Now the dust has settled on the Autumn Budget, we look beyond the headlines at what some of the changes could mean for your longer-term financial plans.
What deserves a closer look following the Budget
Now the dust has settled on last week’s Budget, we've taken some time to reflect on the key announcements and what they could mean for you.
The Chancellor delivered the Budget against a difficult economic backdrop of higher energy prices, stubborn inflation and pressure on government borrowing costs. The result was a Budget that largely avoided big tax or spending changes, instead making a series of smaller adjustments.
Several of the smaller measures are worth noting, particularly where they could affect financial plans or decisions coming up.
Pensions and inheritance: April 2027 is getting closer
One of the most significant changes for many people was announced previously rather than in this Budget, but its implementation is now only months away.
From 6 April 2027, most unused pension funds and pension death benefits are due to be included within an individual's estate for Inheritance Tax purposes. This Budget makes some technical changes to the implementation rather than reversing the direction of the policy.
Our view: The approaching change strengthens the case for looking at retirement income, pensions, wills, gifting and wider estate planning as one connected exercise. It does not mean automatically withdrawing pension funds or making gifts. The aim remains to find the right balance between maintaining your own long-term financial security, managing tax efficiently and providing for the people you care about.
Cash, savings and property: focus on the return after tax
From 6 April 2027, tax rates on savings income are due to rise to 24%, 44% and 49%. The same rates will apply to property income in England, Wales and Northern Ireland, meaning a further increase in the tax burden for many buy-to-let landlords.
This is particularly relevant to anyone holding substantial amounts of cash, whether following a business sale, ahead of a tax payment or simply as part of their wider financial arrangements. Landlords should also consider the effect of the higher property income rates on the net return from their property portfolios.
Our view: Higher tax rates make it increasingly important to consider returns after tax, rather than simply comparing headline yields or interest rates. For cash that is unlikely to be needed immediately, short-dated UK government gilts can offer a useful tax-efficient alternative to cash deposits.
Gains on gilts are generally exempt from Capital Gains Tax, so low-coupon gilts bought below their redemption value can be particularly attractive for higher and additional-rate taxpayers.
Equity partners: keep an eye on cash flow
The Budget includes proposals for more timely payment of Self Assessment income, with the intention of bringing tax payments closer to the period in which income is earned. The detail is still developing, so this should not be read as an immediate change to every partner's tax-payment timetable.
Our view: For partners, the eventual tax liability is only part of the issue. The timing of drawings, profit allocations and tax payments can create significant cash-flow requirements, particularly when they do not move together. As the proposals develop, it will be worth considering how much cash should be kept available and when.
Business owners: changes ahead from 2028
From April 2028, the tax rules around some company reorganisations, share buybacks and owner exits are set to change. The aim is broadly to ensure that profits taken out of a company are taxed appropriately, as income and not capital where relevant, while continuing to allow genuine commercial exits and family succession.
For owners planning to step back, reorganise ownership or pass a business on, the important point is that the government says genuine commercial exits and family succession should continue to be protected. Further detail and draft legislation are expected during 2027.
Our view: Succession is rarely just a tax question. For an owner considering retirement, passing a business to the next generation or a staged exit, the focus should be on what the structure ultimately leaves them and their family with, when they receive it and whether it supports the life they want afterwards.
The developing rules are another reason to bring the financial, tax and legal planning together early.
Thinking about selling your business?
For business owners contemplating a future sale, the lifetime limit for Business Asset Disposal Relief will fall from £1 million to £500,000 for qualifying disposals from 6 April 2027. This means a smaller proportion of the gain may benefit from the preferential rate, potentially reducing the after-tax proceeds of a sale.
The Budget also introduces Founders' Relief from April 2027, offering a 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains. This could be extremely valuable, but it is aimed at a much narrower group of founders and significant early investors in high-growth, innovative UK companies, with detailed eligibility rules still to be finalised.
Our view: For most business owners, the reduction in Business Asset Disposal Relief is likely to have the greater impact. If a sale is on the horizon, it may be worth considering with your advisers whether the changes should affect the timing or structure of the transaction. Either way, the heady days of Entrepreneurs' Relief, with a lifetime allowance of £10m, are now far behind us.
What could this mean for you?
There was little in this Budget that calls for an immediate response. But some of the changes may alter the assumptions behind financial decisions being considered now, particularly around pensions, cash, retirement, succession and the eventual sale of a business.
The important point is not to make decisions based on an individual tax change in isolation. Your pension, investments, estate, business interests and long-term plans are connected, and changes in one area can have implications elsewhere.
Good financial planning is about understanding those connections and considering what changes mean for you, your family and what you ultimately want your wealth to achieve.
If you are already a Mivida client and anything here prompts a thought or question, please do get in touch with your Mivida adviser. We are always happy to talk things through and can bring your accountant or solicitor into the conversation where it will help.
If you are not currently a Mivida client but this has prompted you to think about your own plans, we would be happy to talk to see if we can help. Email us on hello@mividawealth.co.uk
