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Overview
This year’s Autumn Budget brought a mix of high-impact headline measures and quieter technical changes. While the political narrative focused on easing cost pressures for households, the practical reality for business owners, contractors, landlords, and founders is more nuanced.
Savvy’s team has analysed every announcement and translated them into clear, actionable guidance for the next 12–24 months.
1. Fiscal Drag: The Big Hidden Tax Rise
Income tax thresholds are frozen until 2030–31, meaning more earners will be pulled into higher tax bands as wages rise. Combined with a £26bn tax package already in motion, this increases the effective tax on salaries, bonuses, and dividends.
Savvy’s view:
This is the sleeper issue of the Budget.
What This Means for Your Situation
SMEs: Rising wages will push more employees into higher tax bands, increasing the importance of structured remuneration.
Founders: Review salary/dividend strategy and consider pension contributions as a tax-efficient lever.
Contractors: Expect an increased tax burden unless you optimise your expense and income structure.
Landlords: Rental income may accelerate band creep. Early planning prevents surprises.
For owner-managers, proactive remuneration planning matters more than ever. Salary and dividend optimisation, pension contributions, and the timing of bonuses should be reviewed before 2025–26.
2. Pay Packet Changes: Rising Wage Floors
The National Living Wage increases to £12.71/hr (21+), alongside uplifted rates for younger workers. The Real Living Wage rises to £13.45 outside London and £14.80 in London.
Savvy’s view:
Payroll budgets must be updated now, not in April.
What This Means for Your Situation
SMEs with staff: Wage increases will tighten operating margins, revisit pricing and resource planning.
Founders scaling teams: Hiring costs rise; incorporate this into growth, funding, and recruitment plans.
Contractors in employment structures: Net take-home pay may shift review umbrella or PAYE arrangements.
Landlords employing staff (e.g., in property companies): Payroll costs will rise; incorporate these into cashflow planning.
For employers with tight margins or staff-heavy operations, these changes will materially impact cash flow. Use this as a trigger to review pricing, staffing structure, and payroll automation.
3. New Levies & ‘Sin’ Taxes
A 3p-per-mile tax on electric vehicles (1.5p for plug-in hybrids) begins in 2028–29. The sugar tax expands to include milkshakes, lattes and other sweetened drinks. Cities also gain the power to introduce tourist taxes.
Savvy’s view:
While some changes sit further out, they still need long-term planning.
What This Means for Your Situation
SMEs: EV taxes will impact delivery, fleet, and mobile operations. Factor this into vehicle replacement cycles.
Founders in hospitality or retail: Sugar tax changes may affect product profitability, update pricing models.
Contractors: Increased travel costs may affect expense claims.
Landlords: Tourist taxes may impact short-let income, especially in major cities.
They affect long-term cost modelling, particularly for trades, mobile businesses, and hospitality. Consider these early in fleet planning, pricing strategy, or supplier negotiations.
4. Property & Pensions
A new council-tax surcharge will apply to homes valued over £2 million from 2028. Pension salary-sacrifice above £2k/year will attract employer NI from 2029. Dividend tax rises by 2 points in 2026.
Savvy’s view:
Landlords, high earners and portfolio owners should build these into their long-range tax plans.
What This Means for Your Situation
Landlords: Council-tax surcharges increase long-term holding costs, plan refurbishments, disposals, or restructures accordingly.
Founders and directors: Pension salary-sacrifice changes reduce NI efficiency review compensation strategies.
Contractors: Dividend tax rises in 2026 make forecasting and tax planning more important.
SMEs: Those providing director pensions or dividends will need adjusted forecasting.
— For directors taking significant dividends, the increased rate means reviewing remuneration structures before the 2026 change.
5. Cost-of-Living Relief
Fuel duty and rail fares are frozen, and social/environmental levies are removed from electricity bills. Welfare support receives a £9bn uplift, including ending the two-child benefit cap.
Savvy’s view:
Good news for households, but impacts for businesses vary.
What This Means for Your Situation
SMEs: Lower transport and energy costs may help stabilise overheads.
Founders: Wage pressures may ease slightly valuable for budgeting.
Contractors: Cost-of-living improvements may improve net disposable income.
Landlords: Increased tenant affordability may reduce arrears risk.
—, but limited direct impact on SMEs. However, lower transport and energy costs may ease pressure on staff wage demands, a subtle but important secondary effect.
6. Personal Tax: The Ongoing “Stealth” Freeze
Income-tax thresholds remain frozen a long-running policy that quietly increases the tax take as salaries rise.
Savvy’s view:
This significantly impacts directors, contractors, and high-earning employees.
What This Means for Your Situation
SMEs & founders: Threshold freezes increase long-term tax exposure; smart timing of bonuses and dividends matters.
Contractors: More income will fall into higher tax bands, revisit allowable expenses, and structure.
Landlords: Additional rental or dividend income may push total income into higher brackets sooner.
We strongly recommend reviewing salary versus dividends, pension contributions as a tax-efficient lever, director’s loan strategies, and the timing of bonuses and distributions.
- Salary vs dividend mix
- Pension contributions as a tax-efficient lever
- Director’s loan strategies
- Timing of bonuses and distributions
This section of the Budget is often overlooked, but it has some of the biggest long-term effects on take-home pay and overall tax efficiency.
Additional Announcements Relevant to SME Owners
Beyond the carousel highlights, several measures from the Budget have direct implications for businesses:
Corporation Tax
No change rates remain as they are.
Savvy’s view:
Stability is welcome, but with no relief coming, it’s essential to tighten forecasting and ensure expenses and director remuneration are structured for efficiency.
National Insurance
Employee NI reductions continue, but employer NI thresholds remain largely unchanged.
Savvy’s view:
This increases the relative burden on employers. Hiring plans should be modelled with full payroll costings.
VAT Threshold
The VAT threshold rises from £90,000 to £95,000.
Savvy’s view:
A small buffer useful for micro-businesses, but not transformational. Businesses nearing the threshold should still model VAT vs non-VAT scenarios.
Capital Allowances
Full expensing remains available for qualifying investments.
Savvy’s view:
Still one of the strongest reliefs on offer. If you’re planning significant equipment or tech upgrades, timing and classification matter.
R&D Tax Relief
Support remains, but compliance is tightening.
Savvy’s view:
Avoid DIY claims. HMRC’s scrutiny is at its highest. Use a compliant, specialist advisor.
What Small Businesses Should Do Now (Savvy Checklist)
- Update payroll budgets to reflect increased wage floors
- Refresh 12–18 month forecasts with unchanged CT and frozen tax thresholds
- Review remuneration strategy for 2025–26 (salary, dividends, pensions)
- Assess proximity to the new £95k VAT threshold
- Map capital investments and confirm full-expensing qualification
- Landlords: build the upcoming 2026–2029 rule changes into your planning
- Ensure Xero/QuickBooks forecasts are using updated assumptions
Savvy’s Closing Thoughts
This Budget wasn’t defined by shock announcements but by slow, structural shifts that tighten the tax environment for both employees and business owners.
Strong financial management is now a competitive advantage.
At Savvy, we help clients turn these rule changes into opportunities: smarter remuneration, clearer forecasting, better cashflow planning, and forward-looking tax strategy.
If you’d like a personalised analysis of how these measures impact your business, we’re here to help and can build your updated plan within days, not weeks.
Prepared by Savvy Accounting, AI-first accounting for ambitious businesses.