In her first Budget, Chancellor Rachel Reeves introduced £40bn in tax rises, largely focused on increasing National Insurance contributions for employers and implementing a temporary repatriation facility for non-resident individuals.
According to Nimesh Shah, CEO of Blake Rotenberg, while pre-Budget rumors pointed to sweeping tax changes, the actual announcements were more focused, though still highly impactful.
The initial tax increase is a £25bn increase from the NIC changes. From April 2025, employer NICs will jump by 1.2 percentage points to 15%, with a minimum NIC of £5,000. For businesses, this means an additional cost of £615 per employee, creating a significant expense for SMEs. A company with five employees each earning £50,000 will see their NIC bill increase by more than £5,500.
Capital Gains Tax (CGT) has also seen adjustments, with rates rising to 18% for basic rate taxpayers and 24% for higher rate taxpayers. Although the CGT changes have been less severe than expected, entrepreneurs will feel the impact, as the tax saving potential of the Business Asset Disposal Relief Scheme falls to £60,000 by 2026. The private equity carried interest scheme also faces a rise, making Effectively results in increased CGT on carried interest. to 32% as of April 2025, and to be brought within the scope of income tax and national income tax as of 2026.
The Budget introduced temporary repatriation facilities for non-resident individuals, allowing them to transfer money abroad at a reduced tax rate of 12% for two years. This initiative is expected to generate revenues of £12.7 billion. However, the move has made many non-residents consider their options, especially with the inheritance tax implications looming as a result of previously announced reforms.
Family businesses face new challenges with a £1m cap on Business Property Relief and a 50% discount thereafter. Although these changes will take effect in 2026, Shah advises early planning, noting that anti-blocking measures related to lifetime transfers could complicate efforts.
Shah’s overall stance on the budget is mixed. Although it avoided the more drastic changes that many had feared, it leaves room for more tax increases in next spring’s budget. Companies and investors will need to monitor developments closely as they navigate the evolving financial landscape.