Before the Budget: what company directors can do now

The Chancellor delivers the Autumn Budget on Wednesday 28 October 2026, usually starting at around 12:30pm, straight after Prime Minister's Questions. Until then, nothing has been announced, and anything predicting specific tax changes is speculation. The sensible approach is not to guess, but to make sure you are making the most of the rules you know now.

Why acting on rumours is risky

Most tax changes announced in a Budget take effect from the start of the next tax year, on 6 April. But some apply straight away. At the Budget on 30 October 2024, the main rates of Capital Gains Tax rose from 10% and 20% to 18% and 24% from that same day. A decision rushed through on a rumour can backfire, and so can one delayed on a rumour that turns out to be wrong.

1. Know where you stand on dividends

With the usual £12,570 salary, dividends of up to £37,700 are taxed at 10.75% (after the £500 dividend allowance); above that, the rate is 35.75%. Check how much you have taken so far this tax year. For example, a director who has taken £30,000 has £37,700 − £30,000 = £7,700 left in the basic rate band. Here is the tax on that same £7,700 of dividends, inside the band and above it:

• Inside the band: £7,700 × 10.75% = £827.75 of tax.
• Above the band: £7,700 × 35.75% = £2,752.75 of tax.
• The difference: £2,752.75 − £827.75 = £1,925.00, which is 35.75p − 10.75p = 25p on every £1.

So if you still have room in the band, taking dividends up to the top of it, and stopping there, keeps them at the lower rate.

The tax year runs until 5 April 2027, so there is time. The point is to plan the rest of the year's dividends deliberately rather than by habit.

2. Use pension carry forward before it expires

Unused pension annual allowance can be carried forward for three tax years. That means any allowance you did not use in 2023/24, up to £60,000, can only be used until 5 April 2027; after that, it is gone. Carry forward only applies once this year's £60,000 allowance has been used, and you must have been a member of a registered pension scheme in the year you are carrying forward from. Pensions have been a regular Budget topic, so it is worth knowing your position now. Our pension guide explains how company contributions work.

3. Check the £100,000 trap

Once your income passes £100,000, you lose £1 of your Personal Allowance for every £2 above it, until it has gone completely at £125,140: (£125,140 − £100,000) ÷ 2 = £12,570, the whole allowance. Income in that band is taxed at a very high effective rate. If your salary and dividends are heading into it, having the company pay into your pension instead of paying you more can keep your income below £100,000.

4. Tidy your director's loan account

If you owe your company money through your director's loan account, and it is not repaid within nine months of the company's year end, the company pays a temporary tax charge on it. A loan of more than £10,000 at any point can also be taxed on you as a benefit. Check the balance before your year end, whatever the Budget says.

5. Planning to sell? Get advice before you commit

Business Asset Disposal Relief cuts Capital Gains Tax on selling a qualifying business to 18%, instead of the 24% higher rate, on up to £1 million of gains over your lifetime. Any gain above that £1 million is taxed at the normal rate. For example, a higher rate taxpayer who sells their company for a gain of £1.2 million would pay:

• On the first £1,000,000, with the relief: £1,000,000 × 18% = £180,000.
• On the rest, £1,200,000 − £1,000,000 = £200,000, at the normal rate: £200,000 × 24% = £48,000.
• Total: £180,000 + £48,000 = £228,000, compared with £1,200,000 × 24% = £288,000 without the relief.
• The saving: £288,000 − £228,000 = £60,000. That is the most the relief can save at today's rates: £1,000,000 × (24% − 18%) = £60,000.

These figures leave out the £3,000 tax-free allowance for capital gains, which would reduce the bill slightly. Capital Gains Tax changed on Budget day in 2024, so if a sale is close, speak to us before you exchange contracts.

6. Time big purchases sensibly

The Annual Investment Allowance lets a company deduct up to £1 million a year of qualifying equipment and machinery from its profits in full. Relief follows the accounting period in which you buy, so if you are planning a significant purchase anyway, buying before your year end brings the tax saving forward. Buy because the business needs it, not for the tax alone.

What not to do

• Do not pay large extra dividends in a rush because of a rumoured rate rise. If the rumour is wrong, you may simply have paid more tax sooner.
• Do not delay decisions you would otherwise make now, in the hope of a cut that may never come.
• Do not act on headlines. Wait for the official documents, which are published on Budget day.

After the Budget

We will publish our breakdown of what the Budget means for limited companies and their directors on Budget day, with every figure checked against the official documents. Then we will review each client's salary, dividends and pension plans for 2027/28 in light of what has actually changed.

Common questions

Sources: HMRC guidance on GOV.UK for Business Asset Disposal Relief, the pension annual allowance and tax on dividends. Budget date confirmed by HM Treasury. Figures correct for 2026/27 and reviewed October 2026. General guidance, not personal advice.