A bland Budget? Read the detail

Hey {{first_name|there}},

It's been a while.

You're getting this because at some point you signed up to hear from me.

Tax, Tech & Tactics is back, every Thursday morning.

Plain-English tax, tech and growth tactics for founders running £1m+ businesses.

And I couldn't think of a better excuse to restart than a Budget.

First, the caveat I give every year.

I'm party-agnostic.

Rightly or wrongly, how I vote comes down to how supportive a party is of small business.

It affects me, my clients and everything I do.

I thought the last Conservative government was terrible for small business.

Labour haven't done any better.

Most of the coverage I saw called it bland.

Nothing in it.

I disagree.

There was one major change and a lot of smaller ones.

Death by a thousand cuts.

We always say the devil's in the detail. Read the Red Book.

This was the worst Budget for detail I've sat through in a long time.

The speech had vague references the untrained ear would miss.

The Red Book had more vague references, to future detail and technical consultations.

We don't have certainty on much of it yet.

But the direction is very clear.

Every Budget comes with rumours.

Some are unfounded.

Some are leaked on purpose.

Either to test the reaction.

Or so the real announcement feels like a relief. "It could have been worse."

Call me a cynic.

This year the rumours were about aligning capital gains tax with income tax.

That would be a disaster.

There's a gap between those rates for good reason.

Business Asset Disposal Relief is always on the hit list.

Its predecessor gave you 10% on up to £10m of lifetime gains.

Today it's 18% on the first £1m.

From 6 April 2027, it's 18% on the first £500k, and 24% above that for higher-rate taxpayers.

That's up to £30k more tax per person.

Most small businesses are owned by a couple.

So call it £60k.

I know that number well.

A client exit I'd been working on for some time was due to complete soon anyway.

We decided to push it over the line before the Budget.

Lawyers, advisers, everyone pushed hard.

It completed on Tuesday afternoon.

Husband and wife owners.

Completing after the change would have cost them £60k.

As it turns out, the change doesn't take effect immediately, so we had a bit more time than we feared.

If you're already in a sale, my advice is simple.

Complete before 6 April.

Complete, not just exchange.

In the speech, BADR barely got a mention.

The airtime went on something that sounded great.

A new Founders' Relief.

10% on up to £10m of gains.

I turned to my wife and said, "That must be a load of crap."

Why cut one relief and launch a far better one on the same day?

It didn't take long to find out.

To qualify, you need to:

The turnover test alone means growing from £10m to about £19.5m in three years.

Virtually nobody I work with will qualify.

It's there to soften the BADR blow.

I always say don't let the tax tail wag the dog.

Don't build your business strategy around minimising tax.

But an exit is different.

Founders work for years, often underpaying themselves, to release that value at the end.

Tax a big enough slice of it and you remove the incentive to take the risk in the first place.

This is the part that worries me more.

From July 2029, HMRC can take smaller tax debts straight from your bank account.

Up to £5,000 for individuals and £10,000 for companies, where they think you can pay and repeatedly don't.

Don't get me wrong.

If the tax is correct, you can pay and you're choosing not to, there should be some power.

But anyone who's dealt with HMRC over PAYE knows how often they get it wrong.

Would you want them in your bank account, collecting what they think you owe?

VAT and PAYE also move to compulsory direct debit from April 2029.

Same argument.

Then the big one.

Payments on account during the year.

Most business owners take dividends, which aren't taxed at source.

Today you pay the balance on 31 January, plus payments on account towards next year on 31 January and 31 July.

From April 2029, HMRC plans to collect smaller, regular payments through the year, based on last year's bill.

Monthly? Quarterly? We don't know yet.

I'd much rather that cash sat in my account, working in the business, than with HMRC early.

Especially when they might get the number wrong.

And how many business owners earn the same amount year in, year out?

Hardly any.

If it goes ahead, and I hope it doesn't, there needs to be a way to reduce payments when you know your income will fall.

The same way you can reduce payments on account today.

It stinks of a controlling state.

One that's anti small business.

If you're planning a sale in the next few years, the clock started yesterday.

Until next week,

Luke

PS: I run The Boardroom every month. It's a free, small-group, in-person session for founders running £1m+ businesses, and it's invite-only. If you'd like a seat, reply and tell me a bit about your business.