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Rachel Reeves' Autumn Budget - Buy Now, Pay Later
As founders and business owners, we’re used to being told we’re ‘the backbone of the UK economy’. After this Autumn Budget, it’s hard to feel particularly cherished.
We didn’t exactly get off to a flyer when the OBR accidentally released the whole thing before the Chancellor even stood up. One upside – it saved us from watching quite as much of the Commons Panto.
Big picture – This budget raises around £26bn in extra tax by the end of the decade, pushing the tax burden to a post war high.
Below we’ve pulled out the key measures that matter for founders, investors and SMEs, and crucially how much each one brings in, or costs.
Taxes on Investment Income Going Up
From 2027, the tax rate on dividends, savings interest and property income rises by 2%.
This narrows the gap between tax on ‘work’ and tax on ‘wealth’, but it hits:
- Owner managers who take dividends
- Landlords (who will just pass the cost onto renters)
- Savers with meaningful non-ISA cash
Rough fiscal impact – The OBR expects these higher rates on property, savings and dividend income to raise around £2.1bn a year by 2029/30.
Our view – Taxing investment harder rarely helps growth. Every pound skimmed off here is a pound not reinvested into UK businesses, or a pound added to tenants’ rent.
Personal Tax Threshold Frozen Until 2031
Income tax and NIC thresholds are now frozen until April 2031. No headline rate rises, but more people dragged into higher bands as wages move.
- Fiscal drag continues to do the heavy lifting.
- OBR estimates millions more basic rate tax payers will become higher rate over the next few years.
Rough fiscal impact – Extending the freeze to 2031 is forecast to raise around £23bn in extra tax by 2030/31 compared to letting thresholds rise with inflation.
Our view – The single biggest stealth tax in this package, leaning heavily on workers, rather than productivity.
'No Change' to Income Tax, NI & VAT (sort of...)
The Chancellor was crystal clear “No increases to the main rates of income tax, NI or VAT in this Parliament.”
BUT combined with the threshold freezes and higher taxes on investment income, the overall tax hike still climbs to a record 38% of GDP by 2030/31.
Rough fiscal impact – This isn’t a new revenue line in itself, it’s the freeze + investment income hikes + pension NIC changes (below) that do the heavy lifting.
Our view – Stability on the big three taxes is welcome, the price is paid via everything else around the edges.
ISA Reform - Nudging Cash into Equities
From April 2027, for under 65s:
- Overall, ISA limit stays at £20k, but
- Cash ISA cap drops to £12k, the remaining £8k must be in stocks and shares/other investment ISAs if you want to use the full allowance.
Over 65s keep the full cash option.
Rough fiscal impact – ISA changes sit inside a wider ‘supporting savers’ package (which includes making Help to Save permanent). The real aim here is behavioural, shift part of the £300bn sitting in low yield cash ISAs into productive investment.
Our view – Directionally not crazy, but without proper financial education, most people will simply use less of their allowance rather than jumping into equities.
Salary Sacrifice Pensions Capped at £2k
From April 2029, only the first £2,000 of pension contributions made via salary sacrifice will be exempt from NI, above that, normal employee/employer NICs will apply.
- Hits higher earners hardest, also removes flexibility planning in SMEs.
- Increases effective employment costs where business previously leaned on salary sacrifice.
Rough fiscal impact – The OBR expects this cap to raise around £4.7bn in 2029/30 and £2.6bn in 2030/31 as it beds in.
Our view – The £4.7bn raise above blew us away when we first read it. Another productivity unfriendly moved dressed up as ‘fairness’. It penalises people for putting more into pensions via a very standard mechanism.
Employee Ownership Trusts (EOTs) - Relief Halved
CGT relief on qualifying disposals to EOTs has been cut from 100% to 50%, effective immediately (26 November 2025).
- Sellers now pay CGT on half the gain (24% in many cases).
- This is a big change for owner managed businesses who were planning an employee ownership succession route.
Rough fiscal impact – The new restriction is expected to raise roughly £900m a year from 2027-28 onwards.
