Everything you need to know about changes for you and your business

The Chancellor has announced several measures in the Autumn Budget which will bring a mix of cost pressures, targeted relief and a robust focus on tax compliance. 

While the overall aim was stability, there will be challenges ahead for directors and business owners as well as some bonuses. 

We’ll review the main announced measures and their anticipated impact on those running businesses and what they can do about them.

Increased tax burden on business owners and investors

Facing a £20 billion inherited fiscal black hole and demands from MPs for more help for families through the elimination of the two-child limit on child benefit; the Chancellor looked at raising revenue from sources of wealth and assets, impacting how directors will extract profits and how investors hold savings. 

  • Dividend Tax increase

From April 2026, the tax rate applied to dividend income will increase by two percentage points. The ordinary rate rises from 8.75% to 10.75% while the upper rate rises from 33.75% to 35.75%. The additional rate remains unchanged. 

For companies paying Corporation Tax at the main 25% rate, extracting surplus profits via dividends becomes slightly less efficient than taking a bonus, especially for higher earners. Business owners should consult their accountants about their remuneration strategy and the balance between salary, dividends and pension contributions. 

  • Salary Sacrifice Cap

A new measure targets the use of salary sacrifice schemes for pensions, capping the National Insurance (NI) relief that both employees and employers receive to the first £2,000 of pension contributions per person annually, effective from April 2029. 

While this will raise significant revenue for the government (£4.7 billion by 2029/30), this will add another layer of operational cost for businesses. While designed primarily to affect middle and higher earners, companies should prepare for additional costs related to employee remuneration and potential adjustments to long-term workforce planning and retention strategies. 

  • Tax thresholds frozen

A freeze on Income Tax and National Insurance thresholds has been extended to April 2031. While bringing certainty to financial planning, this could also see curbed spending and weakened demand which would put further pressure on business revenues.

A tougher environment for fraudsters

Several measures were announced to significantly toughen the enforcement environment for illicit business activity and fraudulent insolvencies. 

  • Crackdown on rogue directors and “phoenixism”

The Insolvency Service will receive an extra £25 million over five years to crack down on rogue directors. This funding will establish a new Abusive Phoenixism Taskforce, with 50 staff, to investigate suspicious company insolvencies.

Directors who deliberately attempt to liquidate or dissolve companies to evade tax and write off debts will be specifically targeted. This funding will allow the Insolvency Service to disqualify more irresponsible directors to protect creditors.  

  • HMRC enforcement and penalties 

To further close the tax evasion gap there will be a new dedicated small business evasion and enforcement team consisting of 350 HMRC criminal investigators focusing on serious fraud and evasion by small businesses. Including the doubling of penalties for late Corporation Tax returns from April 1st 2026.

Incentives for investment and scaling-up

Several measures aimed at encouraging investment and growth were also announced and could have a positive impact. 

  • Boosted investment incentives (EMI, VCT, EIS)

The limits for key entrepreneurship and investment schemes were expanded, aiming to make it easier for companies to attract talent and capital. 

These include Enterprise Management Incentives (EMI) and Venture Capital Schemes (VCT/EIS). 

The eligibility limits on EMI are being significantly increased from April 2026 raising the employee limit to 500, the gross assets test to £120 million and the company share option limit to £6 million. This will be good news for scale-up firms looking to attract and keep talent. 

For VCT/EIS, company investment limits are increasing to £10 million (£20 million for Knowledge Intensive Companies). However the upfront VCT Income Tax relief will decrease to 20% from April 2026. 

Capital allowances and listing relief

To promote productivity, the government is introducing a 40% First-Year Allowance (FYA) for upfront investment costs for main-rate assets from January 1st 2026. This is seen as a productivity kick-starter although the main Writing-Down Allowance (WDA) is simultaneously being reduced from 18% to 14%. 

For businesses considering floatation, there will be a three-year exemption from Stamp Duty Reserve Tax (SDRT) for companies newly listing in the UK from November 2025. 

Employee Ownership Trusts (EOTs) Restricted

In a measure expected to dampen a popular exit route, the Capital Gains Tax (CGT) relief on qualifying disposals to EOTs is reduced from 100% to 50% immediately. This change was implemented because the scheme’s cost was rising more than 20 times the original forecast.

Operational costs and sector-specific changes

There are some important changes for employees coming too. 

The National Living Wage is increasing by 4.1% to £12.71 per hour from April 2026. 

Business rates rebalancing 

The government is permanently lowering business rates for over 750,000 Retail, Hospitality and Leisure (RHL) properties. This is funded by imposing higher rates on properties worth over £500,000, explicitly targeting large properties like warehouses used by big online retailers. A £4.3 billion package was announced to provide support for businesses transitioning to their new bills.

By aiming to create a more level playing field between small businesses, high street stores and multi-national online giants, they hope to see it reflected in spending and employment.

Other key operational measures

  • VAT on Private Hire Vehicles: Measures are introduced to ensure all Private Hire Vehicle Operators (PHVOs) pay VAT similarly, closing a loophole that allows some to exploit an administrative scheme intended for tour operators. This levels the competitive field for taxi drivers. 
  • Low-value imports: Customs duty relief on low-value imports (goods valued at £135 or less) will be removed by March 2029 at the latest. This aims to support UK businesses and high streets by ensuring equivalent tariffs are paid compared to foreign online retailers. 
  • SME Apprenticeships: The cost of training for apprentices under 25 is being made free for small and medium-sized enterprises (SMEs). This tangible investment aimed at addressing the critical need for support with hiring and training among mid-sized businesses. 
  • Electric Vehicles (EVs): Businesses adopting EVs benefit from a 10-year, 100% business rates relief for eligible chargepoints and EV-only forecourts, and a one-year extension of 100% First-Year Allowances for buying zero-emission cars and chargepoint infrastructure until April 2027.

If the Autumn Budget has a theme for directors then it’s this – tax compliance is paramount and the government is committed to collecting revenue and clamping down on fraud. 

There will be immediate operation costs due to the National Living Wage increase and future structural costs from the salary sacrifice cap while owners looking to sell via Employment Ownership Trusts or extract profits via dividends will face higher effective tax rates. 

However, for scaling companies and those focused on growth, there is targeted support through the expanded EMI and investment schemes, alongside immediate tax relief for capital expenditure (40% FYA) and specific help for high street sectors via business rates rebalancing.

In essence, the Budget acts like a demanding new financial partner for businesses: demanding high standards of compliance and increasing the costs of wealth extraction, but offering specific tools and capital encouragement for those committed to growing and investing in their businesses.