to include AI tools that recognise income and expense patterns, predict when customers are likely to pay, and estimate upcoming bills. These forecasts help business owners plan cash flow with more confidence and avoid unnecessary surprises.

5. Smarter pricing and stock control

Retailers and tradespeople can use AI-powered systems to monitor market prices, competitor activity, and stock levels. These tools can automatically suggest when to adjust prices or reorder goods. This avoids costly overstocking or missed sales opportunities while keeping prices competitive.

6. Automated bookkeeping and document entry

AI scanning tools can read receipts, invoices, and statements, and post them directly into software such as Xero or QuickBooks. This reduces errors, speeds up bookkeeping, and ensures that financial data stays accurate and up to date. It also saves many hours of repetitive data entry each month.

7. Easier recruitment and staff management

AI systems can screen job applications, identify the best candidates, and even help draft interview questions. Once staff are on board, automated HR systems can schedule rotas, track holidays, and manage training records. For small businesses without a dedicated HR manager, this can simplify staff administration considerably.

8. More personal customer experiences

By learning from customer purchases and preferences, AI can suggest tailored offers or loyalty rewards. Small shops, caf�s, and service businesses can use this to build loyalty and encourage repeat trade. Many customers now expect personalised experiences, and AI makes them easy to deliver.

9. Improved security and fraud prevention

AI can identify patterns that might indicate financial risk or fraud-such as duplicate payments, unusual transfers, or abnormal system access. Receiving an early alert allows problems to be dealt with before they cause damage. This level of monitoring used to be available only to large organisations, but it is now affordable for small firms.

10. Turning information into insight

Every small business collects large amounts of data, but few have time to analyse it properly. AI tools can quickly highlight trends, compare performance over time, and suggest where to focus attention. Having the right insights means better decisions, better control, and often better profits.

A quiet revolution for small business

For small business owners, AI is not about replacing people. It is about reducing wasted time and helping the business owner make clearer decisions. Starting small-perhaps with AI-based bookkeeping, cash flow analysis, or marketing automation-can quickly show the benefits.

The key is to treat AI as an assistant, not a replacement. Used well, it can give small business owners the same quality of information and efficiency once available only to much larger companies.

If you would like to explore how AI can improve your business systems, or how to integrate these tools with your accounting software, contact our team for practical guidance.

If you feel this article could help a business colleague or family member, please feel free to share it with them.

There is growing speculation that the Chancellor may soon raise the basic rate of Income Tax from 20% to 22%. At the same time, it is thought that a corresponding 2% cut in employee National Insurance contributions could be introduced. Together, these changes would shift how the overall tax burden is shared, particularly between working individuals, pensioners, and landlords.

Although nothing has been formally announced, the idea has gained momentum in recent weeks. The reasoning is simple enough: by increasing Income Tax and cutting National Insurance, the Government could raise more revenue without appearing to penalise those in work. It would make the tax system appear more balanced, but in reality, it would have very different effects depending on the type of income you receive.

For employees

If you are in employment, the two changes may largely cancel each other out. Employees pay both Income Tax and National Insurance on their earnings. At present, basic rate taxpayers pay 20% Income Tax and 8% employee National Insurance on most of their pay.

If Income Tax rises to 22% and National Insurance falls to 6%, then the increase in one would broadly offset the decrease in the other. For example, for every £100 of taxable pay, you would pay £2 more in tax but £2 less in National Insurance. In theory, this means little change to take-home pay.

However, the detail matters. National Insurance applies only to earned income up to an upper earnings limit (currently £50,270). Those earning above that level may not benefit from the full reduction. Similarly, if higher rate tax bands remain unchanged, some employees could see a small increase in their overall bill.

It would also be worth checking whether you are part of a salary sacrifice pension arrangement, as the value of those schemes depends partly on National Insurance savings. A lower NIC rate may slightly reduce the benefit of such arrangements.

For pensioners and landlords

The position is very different for those who do not pay National Insurance. Pensioners, landlords, and individuals living on investment income currently pay Income Tax but no NIC. A 2% rise in the basic rate would therefore increase their total tax liability, with no offsetting reduction.

A pensioner receiving £30,000 of taxable pension income could pay around £600 more tax each year if the basic rate rises to 22%. Similarly, a landlord earning £25,000 of rental profit would face an additional £500 of tax. For anyone, whose income comes largely from pensions, rent, or investments, this would amount to a direct increase in the effective tax rate.

This shift would represent a deliberate rebalancing of taxation towards unearned income. The Government could claim that “working people” are protected, but those living from pensions or savings would shoulder a greater share of the burden.

For the self-employed

The self-employed occupy a middle ground. They pay both Income Tax and Class 4 National Insurance, but the NIC rates and thresholds differ from those for employees. Whether they gain or lose would depend on whether the Budget also cuts self-employed NIC. If not, they could experience an overall increase in their combined tax and NIC bill.

What you can do now

Until the Budget is announced, nothing is certain, but it makes sense to plan ahead. Review your sources of income and estimate how much is subject to National Insurance and how much is not. If most of your income is from pensions, rent, or investments, you should prepare for a possible rise in your tax bill from next April.

Employees may not notice much difference, but anyone outside the NIC system could. A simple review now can help you plan, budget, or consider timing income or pension withdrawals before rates change.

We will provide a full update once the Chancellor confirms the details in the Autumn Budget.

If you feel this article could help a business colleague or family member, please feel free to share it with them.