Following a drama-filled Budget, the smartest entrepreneurs are assessing how the chancellor’s speech, marketed as a Budget “for working people”, will affect them, their businesses, and their long-term plans.
Hidden among promises to tackle NHS waiting lists, ease the cost of living, and reduce national debt (which turns out not to be as bleak as the chancellor would have us believe, as higher-than-expected tax receipts have left the Treasury with a £4 billion surplus), Rachel Reeves also promised “to make Britain the best place in the world for entrepreneurs to scale up, and to stay”.
Against a backdrop of rowdy backbenchers, Reeves said: “Growth begins with the spark of an entrepreneur: Half of new jobs in Britain are created by scale-up businesses. And we want those jobs created here, not somewhere else.”
Here are five changes that might affect your entrepreneurial clients.
1. Venture Capital Trusts and the Enterprise Investment Scheme widened
Offering significant tax breaks to individuals investing in high-risk, early-stage companies, Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) play a vital role in funding fledgling businesses.
In line with her pledge to “make Britain the best place in the world for entrepreneurs to scale up”, Reeves announced that the annual limits for funds that companies can raise under these schemes would, from April 2026, increase to £10 million for regular companies and £20 million for knowledge-intensive companies. Plus, the lifetime limits will increase to £24 million and £40 million, respectively.
Good news for businesses looking to raise funds, but there’s a “but” for investors.
From April 2026, Income Tax relief on VCT investments is to be reduced from 30% to 20%, bringing treatment into line with EIS investments.
2. Enterprise Management Incentives opened up to larger businesses
From April 2026, the qualifying size threshold for Enterprise Management Incentives (EMIs) will increase from 250 to 500 full-time employees.
This will allow scale-ups to join start-ups in attracting talent with the option to buy shares at a pre-agreed value, with any growth taxed as capital gains rather than income.
This reflects the government’s ambition to support scaling businesses rather than only start-ups and opens the scheme to a much wider pool of medium-sized companies, helping them to attract the best talent.
For clients preparing for a future sale, EMIs can help build a more motivated and stable workforce, which could strengthen valuations and make businesses more attractive to buyers.
3. Tax relief on Employee Ownership Trusts to be cut
One big change, introduced with almost no notice, relates to the tax treatment for business owners selling to an Employee Ownership Trust (EOT).
From November 2025, tax relief will drop from 100% to 50%. So, where previously there was no Capital Gains Tax (CGT) on the business sale, now sellers will be charged 12% on all profits from the sale.
In a single move, the government has fundamentally altered the financial benefits of an EOT sale, which, for many founders, may make this route less appealing.
Despite no longer being quite so financially rewarding, for owners keen to preserve company culture and create a stable route to succession, EOTs may still be a good option.
Hardest hit will be those already part-way through an EOT transaction, who may wish to review their options in light of the unexpected tax charge they now face.
4. Dividend Tax will increase by 2% from April 2026
From April 2026, ordinary and upper rates of tax on dividend income will rise by 2%:
| Tax band | Dividend Tax 2025/26 | Dividend Tax 2026/27 |
| Basic | 8.75% | 10.75% |
| Higher | 33.75% | 35.75% |
Regardless of your tax status, the annual ÂŁ500 tax-free dividend allowance remains unchanged, as does the tax rate of 39.35% for additional-rate taxpayers.
For those who pay themselves via dividends or rely on them for regular income, this change may require a rethink, as the increase could mean using dividends to extract profits may be less tax-efficient than taking a salary.
The most suitable solution will depend on individual circumstances. While dividends are likely to remain key to efficient profit extraction, it’s wise for clients to review what’s best for them before the end of the tax year.
5. Confirmation of Business Relief changes, with an additional rule
As initially announced at the 2024 Autumn Budget, changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) will be implemented as planned.
From April 2026, only the first £1 million of combined business and agricultural assets will be eligible for 100% Inheritance Tax (IHT) relief. Assets exceeding this threshold will be eligible for 50% relief – an effective 20% tax rate.
Crucially, however, the chancellor confirmed at the 2025 Budget that any unused portion of the ÂŁ1 million allowance can be transferred to a surviving spouse or civil partner.
Helpfully, this applies even if the first partner died before the new rule comes into effect.
Providing more certainty and control over the transfer of business assets across generations, this should be welcome news for family businesses and SMEs.
If you work with clients who were concerned by previous legislation, this announcement will undoubtedly spark fresh conversations and may necessitate revisiting their estate plans once again.
Get in touch
If you have entrepreneurial clients who are reviewing their business and financial plans in light of the 2025 Autumn Budget and could benefit from expert financial advice, please get in touch.
Email mail@delaunaywealth.com or call us on 0345 505 3500.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning or tax planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
The Enterprise Initiative Scheme (EIS) and Venture Capital Trusts (VCTs) are higher-risk investments. They are typically suitable for UK-resident taxpayers who are able to tolerate increased levels of risk and are looking to invest for five years or more. Historical or current yields should not be considered a reliable indicator of future returns as they cannot be guaranteed.
Share values and income generated by the investments could go down as well as up, and you may get back less than you originally invested. These investments are highly illiquid, which means investors could find it difficult to, or be unable to, realise their shares at a value that’s close to the value of the underlying assets.
Tax levels and reliefs could change and the availability of tax reliefs will depend on individual circumstances.
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