DJH Client Services Director Rebecca Thorley unpacks the budget’s impact on businesses and owners
This Budget spares dividends but not investment income or business exits, and for owner-managed businesses and wealthy families the detail matters more than the headline.
The confirmation of no change to dividend taxation will reassure owner-managers who draw profits this way. However, the further two percentage point rise on property and savings income from April 2027, on top of the increase already scheduled, will be felt by landlords and by anyone with significant cash or investment income held personally. Many business owners will fall into this group, particularly those who have built up rental portfolios or surplus cash outside the company.
This makes it worth reviewing how assets are held, including the use of pensions and ISAs. The £20,000 ISA allowance is unchanged, and the proposed cash ISA cap has been dropped.
Exits are also affected. Halving the Business Asset Disposal Relief lifetime limit from £1m to £500,000 will hit owners planning a sale, although the Chancellor says three in four claimants will see no change. The new founders’ relief, a 10% rate on lifetime gains of up to £10m for the founders of the most successful firms, will help a smaller group, and we will need to see the qualifying conditions.
Succession remains the biggest pressure point. With the inheritance tax changes to business property relief now in force, many families are still working out how to pass on their companies. Anyone considering a handover should take advice early, before the detailed rules and start dates are set.
For high-net-worth individuals, pensions entering the inheritance tax net from April 2027 and the high-value property surcharge from April 2028 still need planning.
There is some support for the businesses these owners run. The small business rates relief threshold rises to £18,000, the 5p fuel duty cut is extended to July 2027, and the main rate first-year allowance rises from 40% to 50%, though the 3.9% National Living Wage rise adds to payroll costs.
The Budget documents and consultations published after the speech will determine the real impact.
