UK budget “not as bad as it could have been”, states HURST

Accounting and business advisory firm HURST tax partner Adrian Young has stated that the budget was “not as bad as it could have been”.

He said: “I expect business owners will be fairly neutral in their responses. This is because the most painful measures, such as increasing national insurance contributions and headline rates of capital gains tax, had already taken effect, having been announced in last year’s Budget.

He noted that this leaves business leaders to pick over one or two more impactful measures that had come up.

“That leaves business leaders to pick over one or two more impactful measures that did come up.”

These measures included confirmation of an increase in the national minimum and living wages, with the main headline rate for workers aged 21 and over rising by 4.1% to £12.71 per hour, up 50 pence from £12.21.

He added: “As with all such increases, this will have an inflationary impact on wage structures.”

“A more welcome announcement for business was the freezing of the headline corporation tax rate. Coupled with that were positive changes to the capital allowances rules to increase the availability of first-year allowances in certain sectors.”

He also welcomed the proposed improvements to the Enterprise Management Incentive (EMI) scheme.

These rules are sometimes applied to encourage key employees, and the enhancements are intended to make the benefits accessible to businesses, he added.

Conversely, he described the reduction by half of the tax relief for individuals selling their businesses to employee ownership trusts (EOTs) as “unexpected and appears to go somewhat against a broader policy of encouraging employee engagement”.

Young commented: “Overall, the long-trailed freezing of personal allowances for a further three years after 2028 is the big tax-raiser for the chancellor. Initial estimates I have seen suggest this measure will bring close to a million more people into the tax net by 2029 and into 2030.

“I’ve said before that it’s a subtle move, as it enables the chancellor to hold true to her manifesto pledge not to increase income tax rates while still bringing much more tax into the coffers.”

From April 2026, the tax rate on dividend income will rise by two percentage points to 10.75% for basic-rate taxpayers and to 35.75% for higher-rate taxpayers.

The dividend additional rate will remain unchanged at 39.35%, Young noted.

The government expects this measure to raise £280m in FY27 and up to £985m in FY28, with further increases in tax receipts projected in subsequent years.

He added: “In summary, I believe business leaders will think the Budget was not as bad as it might have been. It’s a fairly low bar and, whereas Reeves’s focus on growth is to be welcomed, I didn’t see any stand-out measures that will make a material change to the fortunes of businesses.”

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