A mixed bag for business, where uncertainty meets opportunity
The Autumn Budget 2025 may not have included dramatic tax policy shifts, but for CFOs of fast-growth and mid-sized corporates, the detail reveals a more complex picture. If your business is preparing for a restructure, funding round or founder exit, the cumulative impact of these updates is significant.
The Government has chosen not to overhaul the entire tax system. Instead, it has focused on tightening existing rules, reducing the value of reliefs and increasing the effective tax burden in more subtle ways. The headline Corporation Tax rate remains at 25%, but overall tax costs for both companies and their shareholders are likely to rise.
This article highlights the Autumn Budget 2025 updates that matter most for finance leaders and explains why now is the time to reassess your tax strategy. Through our My Tax Partner service, we help clients design and implement robust tax strategies via regular, agenda-led meetings. This consistent yet flexible approach ensures businesses can adapt quickly to changes such as budget measures and HMRC updates, maintaining a strategic edge. Our key areas of focus from the Budget are summarised below.
Stability on the surface, complexity underneath
Corporation Tax rate held at 25%
The main rate of Corporation Tax is unchanged, offering a degree of stability for forecasting and planning. However, this consistency should not be mistaken for a flat or static tax environment. Other changes, particularly those relating to personal tax, reliefs and anti-avoidance measures, will affect your business’s overall tax position.
No wealth tax or major CGT overhaul, but reliefs eroded
While the Chancellor avoided introducing a wealth tax or making major structural changes to Capital Gains Tax (CGT), several less visible reforms will reduce the tax efficiency of exits, value extraction and group restructuring. These changes are particularly relevant for founders and shareholders who are considering a sale or exit in the next 12 to 24 months.
The changes CFOs and founders need to know about
The cost of exit is rising
Earlier this year the Business Asset Disposal Relief (BADR) rate increased from 10% to 14%. From April 2026, it will rise again to 18%. This means founders and shareholders disposing of shares could face materially higher tax liabilities unless they act soon.
In addition, new anti-avoidance rules effective from 26 November 2025 introduce restrictions on accessing CGT reliefs through share exchanges, company reconstructions and Employee Ownership Trusts. These measures reduce flexibility and increase the need for forward planning.
Employee Ownership Trusts: a fundamental shift in the tax outcome
Employee Ownership Trusts (EOTs) have historically offered an attractive exit route for business owners, providing a 100% exemption from CGT on qualifying disposals of shares. From 26 November 2025, this position changes materially.
Under the new rules, only 50% of the gain on a qualifying disposal to an EOT will be exempt. Where this partial exemption is claimed, BADR and Investors’ Relief will not be available. The remaining 50% of the gain will not be taxed immediately. Instead, it will be held over and deducted from the trustees’ acquisition cost, meaning it will come into charge on any subsequent disposal, or deemed disposal, of the shares by the EOT trustees.
This effectively converts what was previously a clean, tax-free exit into a partially deferred tax outcome, with future tax exposure embedded within the trust structure. While EOTs remain a valid succession and ownership option, the tax profile is now more complex and less generous than under the previous regime.
Dividend and property income extraction will be more expensive
From April 2026, dividend tax rates will rise by two percentage points for basic and higher rate taxpayers. For groups holding significant property assets, a new property Income Tax regime will be introduced in 2027 or 2028, with rates of 22%, 42% and 47%.
For companies that rely on dividends or property income to return value to shareholders, these increases will significantly reduce the net benefit unless alternative strategies are put in place.
Business Property Relief will be capped and less flexible
In a post-Budget announcement, the government has revised its planned reforms to Agricultural Property Relief and Business Property Relief. From 6 April 2026, the maximum value eligible for 100% relief will increase from the previously proposed £1 million to £2.5 million, building on the Autumn Budget 2025 decision to allow the combined 100% relief allowance to be transferrable between spouses and civil partners.
In practice, this now means that spouses and civil partners should be able to leave up to a combined £5 million of qualifying assets to their chosen recipients, free of Inheritance Tax (IHT). An effective 20% IHT rate will then apply to any excess value on qualifying assets.
Whilst the increased limits are welcome, overall the changes will still affect business succession plans, especially for companies with valuable property holdings. Structures that previously qualified for full relief may now face significant IHT exposure.
