Preparing your business for Budget changes

Ahead of the Autumn Budget, speculation about possible tax changes is inevitable. For business owners, though, acting on rumours can lead to decisions they may later wish they had handled differently. A more useful focus is preparation, understanding your current position and considering whether your plans can adapt if policy changes.

Many businesses have had to contend with higher operating costs, tax changes and economic uncertainty. Owners are also balancing immediate decisions about cash flow, recruitment and investment with longer-term plans for growth.

Changes to employment costs, including increases to minimum wage rates, may affect decisions about hiring and expansion. Meanwhile, changes to the tax treatment of business assets and succession can have implications for how business wealth is passed on or realised through a sale.

These issues can be closely connected. A decision made for the business can affect an owner’s personal finances, family and future plans.

Running a business can leave little time to review how its finances fit with your own. But decisions about salary, dividends, investments and succession may need to be considered together, in the context of your wider objectives.

Changes to dividend taxation, for example, may lead some owners to review how they take income from their business. The right approach will depend on individual circumstances, and tax rules can change. It may be useful to understand the options and seek professional advice before making a decision.

Recent changes affecting business assets and inheritance may also prompt families to revisit how assets are owned and what their succession plans involve. The details can matter, particularly when several generations or family members are involved.

Business structures and ownership arrangements are often established to meet the needs of a particular stage in a company’s development. As the business grows, those arrangements may warrant review.

A useful question is whether you would choose the same structure if you were setting up the business today. Arrangements put in place when a company was worth £500,000 may need a fresh look if its value has since risen substantially. Regular reviews can help owners assess whether their structures and plans continue to reflect their circumstances and goals.

Ahead of the Autumn Budget, discussion often turns to potential tax changes. Capital Gains Tax (CGT) and the possibility of changes to its rates are among the topics that may interest owners considering a future sale. Until policy is announced, however, these remain possibilities rather than confirmed changes.

It is sensible to understand how different outcomes could affect your plans. Decisions should be based on your circumstances and objectives, rather than speculation alone. If a sale is already under way as part of a considered plan, headlines about potential policy changes may not provide a sufficient reason to alter course.

Whether you hope to sell, pass the business to family members, bring in investors or continue growing it, your longer-term aims can inform decisions made today.

For those considering a sale, preparation may take time. Owners often begin exploring their options well before a transaction, sometimes 18 to 24 months in advance. A sale can involve specialist considerations, so it may be helpful to understand what advice and support could be needed at each stage.

The professionals who have supported a business over time may not all have the same experience of acquisitions, disposals or succession. Owners can consider whether their existing advisers have the relevant expertise for the decisions ahead.

Selling a business can mark the start of a different set of financial decisions. The proceeds may bring new questions about investment, family wealth, succession and philanthropy. Investment values can go up as well as down and you may get back less than you invested.

It can be tempting to focus on completing a transaction and leave these questions until later. Thinking about life after a sale in advance may help owners understand how the proceeds could support their personal and family objectives.

The Autumn Budget may bring changes, but decisions made in response should reflect your own circumstances and long-term aims. Reviewing your business and personal plans, considering how they could adapt to different outcomes and seeking advice where appropriate can help you prepare without acting on speculation.

To discuss your own situation ahead of or after the Autumn Budget, speak to your usual Evelyn Partners contact or book an appointment. To stay informed on the announcements as soon as they happen, register for our post-Budget webinar.