‘Budget tax hikes will hit small businesses – but good news too | Personal Finance | Finance
Young entrepreneur Grace Hardy said the Budget would make it harder for young people to build wealth, especially those keen to start businesses. He decided to increase the basic income tax on gains from property, savings and dividend income by 2%.
This will affect savers, homeowners and those investing in shares outside the tax-free Stocks and Shares ISA allowance.
Grace, 22, CEO Hardy AccountingHe said this was also bad news for young people starting businesses. “This will impact owners of small companies that rely on dividends or own investment properties.”
Grace said reducing the Cash ISA allowance from £20,000 to £12,500 for people under 65 would also make it harder to build personal savings and create a financial cushion for emergencies.
He is also concerned about the Chancellor’s decision to raise the minimum wage again; Workers aged 18 to 20 are getting an 85p rise to £10.85. “While good for employees, this will add approximately 5% to 7% to staff costs for many small businesses already operating on tight margins.”
Overall, he described the Budget as a “mixed bag”. “The introduction of a 40% first year allowance for new businesses is an outstanding measure that makes it easier to write off investment costs in the first year, which is crucial when cash flow is tight. Combined with free apprenticeships for those under 25, this creates real opportunities to invest in young entrepreneurs.”
“However, halving the CGT deduction for employee ownership trusts and lowering Cash ISA limits could impact exit planning as well as personal savings.”
Hardy added: “Despite these pros and cons, key changes not mentioned in the statement include mandatory business systems integration fed into accounting software, mandatory invoicing from 2029 and stricter VAT and self-assessment procedures.
That’s why it’s vital to take advantage of apprenticeship offers and investment incentives now, rather than when things are going to get even tougher than they already are.”
But he warned there would also be more bureaucracy. “From 2026, we face mandatory business systems integration feeding directly into accounting software, followed by mandatory e-invoicing from April 2029.”
Smaller firms also face stricter VAT and self-assessment penalty regimes, and earlier tax payments through PAYE for mixed-income earners. “These represent a fundamental shift in how small businesses operate and report.
Hardy added that the administrative burden and potential software costs can be significant, especially for microbusinesses and individual merchants who are not ready for this level of digital transformation.
