That was possibly one of the biggest anti-climaxes ever! After months of fear mongering Labour ultimately delivered an unimaginative and cowardly budget, with probably the biggest tax raise coming from their freezing of the tax thresholds.

On the upside, those who sat tight and didn’t make any major changes to their affairs were right to do so as there were no hard deadlines announced other than with respect to people who may have been planning to sell their business to an Employee Ownership Trust (EOT) – who if they haven’t already completed before budget day will no longer be able to do so completely tax free, as only 50% of the gain will now be exempt.

A key takeaway for business owners is that the major changes to inheritance tax reliefs for businesses and farms announced at the last budget remain in place (albeit with a minor tweak for married couples and civil partners), so it is essential that people take advice on their business structures in this regard before the changes take effect in April 2026.

The main points from the budget that people will need to be aware of are:

• The basic and higher rates of dividend tax will increase by 2%, to 10.75% and 35.75% respectively, from 6 April 2026. Business owners who operate through limited companies and take their remuneration in a mixture of salary and dividends should review whether this will continue to be the most tax efficient way for them to remunerate themselves.

• Property income will become a new, separate class of taxable income – taxed at 22% for the basic rate, 42% for the higher rate and 47% for the additional rate from April 2027.

• Interest will also be taxed at the same rates as property income from April 2027.

• A “mansion tax” will apply to properties valued at £2m or more from April 2028. The tax will start at £2,500 per year and rise to £7,500 per year for properties worth more than £5m.

• Relief from national insurance on salary sacrifice pension contributions will be limited to £2,000. Many employers who offer this will give or share the employers national insurance benefit to employees via an enhanced pension contribution which will likely no longer continue.

• The planned cap on combined business property relief (BPR) and agricultural property relief (APR) claims of £1m from April 2026 will remain in place but the £1m allowance will now be transferrable between married couples and civil partners if it isn’t used in full on the first death. This is a useful amendment, as it will mean many couples will not need to change their wills, but the changes will still have a significant impact on business owners and farmers.