With the government gearing up to deliver the Autumn Budget on 26 November 2025, speculation is rife about where the tax burden will fall. The Government has committed not to raise the headline rates of Income Tax, VAT or National Insurance (NI), but mounting pressures on public finances mean that tax increases are still on the table-just in less obvious forms.

Below we explore three areas where significant change may occur: the VAT registration threshold, dividend taxation, and capital gains tax (CGT). We set out what we believe could be coming, and how business owners should think about preparing.

VAT registration threshold reduction

The current VAT registration threshold is £90,000 of taxable turnover. Many firms just below that level have avoided VAT registration and the associated administrative burden.

There are reports the threshold might be reduced, or effectively lowered, in the Budget.

What we may see

• The threshold might be cut significantly (some commentary suggests as low as £30,000).
• Alternatively, the threshold might be kept at the same level but frozen for inflation, so that over time more firms cross the bar, in effect broadening the VAT base.
• The Budget might also tighten or reform simplified VAT accounting schemes (flat rate, cash accounting) for small businesses, increasing compliance burdens.

Implications for businesses

• Businesses currently operating below the threshold will suddenly find themselves required to register for VAT, charge 20 % VAT and submit quarterly returns.
• If a business maintains its existing prices (because margins are already tight), this means passing on 20 % on top of what the customer expects, potentially reducing demand and harming competitive position.
• Cashflow risk increases: VAT must be paid regardless of when customers pay you, so if your clients are slow, you may have to fund the VAT.
• Administrative and accountancy burdens increase, small firms must decide whether to absorb the cost themselves (reducing margin) or pass it on (risking turnover).
• In worst-case, some marginal smaller businesses may find the combined cost of VAT, admin, reduced demand and slower cash-flow so challenging that they face insolvency or must consider options like a Creditors’ Voluntary Liquidation (CVL).

What to do now

• Review your turnover and cash-flow forecasts: are you close to or likely to exceed the current threshold?
• If you are near it, model what registration would cost you in terms of admin, cash-flow timing, pricing and margin.
• Assess whether you should proactively register now (perhaps transition costs are lower), or whether you should stay under the threshold, or prepare to pass through VAT to customers.
• Tighten up your bookkeeping and cash-flow monitoring, especially debtor days and payment terms.
• Speak with your accountant or business recovery adviser about contingency plans should registration be required.

Dividend tax increases

There is widespread speculation that the Chancellor will increase the tax on dividend income in the Budget.

What we may see

• The dividend tax rates, currently 8.75 % for basic-rate taxpayers, 33.75 % for higher-rate taxpayers and 39.35 % for additional-rate taxpayers on dividends above the £500 allowance, could increase.
• Some commentators suggest an increase in the basic rate to around 12.75 %.
• There may also be reductions in the dividend allowance (currently £500) or changes to the way dividends are reported and taxed.

Implications for business owners

• Company directors and shareholders who rely on dividends for their personal income will see higher tax bills, reducing take-home pay from their company.
• Because dividends are taxed after corporation tax, the combined effect may be significant. For example, if you pay yourself a modest salary then take dividends, your net income may shrink.
• This may reduce the attractiveness of some business models (mixture of salary + dividend) and may prompt owners to review how they remunerate themselves (salary vs dividend) or consider extraction of retained profits.
• For families owning small companies who pay dividends to shareholders, the increased tax cost might influence decisions about whether the business remains profitable, whether the shareholders draw dividends or reinvest, or even whether to dispose of the business or enter liquidation.

What to do now

• Review your current dividend policy and how much you rely on dividends for personal income.
• Consider modelling the effect of a rise in dividend tax - e.g., increase from 8.75 % to 12.75 % or higher - on net take-home
• If you’re planning an extraction of profits (for example ahead of selling the business or restructuring), it may be worth accelerating that planning
• Assess the remuneration structure in your company: is the current split between salary and dividend still optimal under higher tax on dividends?
• Talk to your accountants and tax advisers now, so that you’re prepared for the Budget announcement and can swiftly respond.

Capital Gains Tax (CGT) changes

There is also strong speculation that CGT will increase, particularly affecting disposals of property, business assets, shareholdings and shareholder exits.

What we may see

• Higher CGT rates: for example, rates could rise beyond current levels (which for Business Asset Disposal Relief are currently due to rise from 10 % to 18 % from April 2026).
• Reductions of exemptions or reliefs: e.g., the annual exempt amount may be reduced; business reliefs may be tightened.
• Potential changes aimed at align¬ing CGT more closely with Income Tax, thereby reducing the tax advantage of extracting value via capital gains rather than income.

Implications for business owners and landlords

• If you are planning to sell a business, shares or a property, higher CGT will increase the tax cost of disposal, reducing the net benefit to you.
• This may prompt a surge in activity before the effective change date (e.g., more business sales or MVLs ahead of April 2026) as owners seek to extract value at lower rates.
• For landlords and shareholders whose exit strategy relies on favourable CGT treatment, the change may mean revisiting timelines, valuations, and whether to accelerate a disposal.
• Businesses might delay investment or disposal decisions in anticipation of change, which could affect growth, liquidity and strategic planning.

What to do now

• If you’re considering the sale of a business, shares or a property, now is a critical time to review your timescales. If rates look likely to rise, you may want to accelerate the disposal or extraction of value while the current favourable rates hold.
• Revisit the structure of your ownership: are you holding business assets, shares or property in the most tax-efficient way? Could there be planning ahead of the change?
• Engage your tax adviser and insolvency/restructuring adviser (such as Parker Walsh) to examine the viability of alternative routes (for example, an MVL if the business is solvent and you wish to close).
• Review cash-flow and exit strategy: a change in CGT may affect how much you net from a disposal, which in turn may impact your future plans (retirement, reinvestment, relocation, etc.).

Key takeaways for small business owners and company directors

• The upcoming Budget is likely to deliver tax ¬changes that broaden the base rather than raise headline rates - meaning many smaller firms and individual owners may feel new burdens.
• If you are a business owner, company director, shareholder or landlord, you should not view the announcement as “somebody else’s problem”. The ripple effects may hit you.
• It is vital to prepare now: run scenarios, revisit your cash-flow forecasts, plan for higher administrative burden, revisit your company structure and exit timetable.
• Consider seeking specialist advice: whether from your accountant, tax adviser or insolvency/restructuring specialist such as Parker Walsh, who can help you navigate options such as voluntary liquidations (CVL), members’ voluntary liquidations (MVL) or restructuring.
• Time is short: a swift reaction to the final Budget announcement may allow you to implement tax-efficient planning before new rules take effect.

Final thoughts

While none of the three main measures discussed (VAT threshold fall, dividend tax rise, CGT increase) have been confirmed, the weight of commentary suggests they are realistic possibilities. The Government faces a difficult fiscal position and must find revenue without breaking manifesto commitments, meaning many of the changes will come in grey areas rather than headline rates.

For the smaller business community and owner-directors, the message is clear: proactively plan, rather than simply react. At Parker Walsh, we emphasise the need to understand the implications on cash-flow, pricing, structure and exit strategy. If you’d like tailored guidance specific to your business or a review of your situation in light of the forthcoming Budget, we’re here to help.