The Autumn Budget is just a few weeks away on Wednesday 28 October. And, as always, the rumours have already started.
Will Capital Gains Tax increase? Will there be more changes for business owners? Will the tax-free pension lump sum be attacked? Will the Government look to raise more money from wealth rather than income?
The honest answer is that right now, nobody outside the Treasury knows. However, it is unlikely there will be increases to any of the headline taxes like income tax, VAT or National Insurance. We expect more targeted measures to tax wealth, assets, and investments instead.
We could see the abolition of the residential nil rate band, which helps the wealthier taxpayers who own expensive homes. Or we could see the Stamp Duty Land Tax (SDLT) replaced with Land Value Tax, or there is even talk of removing CGT uplift on assets on death. This is when people inheriting assets receive them at their base cost, not their market value at death. If this were abolished, it could generate about another £2 billion for the Treasury.
So, a lot could change; we just don’t know.
There is no point making a major business or personal decision based purely on a newspaper headline or something someone has heard on social media. We have seen this before. Budget rumours gather pace, people panic, and suddenly everyone wonders whether they need to sell something, buy something, or restructure their business before a particular date.
Sometimes, doing nothing is the right decision.
But that doesn’t mean you should simply wait for Budget Day either.
Don’t wait for the Budget to start thinking about your business
At Myers Clark, we spend a lot of time talking to business owners about where they are heading.
- What do you want from your business?
- Where do you want it to take you?
- Are you planning to grow? Invest? Slow down? Sell? Pass it on to the next generation?
Because the reality is that tax doesn’t exist in a little box on its own. The decisions you make in your business affect your personal finances, your future plans and ultimately what you want your business to achieve for you.
So, perhaps the best thing you can do isn’t try to predict what the Chancellor will announce. It is to get clear on where you are now.
Capital Gains Tax is one to watch
There has already been plenty of speculation around Capital Gains Tax (CGT).
Could rates increase? Could the system be simplified? Could we see a single rate of 24%? Or could we see the CGT rates aligned with income tax rates of 20%, 40% or 45%. Possibly. But for now, it is all speculation.
What we do know is that if you are already thinking about selling your business, transferring shares, selling an investment or making another significant disposal, tax is likely to be an important part of that decision.
This is where planning matters. If you are already thinking of selling, consider whether you can do it sooner.
Know your numbers before you need them
Business owners are already dealing with enough uncertainty.
Costs continue to change. Employment costs have increased. Customers are making different decisions. Cash can feel tight even when the business is profitable.
Against that background, another Budget can feel like just one more thing to worry about. That’s exactly why knowing your numbers matters. If the Budget changes something that affects your business, how quickly will you know what that means?
- Do you have up-to-date management information?
- Do you understand your cash-flow position for the next six or twelve months?
- Do you know what you can afford to invest?
- Do you know what your business needs to achieve to get you closer to your own ambitions?
A set of accounts telling you what happened last year is useful. But when you are making decisions about the future, you need information that helps you look forward too.
Could businesses use more support?
The Government has already made early moves to support certain high-street businesses, including a 20% reduction in business rates for pubs, clubs and live music venues for 2027/28.
With continued pressure on food, energy and other costs, further announcements affecting hospitality and other businesses are possible.
VAT and business rates are both areas worth watching.
Changes may also happen that don’t grab headlines but still create work for business owners. Enhanced reporting requirements for close companies, changes to mileage and scale rates, and further HMRC compliance measures could all be on the agenda.
So, what can you actually do now?
We wouldn’t suggest putting your plans on hold and waiting to see what happens.
Instead, this is a good opportunity to take stock.
Ask yourself:
- What major decisions am I planning over the next 12 months?
Are you thinking about investing in equipment, taking on staff, buying or selling a business, taking money out of the company, or changing your plans for the future?
- Do I know where my business is financially?
Not where you think it is. Not where it was six months ago. Where is it now?
- What are my personal plans?
Perhaps you want to reduce your hours. Maybe retirement is starting to look less distant. Perhaps you want to grow the business so that it becomes an asset you can eventually sell.
Your business plans and your personal ambitions need to work together.
- Have I spoken to anyone about these decisions?
Running a business can be lonely. Particularly when you are the person everyone else looks to for the answers.
Sometimes you don’t need someone to make the decision for you. You need a sounding board. Someone who understands the numbers, understands your business and is prepared to challenge your thinking when necessary.
The Budget will come and go. Your plans will remain.
On 28 October, there will be plenty of announcements, commentary and, no doubt, a lot of noise. We will all be trying to work out what the changes mean. But your business shouldn’t change direction every time a Chancellor stands up at the dispatch box.
The best businesses have a direction of travel.
They know what they are trying to achieve. They understand their numbers. And when something changes, whether that is tax legislation, the economy or their own circumstances, they can adapt their plan.
It is about knowing where you are, knowing where you want to get to and having enough information to make good decisions along the way. So, rather than spending the next few weeks worrying about what might happen in the Budget, use the time to get your own house in order.
- Look at the numbers.
- Think about the decisions ahead.
- Consider your ambitions.
- And if there is something significant on the horizon, have the conversation now.
At Myers Clark, we are serious about helping you achieve your ambitions. We are not here simply to tell you what tax you owe once the year is over. We want to understand where you are heading, help you think through the decisions along the way and make sure your numbers are helping you get there.
Final Thoughts
If you would like to talk through your plans ahead of the Budget, speak to your usual manager in the first instance. We ae also holding a breakfast event a couple of days after the Budget to go through the details. If you would like to attend the event, please can you email us at marketing@myersclark.co.uk putting Budget Breakfast in the subject and we will send you a link to register.
If you are not yet working with us, let’s talk about where you are now, where you want to get to, and how we might help you get there. Here’s who we are.