Enhanced investor and funding reliefs
The Budget announced an increase to the annual Enterprise Investment Scheme (EIS) investment limit that companies can raise to £10 million (from £5 million) and for Knowledge-Intensive Companies (KICs) to £20 million (from £10 million). The company’s lifetime investment limit increases to £24 million (from £12 million) and for KICs to £40 million (from £20 million). However, there is also a reduction in the Income Tax relief available to individuals investing in Venture Capital Trusts (VCTs) to 20% from the current rate of 30%. These changes are particularly relevant for scale-ups preparing for a funding round or larger more-established businesses planning to attract further growth capital.
Separately, certain limits for Enterprise Management Incentive (EMI) schemes are also being increased. The size limits increase from 250 to 500 full-time employees and from £30 million to £120 million gross assets from April 2026. The total value of shares subject to EMI option also increases from £3 million to £6 million. These changes enhance the utility of EMI schemes as part of recruitment, retention and reward strategy for key staff, particularly in the lead-up to a sale or capital event.
Changes to pension salary sacrifice
From April 2029, the National Insurance Contributions (NIC) savings currently available on pension salary sacrifice will be capped. Only the first £2,000 of employee pension contributions made through salary sacrifice will remain exempt from both employer and employee NICs. Contributions above this threshold will still benefit from Income Tax relief but will now attract full NIC charges.
This change reduces the attractiveness of pension salary sacrifice as a long-term reward or tax optimisation strategy, particularly for higher earners making larger contributions. However, employers should review their existing arrangements to maximise the use of pension salary sacrifice arrangements ahead of April 2029.
Mandatory payrolling of benefits in kind
The Government confirmed that all benefits in kind must be reported and taxed via payroll software from April 2027 onwards. This phased rollout will apply to both Income Tax and Class 1A NICs.
For companies that still rely on manual P11D reporting or have bespoke benefit packages, the shift to real-time reporting will require systems and process changes. It will also demand closer integration between payroll, finance, and HR.
Strategic implications and actions for finance leaders and their boards
The Autumn Budget 2025 is not simply a compliance event. The updates have significant strategic implications that extend into cash flow, shareholder value, capital allocation, governance and risk. Finance leaders need to move beyond surface-level tax analysis and consider how these changes affect the broader financial and commercial strategy of the business.
Here’s where we believe CFOs should be focusing:
1. Exit planning and shareholder value extraction
With the phased increase in the BADR rate to 18% by April 2026, the tax cost of a business sale or equity disposal is rising. For founders, management shareholders or early-stage investors considering an exit in the near to medium term, the difference in tax outcomes could be substantial depending on the timing and structure of the transaction. Additionally, anti-avoidance provisions introduced in November 2025 are narrowing the scope of planning routes previously used to defer or mitigate CGT through mechanisms such as share exchanges and reconstructions.
Action: Exit strategies need to be stress-tested now. CFOs should model the difference between exiting in the current or next tax year, review eligibility for BADR, and explore alternative structuring options while they remain viable.
2. Employee Ownership Trusts and succession planning
The Autumn Budget introduces a major shift in how EOTs are taxed, changing the exit dynamics for founders considering employee-led succession. From 26 November 2025, the current 100% CGT exemption will be replaced by a partial relief; only 50% of the gain will be exempt. The remaining 50% is not taxed immediately but held over and deducted from the trustees’ acquisition cost. This gain will then come into charge on a future disposal by the EOT.
While EOTs still offer succession, cultural continuity and long-term employee benefit, the tax position is now more complex. Deferred gains held within the trust may affect future flexibility and reduce the attractiveness of the structure as a clean exit route.
Action: CFOs supporting founders or planning future succession should revisit any EOT-based exit strategies. That includes modelling the tax outcomes under the revised regime, understanding the impact of deferred tax within the trust, and comparing these with other potential exit routes. With timing and tax reliefs both in flux, early review is essential.
3. Forecasting and cash flow planning
The upcoming changes to dividend and property Income Tax rates will reduce the net return on value extraction for shareholders. If your business has structured returns around regular dividend distributions or rental income, the effective tax cost will rise materially from 2026 onwards. These increases may also affect cash flow planning for founders who rely on these distributions to meet personal tax liabilities.
Action: CFOs should update financial models and board forecasts to reflect higher future tax costs, especially where dividend or property income flows are part of ongoing shareholder remuneration or investment strategies.