Our view – This will no doubt reduce the number of EOT deals. For many founders, the maths of ‘sell to employees vs sell to trade/private equity’ has just shifted sharply.
EIS & VCT - Extended, But with a Sting
The Budget widens and extends EIS/VCT availability from April 2026:
- Company investments limits for EIS and VCT roughly double and gross asset limits increase.
- EIS hangs onto its 30% up front income tax relief.
- VCT up front income tax relief is cut from 30% to 20% from 6 April 2026.
Rough fiscal impact – HMRCs shows the combined changes will raise around £200m across the late 2020s.
Our view – Net net, this is pro-EIS, lukewarm VCTs. It supports slightly later stage scale ups, but chips away at one of the few genuinely attractive retail investment incentives.
Apprenticeships & Skills
On the spending side, apprenticeships and youth employment do get some attention:
- A £1.5bn ‘boost’ for skills and apprenticeships, including fully funded training for under 25 apprentices in SMEs (removal of the 5% co-contribution).
- £820m for a Youth Guarantee, funding six month paid work placements work 18-21 year olds on Universal Credit and free apprenticeships for SMEs.
Rough fiscal impact – Around £2.3bn of additional committed spend on skills and youth employment programmes over the forecast period.
Our view – The direction is good, especially fully funded SME apprenticeships, but we’ve seen before that delivery and the admin can make or break these schemes.
'Mansion Tax' - High Value Council Tax Surcharge
From April 2028, properties valued at £2m+ will pay an annual council tax surcharge:
- Roughly £2,500 for £2m-£2.5m homes.
- Up to £7,500 a year for £5m properties.
Rough fiscal impact – The OBR forecasts a WHOPPING £400m a year in revenue once fully up and running.
Our view - Politically powerful, economically minor. It plays well in the headlines, but in the context of a £26bn overall tax package, this is more symbolism than substance.
Two Child Benefit Cap Scrapped
From April 2026, the two-child limit in Universal Credit is removed, so families can claim the child element for all children again.
- Government analysis suggest this will lift around 450,000 children out of poverty.
Rough fiscal impact – OBR costing policy shows a £2.1bn extra welfare spend in 2026/27, rising to £2.9bn a year by 2030/31 as more cohorts become eligible.
So, £2-3bn a year, every year, once fully rolled out.
Our view – Socially, this is the single biggest redistributive moved in the Budget. It’s also one of the clearest examples of ‘tax hikes on one side, welfare expansion on the other’, rather than a joined-up growth plan.
Scrapped National Living Wages Increased
From April 2026:
- NLW (21+) moves from £12.21 to £12.71 per hour (+4.1%)
- 18-20 NMW rise from £10.00 - £10.85 (+8.5%)
- 16-17s/apprentices rise from £7.55 - £8.00 (+6%)
Government comms highlight:
- About £900 a year extra for a full-time worker on NLW
- Around £1,500 a year extra for full time workers on the 18-20 rate
Rough fiscal impact – The direct cost to the Exchequer is relatively small, most of the heavy lifting here sits with businesses’ margins.
Our view – Great for workers in the short term, but for SMEs already hit by higher NI, threshold freezes and the restriction on tax saving schemes (pension salary sacrifice), this is yet another squeeze.
So, is this a 'pro-growth' Budget?
If you sit back and follow the money:
Big revenue raisers:
- Thresholds to freeze to 2031 - £23bn by 2030/31
- Salary sacrifice pension cap – Up to £4.7bn a year
- Higher taxes on investment income - £2.1bn a year
- EOT CGT relief cut - £0.9bn a year
- Mansion tax - £0.4bn a year
Big spend commitments:
- Removing the two child benefit cap - £2-£3bn a year
- Skilled, youth guarantee, apprenticeships - £2.3bn total
- Plus, other cost of living moves (energy bill cuts, as an example)
Net result? A lot is raised, little is given back, and the burden falls heavily on entrepreneurs, workers and long-term investment. For us, this doesn’t scream, ‘go and build something bold in the UK!’.
If you want to understand how any of these measures hit your situation, as a founder, investor or business owner, touch base with us and we can talk it through.