It’s budget day, and the news has already become an endless cycle of what “might” be ahead, with the chancellor Rachel Reeves undoubtedly facing some tough decisions in the face of prevailing economic headwinds and a reported £20-30bn financial black hole to be filled.
In truth, we don’t know what Reeves has in store, and she’s not made things any easier for forecasters by bracing us for income tax rises in a hastily arranged press conference recently, then backpedalling after better-than-expected numbers from the OBR suggested the hole may be closer to £20bn.
That hasn’t stopped the bulk of budget chatter being about tax changes, however. Tom Klouda, private capital tax partner at BDO in the North West, gave Prolific North a more positive spin on how Reeves could actually help the sector, with energy reduction incentives top of the list: “In our most recent Economic Engine survey of 500 mid-sized business leaders, 26% of North West companies told us the single tax measure that would most support their business in 2026 was targeted incentives to cut energy/input costs, such as efficiency grants. This was followed by a simplification or reducing business rates (24%) or improving capital allowances (20%), he explained.
He added that the survey revealed that three in five (59%) said that if this budget does not include measures that support their business, they’ll be forced to slow or pause expansion plans next year, so what might we see there?
“The pace of reform to business rates has been slow but changes this year will see businesses that use large, high value premises pay higher rates, with smaller high street premises retaining some business rates discounts.
“It seems likely that further changes to increase business rates for warehouses used by online businesses and a gradual reduction in discounts for smaller businesses will continue in 2026 and beyond. However, the Government’s plan to phase down support for the high street retail and hospitality businesses may be delayed if this is expected to have a significant negative impact on inflationary pressures and the cost of living for consumers.
“It is also rumoured that the Chancellor is considering extending the scope of the UK’s 100% first year capital allowance rules so that the purchase of patents and licences qualifies for relief in the same way as plant and machinery does. This would be of significant benefit to many businesses operating in the eight sectors targeted in the Government’s industrial strategy.”
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Unsurprisingly, tax was also front and centre for Mike Parkes, technical director at Greater Manchester-based online tax tool GoSimpleTax, which specialises in self assessment and tax advice for the self employed and freelancers.
He said: “Every budget brings new uncertainty and added complexity to the tax system. The basic and higher rate thresholds for income tax have already been frozen until April 2028, bringing more self-employed people into the income tax net.
“Extending this freeze to the end of the Parliament could generate substantial additional revenue through fiscal drag as incomes continue to rise but leave individuals worse off and with higher tax liabilities.
“Our advice is for self-employed people to get clarity to see where they stand. Calculate what you earn from self-employed income and salary and make sure you account for your expenses.
“[For self-employed people] this Budget comes at the same time HMRC is sending out more than 200,000 letters to people who will be impacted by changes to the tax system in April next year. With only five months to go until sole traders and landlords with qualifying income over £50,000 will be required to use Making Tax Digital (MTD) for Income Tax. HMRC has advised that customers will need compatible software that can give you real-time estimates of your tax bill throughout the year, helping with cash flow planning and taking the pressure of an annual self-assessment return.”
Rob Illidge, CEO at branding tech specialist Vulse had some ideas about what could help his company through the coming months: “As a UK tech founder, the budget is always a moment to think about the future and how it will affect a growing business like ours,” he blogged on LinkedIn.
“Here’s what I’m hoping for and expecting to see from the Autumn Budget:
1) Meaningful relief on employer NI to help growing companies hire faster and retain talent.
2) Continued (and expanded) R&D tax credit support, especially for data-driven SMEs like us.
3) Incentives for export and global expansion, helping UK SaaS compete internationally.
4) Cyber and data security funding to support responsible AI innovation and compliance.
5) Skills & digital training investment to close the technical talent gap.”
Illidge also helpfully broke down how these measures could assist growing SaaS businesses:
Stronger R&D support accelerates the development of our central AI model.
Hiring incentives would allow us to expand our engineering and customer success teams sooner.
Stability and clarity in tax policy help us plan long-term product investment.
He added: “The boy scout in me says always be prepared so we’re building flexible financial models for multiple budget outcomes, whilst strengthening partnerships with universities (including Manchester Met) to reduce reliance on external funding cycles.
We’re also continuing to diversify our tech stack across AWS/Azure for resilience, regardless of policy shifts.
The UK has world-class founders, engineers and creativity, the right support can turn that into world-class scale.”
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Steve Price, MD at Manchester business advisory BWP Inspired was clearly concerned that founders and small businesses, particularly in the ecommerce and digital sectors, would be picking up the tab as Reeves seeks to plug her black hole without breaking manifesto pledges to “working people.”
He took to his Freedom Fix channel to explain who he thinks should really be under the cosh: “Major corporations using transfer pricing to avoid UK tax. The ultra-wealthy parking assets offshore. Financial engineering that lets massive companies pay minimal tax despite huge UK revenues,” he suggested.
“However, it’s far easier politically to target business owners and landlords. We don’t have the PR machines or the lobbying power. I’ve worked with business owners across manufacturing, e-commerce, SaaS, and professional services. The consistent thread? They’re already stretched thin. Rising costs, squeezed margins, constant pressure to innovate and compete.
“The idea that they’re somehow insulated from economic hardship is, frankly, economically illiterate.”
Price also had some clear ideas of what he would like to see from tomorrow’s budget: “Genuine wealth taxes. Higher rates on passive investment income. Closing the loopholes major corporations exploit daily,” he suggested.
“Not penalising the risk-takers who keep the economy moving. Because when you over-tax mobile capital and entrepreneurial talent, you don’t get more revenue. You get capital flight. Business closures. Reduced innovation. A shrinking tax base. The exact opposite of growth.
“If you’re running a business right now and feeling the squeeze, you’re not imagining it. And you’re definitely not the one with the broadest shoulders in this equation.”