4. Capital allocation and investment strategy
With erosion of key reliefs and the increase in effective tax costs, the return on certain capital-intensive investments may now fall below threshold. This is particularly relevant for property-holding companies, IP-heavy businesses or corporates with significant reinvestment plans. In a tighter relief environment, the value of capital allowances, group structures and available tax shelters becomes critical.
Action: Capital allocation decisions must now incorporate post-tax return modelling under new rules. Investment thresholds, financing routes and asset-holding strategies may need to be recalibrated accordingly.
5. Group structuring and tax governance
Many corporate structures – especially those that grew through acquisitions or legacy planning – may now be exposed under the new tax rules. Structures that relied on full BPR or shared use of allowances between entities and spouses may no longer be effective. Furthermore, the tightening of anti-avoidance legislation will increase scrutiny of intra-group reorganisations, shareholder transfers and any planning seen as artificially mitigating tax.
Action: CFOs should commission a fresh review of their group structure, checking for exposure to the new BPR caps, inefficient value extraction paths, or structures that are vulnerable to challenge under the new anti-avoidance framework.
6. Employee and founder incentives
With increasing dividend and CGT rates, the balance of risk and reward in remuneration strategies is shifting. Share schemes, EMI options and other forms of long-term incentive planning will need to be revisited to ensure they remain attractive and tax-efficient, particularly for key personnel and founders with liquidity events in mind.
Action: Reassess your approach to remuneration and incentive planning in light of reduced take-home value and tighter HMRC scrutiny of share schemes. Review your EMI arrangements in light of the new higher limit from April 2026, and explore how these can support retention and alignment ahead of funding or exit events.
7. Reward strategy and payroll compliance
With the 2029 cap on NIC relief for pension salary sacrifice, employers will need to revisit how they structure executive pension contributions. For senior employees and founders who contribute more than £2,000 a year via salary sacrifice, the change reduces the net value of this benefit and increases overall employer NIC costs.
Separately, the mandatory move to payroll-based reporting for all benefits in kind from April 2027 introduces new compliance and systems considerations. Many companies will need to upgrade payroll software and ensure that benefit policies are aligned with real-time reporting requirements.
Action: CFOs should begin planning now for both changes. That includes modelling the NIC impact of current salary sacrifice arrangements, updating total reward strategies, and conducting a readiness review of payroll systems to ensure compliance with benefit reporting from 2027. Finance, HR and Payroll teams will need to collaborate more closely to deliver a seamless transition.
8. Funding strategy and investor planning
For CFOs preparing for a funding round, the increase in EIS thresholds provides a significant opportunity to attract a broader pool of private capital. These schemes remain powerful tools in early-stage and growth capital strategies, particularly for businesses in the tech, life sciences or high-growth B2B sectors.
Action: Assess your eligibility under the revised EIS/VCT rules and consider how to position the business to take advantage of these expanded reliefs. Early communication with investors and advisors will be key to maximising value from the new limits from April 2026 onwards.
9. Investor and board expectations
Boards and investors are increasingly demanding evidence of good tax governance. That includes clarity on risk controls, transparency on relief usage, and forward-looking planning around transactions, succession and restructuring. The Autumn Budget signals that tax will become an even more important component of governance and ESG narratives.
Action: Ensure your tax strategy is documented, board-visible and aligns with both operational strategy and stakeholder expectations. A regular, agenda-led review of your tax position should become part of governance best practice.
How My Tax Partner can help
In a shifting tax environment, clarity and confidence are more valuable than ever. That’s why HaysMac’s My Tax Partner service exists.
We act as your strategic, partner-led Head of Tax, giving you:
- Proactive insight into emerging risks and upcoming changes across the entire tax landscape
- Practical modelling of disposals, restructures or shareholder returns under the latest rules
- A tailored tax agenda that evolves alongside your business and board priorities
- Agenda-led meetings that reduce risk and increase visibility, without adding admin burden
You get senior-level tax advice, integrated into your strategic thinking, covering everything from exits and funding to remuneration and payroll governance without the cost or commitment of an in-house Head of Tax.
Ready to stress-test your tax strategy?
If you are considering a transaction, reviewing group structure or simply want peace of mind that your tax strategy is future-fit, now is the time to act.
Book an exploratory My Tax Partner session with a senior member of our team. We will review your position, flag risks, identify opportunities and provide practical next steps aligned with your goals.
Let’s start with a conversation. Before these changes become problems.
