As the UK enters a period of mounting fiscal pressure, business owners are facing a growing climate of tax uncertainty. With major changes to Business Property Relief on the horizon, rising Inheritance Tax liabilities, potential increases to dividend taxation, and the continued impact of frozen thresholds, the landscape is shifting rapidly. The following headlines outline the key developments affecting entrepreneurs, family businesses, and high-net-worth individuals — and underscore the need for early, proactive planning to safeguard wealth and support long-term resilience for businesses.
“Pretty Much Inevitable”: Tax Hikes Expected This Autumn
The Autumn Budget is expected to bring further tax increases as the government looks to fund its £190 billion spending review. Major new commitments to the NHS, housing, defence, and nuclear energy have dramatically reduced fiscal flexibility.
Yael Selfin, Chief UK Economist at KPMG, warned: “Looking ahead to the autumn budget, by cementing in substantial increases in departmental spending, Reeves has made further tax rises look increasingly inevitable.”
The National Institute of Economic and Social Research echoed this concern, stating that tax increases are now “pretty much inevitable.”
With Labour promising to restore winter fuel payments and review the two-child benefit cap, public spending could rise by an additional £10–30 billion. At the same time, UK borrowing costs are rising — indicated by increasing gilt yields — and productivity forecasts are weakening.
Rain Newton-Smith, Director General of the Confederation of British Industry, cautioned: “Business cannot shoulder more” in tax rises.
Richard Tice, Leader of Reform UK, added: “Labour has lost control of the economy… More taxes will ruin what’s left and entrepreneurs are leaving by the week.”
“No One Is Immune”: BPR Changes Put 200,000 Jobs & Family Businesses at Risk
Planned changes to Business Property Relief (BPR) are raising alarm across the UK business landscape. From April 2026, the government will cap the current 100% Inheritance Tax (IHT) relief on qualifying business assets at £1 million. Amounts above that will receive only 50% relief — a shift that could significantly affect business succession planning.
A recent CBI Economics report estimates the reform could trigger a £15 billion hit to the UK economy and put more than 200,000 jobs at risk. Intergenerational businesses stand to be among the hardest hit.
Neil Davy, CEO of Family Businesses UK, warned: “No industry, sector, region or constituency will be immune.”
Stealth Tax Increases Loom Amid Fiscal Pressure
Despite promises not to raise income tax, VAT, or National Insurance, the government faces a potential £60 billion funding shortfall. With few direct tax levers remaining, experts expect further use of “stealth taxes” — threshold freezes, relief restrictions, and indirect fiscal tightening — all of which disproportionately affect business owners and higher earners.
Such policies increase tax liabilities over time without overt rate hikes, reinforcing the importance of timely and proactive planning. Reliefs and allowances available today may be quietly phased out in the near future.
IHT Liabilities Set to Rise Sharply
More estates will soon be pulled into the IHT net, with nearly half of taxable estates expected to exceed the £2 million threshold by 2027/28. In 2021/22, 3,153 estates exceeded this figure — a number forecast to rise to 5,613 within five years, and double again by 2029/30.
Rachael Griffin of Quilter warned: “Many more estates are set to become liable for IHT as pension wealth is brought into scope.”
The freeze on IHT thresholds, rising asset values, and new pension rules from 2027 are all contributing to this trend. HMRC expects IHT receipts to reach £11.7 billion by 2027/28.
For business owners, this is a clear signal to reassess estate and succession planning — especially for those with substantial pension pots or business assets.
Dividend Tax Increases Under Review
The Chancellor is reportedly considering significant changes to dividend taxation in the Autumn Budget. Treasury officials have prepared a range of options, including removing the £500 tax-free allowance and raising the current dividend tax rate (which already reaches 39%).
Removing the allowance could generate more than £300 million — while allowing Labour to maintain its pledge not to raise taxes on “working people.”
A Conservative spokesperson responded: “Rachel Reeves is putting her hands in the pockets of British taxpayers and businesses.”
Additional proposals include increasing the bank surcharge, currently 3%, to between 5–8%. Darren Jones, Chief Secretary to the Treasury, said: “Any tax decisions would be subject to the OBR forecasts,” signalling that tax rises remain firmly on the table.
Mel Stride, Shadow Chancellor, warned: “Rachel Reeves today refused to rule out coming back with more tax rises later this year… to pay for her mistakes.”
Business owners relying on dividend income should consider revisiting profit extraction strategies and shareholder remuneration plans in anticipation of potential changes.
Tax Burden at 40-Year High: Time to Review Long-Term Strategy
The UK’s overall tax burden is at a four-decade high, with "tax freedom day" falling six days later than in 2024 — the latest since 1985. The Adam Smith Institute projects that by 2028, workers may not reach tax freedom until June 24, mirroring levels last seen in wartime Britain.
James Lawson, Chair of the Adam Smith Institute, said: “A tax system that consumes 162 days of our working year is... not sustainable.”
The top 1% of earners now contribute 28.2% of total tax revenue. Many high-net-worth individuals and business owners are actively reviewing their tax and business structure options.
With profitability and long-term planning affected, reviewing remuneration structures and succession plans has become increasingly essential.
Public Borrowing Surges: Headroom Shrinks Further
Government borrowing in April reached £20.2 billion — far exceeding forecasts — with a deficit of £70.3 billion recorded last month alone. The debt-to-GDP ratio now sits at 95.5%.
Fiscal headroom has shrunk to just £5.7 billion. Economists from Capital Economics and EY warn that this financial squeeze will almost certainly force further tax increases to maintain spending and retain market confidence.
Mixed Signals Underscore Growing Uncertainty
Chancellor Rachel Reeves has pledged not to raise core taxes again after last year’s £40bn package, calling it a “one-off” to stabilise the economy. But that claim is being challenged by mixed messages from government colleagues.
While Reeves insists “our spending plans are fully costed,” she has not confirmed whether the current freeze on income tax thresholds will end in 2028 — a measure that could see 1.9 million more people pulled into higher tax bands by 2030.
Defence Secretary John Healey, meanwhile, has refused to rule out tax rises to meet Labour’s 3% GDP defence spending target, potentially adding £15 billion to annual spending. This inconsistency leaves business leaders navigating a highly uncertain fiscal outlook.
How Can Qubic Help?
To navigate these potential changes, Qubic offers tailored tax planning services. Our expertise can help mitigate the impact of higher taxes and leverage current reliefs effectively. The window of opportunity to capitalise on existing tax rates and reliefs is narrowing, making now the time to act.
We understand that uncertainty surrounding tax changes can be challenging, and we are here to help you.
To learn more about our tax planning services or to discuss your options with a member of our team, simply get in touch using the details below:
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