Thursday 27th November 2025
For FPC clients there is much to unpack from the Budget this week. “Those with the broadest shoulders” will have to contend with the practicalities of a mansion tax, albeit a headline grab rather than a significant revenue raiser. And given it’s pencilled in for April 2028 there is scant detail yet on any process, let alone appeals procedures.
Business owners
In the 2024 budget it was business owners that were hit hard with additional costs to raise an extra £26bn in tax revenue. The flip side of these new minimum wage increases is that this cost will again, either come from business margin or be passed on to consumers through higher prices. From April 2026 it will now become more expensive for owners to be paid via a dividend with a 2% tax increase across all the board.
With business sale taxes having increased at the last budget, the Chancellor has with immediate effect halved the tax relief available on sales via the ‘John Lewis model’. Employee Ownership Trusts (EOT’s) had become increasingly popular in recent years and in some cases no doubt driven by tax benefits rather than philosophy. And whilst an EOT is not a mainstream answer for most corporate exits, it’ll still feel like another net tightening around business owners.
Investment
The increase to dividends will also have an impact on those holding shares as investments, so that’s all FPC clients. Bear in mind though that a key part of our service isn’t just helping manage risk, we work with individual clients to manage tax too.
Rest assured we’ll factor these changes in to reviews and in many cases, it will be of minimal impact due to clients having money in pensions, ISAs or investment bonds.
For those clients who have direct property portfolios, accounting flexibility has been tightening in recent years too. There will also be a 2% tax increase in property income, though this will require a new order of taxation to be introduced. As a result, these changes are slated for April 2027 which at least gives time for us to work with clients and their accountants.
Pensions
Of the two big revenue raisers, pension salary sacrifice is in the crosshairs for April 2029. There has already been a distinction made around ‘employee contributions’ which suggests there will remain opportunities for business owner funding.
In the meantime, we’re now a year in to advising clients about how pensions sit in their financial plans, given the inheritance tax changes in the last budget ahead of 2027. This government is at least giving plenty of notice of changes, meaning we have plenty to talk about at reviews but in a calm manner.
Another positive, it has also been confirmed that pension income will not be taxed at this new + 2% rate. So more reasons for us to be considering pensions as part of a retirement strategy, especially since dividend income received within a pension will remain tax free.
In closing
In the medium term we will see more people paying more tax as thresholds remain frozen. Is this trouble down the line for the economy and markets, but more importantly workers who are voters for a 2029 election? As with the risk warnings we offer about AIMS models, everything gets more uncertain the more years ahead we look.
Ultimately, a budget can change the rules and allowances, but it doesn’t change family or values or the life you want to lead.
Rest assured you’ve got a plan in place already, we’ll help you understand these changes and then review.