It’s the calm before the storm, except the calm doesn’t feel reassuring. When it comes to this year’s budget, many UK businesses are deferring decisions and waiting to see what the state of play will be.
Our clients working in M&A, financial restructuring and insolvency are navigating a tense holding pattern. Deals in certain sectors are being delayed, valuations are under pressure, and contingency planning is ramping up. The UK is bracing for potential shifts in tax policy, capital gains treatment, and regulatory scrutiny that could reshape the dealmaking landscape and the financial stability of businesses overnight.
The most essential thing businesses are looking for in next week’s budget is stability. However, there are five key questions we still have.
1.Will the income tax u-turn mean a corporation tax backtrack?
Reeves’ pre-budget speech seemed to be laying down the groundwork for income tax rises, the first since 1975. A stark deviation from the promises of Labour’s successful manifesto. Then, on the 13th November, the Financial Times announced that these plans had been dropped. So, the £10bn a year the income tax proposal would have risen must now be found elsewhere.
One such place where those funds could be found is through corporation tax – but this would be, whilst not as incendiary, still a revision of previous promises. The Corporation Tax Roadmap was a major part of last year’s Budget, offering a positive outlook for businesses. There was certainty with the R&D tax relief and the corporation tax headline rate remaining constant. But businesses are still preparing for the possibility of Corporation Tax (CT) increases, even if the Treasury suggests otherwise.
2. Will NIC changes lead to a snap recruitment cycle?
If, as expected, National Insurance changes are made, employers will reassess how they pay their employees. Bonuses may be moved forward, pay could be restructured, and reward packages might be reworked as businesses look to be cost-efficient. For finance talent, that could lead to looking for a move sooner than planned, as employees look to find a favourable package before the changes take effect.
And more broadly, any significant changes to NIC would represent a major change for payroll teams. Early clarity to be able to prepare is essential for our clients.
3. Will an exit tax emerge?
Capital Gains Tax saw an increase in last year’s budget, and speculation suggests further rises could follow. However, HMRC’s own reports suggested an increase of 10% would actually cost the Treasury, as individuals would be less inclined to sell. So, as with the income tax issue, a workaround must be found.
A broader “wealth tax” is something Reeves has frequently shot down, but if there’s any theme emerging here, it’s that something has to give. The “exit tax” proposal is one such suggestion, a policy that would impose a 20% levy on unrealised gains from business assets when an individual stops being a UK tax resident, regardless of whether those assets are sold at time of departure.
Many of the UK’s peers already have similar systems. Italy is the only other country in the G7 to not have a “settling up tax”. For finance leaders, such a change could influence year-end planning, incentive structures, relocation timelines, and ultimately hiring decisions.
4. Will the business rates reform be calibrated correctly?
Businesses are bracing for significant changes to the business rates system. Tightening compliance measures and adjustments to the existing multiplier structure have long been speculated, and the question many have isn’t whether change will happen, it’s how much change they can expect. For the Chancellor, the challenge is getting the balance right: enough meaningful change to create fiscal headroom, but not so much that businesses lose confidence or tipping vulnerable sectors into distress.
Will that calibration be right? Insolvency professionals will be able to tell rather quickly.
5. Will HMRC enforcement become the stealth tax-rise many businesses aren’t preparing for?
The government is counting on raising £7.5bn through anti-avoidance measures, with a particular focus on phoenix businesses. But scrutiny in one area often spills into others, and many legitimate firms fall into potentially grey areas. For those in restructuring, the worry is whether this pressure will extend beyond blatant avoidance into a tighter interpretation of the present rules, in effect, increasing the tax rate without altering headline rates.
Stricter enforcement wouldn’t be a new tax in practice, but to many firms operating with tight margins, it may feel like one.
Currently, this is all just speculation; the real work will begin in the days, weeks and months after November 26th. Gambit Search will have a post-Budget article to provide analysis and provide answers to the questions we have here.
For now, you can browse our current roles or upload your CV and one of our expert recruiters will be in touch. Or if you’re looking to find talent as one of our clients, you can get in touch with our team by calling 0203 633 2500.
