And what else might be coming down the track? Budget predictions remain predictions, however well informed the source.
What you can do now is bring your own figures up to date. That way, whatever is announced on 28 October lands on a plan that already reflects today’s rules.
Then ask the question that matters more than any rate.
02 What does your life need from the business?
This is a question worth asking regularly, starting with the life you want rather than the detail of the next Budget.
For example, say you want to appoint a managing director and drop to three days a week, keeping your shares. After the full cost of the hire, corporation tax, and dividend tax, how much would reach you personally? Would it cover what you need?
Your accountant can work out what the company can pay you, allowing for the profits available for dividends and the cash it needs for costs, investment, and commitments. A financial planner can connect that with household spending, money held outside the company, and future income.
If there’s a shortfall, how many months would your own cash cover it for? That’s how long you have to adjust for. The next question is whether you can afford to keep the arrangement going over the longer term.
It also matters how much of your income and capital depend on the company. If both rely heavily on the same business, a weaker year could affect your household income and the value of your shares together.
Pensions and other investments outside the business give you something to stand on when that happens. Check when you could actually use that money.
Ask your accountant and planner to run the figures in three different scenarios:
- Profit falls by a quarter.
- Dividend tax increases again.
- Both happen together.
You can then see what would force a rethink: the timing, the cost of the hire, or how far you step back.
These assumed changes test the decision. They don’t predict what will happen. And the figures may show that you have room to make the change, including through a weaker year.
The same approach applies if you’re considering a sale. Work from what you would receive after tax and costs, and when that money would be available. Then examine what different outcomes would mean for the income you need or the next venture you want to fund.
It all starts with being clear about what you need and what you want, then working back from there to what it will take. For many business owners, the business is a key asset in making those plans possible.
03 What if they are just rumours?
There’s always speculation before a Budget. When the possible changes could affect your wealth or business, it can be tempting to act before the facts are known. But acting on rumour alone is usually a temptation to resist.
Ahead of this Budget, there’s speculation about possible increases in capital gains tax (CGT), including alignment with income tax rates. A higher rate might look like an obvious way to raise more, but HMRC’s illustrative modelling shows that people change their behaviour and the take can fall.
That guarantees nothing about what the Chancellor will do.
Even so, some owners will be tempted to bring a sale or other disposal forward to secure today’s 18% or 24% rates, rather than a hypothetical 45% if CGT were aligned with the additional rate of income tax.
Before bringing forward a disposal, ask what would change if the expected tax change never happened, came later, or took a different form.
Ahead of the October 2024 Budget, speculation included aligning capital gains tax with income tax. The main rates instead rose to 18% and 24% immediately, while the tax rate on gains qualifying for Business Asset Disposal Relief rose in April 2025 and again in April 2026.
Earlier action could still have saved tax. The wider question was whether the sale, on the terms available, suited the owner’s plans.
It’s easy to be wise after the event. How would you have felt if the rate hadn’t risen?
04 Three questions for your pre-Budget conversation
You don’t need every answer before you speak. Bring one decision you’re considering, what you expect to draw from the company, your household spending, and the cash you hold outside the company.
Take action
If you would like to talk to one of our team about the announcements in the Budget and how we could help you make a plan, please fill in the form below and we'll get in touch. Alternatively, please feel free to call us on 0330 390 9191 and we’d be happy to help.
