Rachel Reeves’ 2025 Autumn Budget confirms what many agency owners suspected: the overall tax take is going up, largely through “stealth” measures rather than headline rate hikes. The Office for Budget Responsibility now expects the UK tax burden to climb to around 38% of GDP, the highest level on record.
For agencies, whether you’re a creative, marketing, digital, design or PR business, this Budget has direct implications for:
- how you pay yourself as a director
- what you keep after tax on salaries and dividends
- how you reward and retain your team
- your longer-term exit and wealth plans
Below we’ve pulled out the key measures and what they mean in practice, plus the areas we think agency owners should review now and plan for over the next 2–5 years.
Income tax & dividend tax: “stealth” rises that squeeze directors
Threshold freeze extended
Income tax thresholds are being frozen until 2030–31, rather than rising with inflation.
For agency owners who typically:
- take a mix of salary + dividends, and
- see fees and wages rise over time
this “fiscal drag” means more of your income will fall into higher tax bands even if your real standard of living doesn’t feel much higher.
Dividend tax going up from April 2026
From April 2026, the basic and higher rates of dividend tax each increase by 2 percentage points.
That hits:
- owner-managed agencies where directors extract profits via dividends
- partners/shareholders in multi-owner agency structures
What to do now
- Model your total director pay (salary + dividends) for the next 2–3 years under the new rates.
- Review your salary/dividend mix – in some cases, it may make sense to slightly rebalance towards salary, pension or other benefits.
- If you were planning one-off large dividends (e.g. ahead of a sale or restructuring), timing will matter more – you’ll want the tax consequences mapped out well in advance.
Salary-sacrifice pensions: a big change for higher earners from 2029
A headline measure for business owners is the reform of salary-sacrifice pension schemes.
From April 2029, only the first £2,000 per year of salary-sacrificed pension contributions will remain exempt from National Insurance; contributions above that will be subject to both employer and employee NICs.
This matters for agencies because:
- directors and senior staff often use salary sacrifice to boost pension funding in a tax-efficient way;
- agencies with structured benefits packages (e.g. for senior creatives, account directors, senior leadership) may find the net benefit significantly reduced.
What to do now
- Identify who in your agency is using salary-sacrifice, and at what levels.
- Ask us to model the impact from 2029 – how much extra NIC will you and they pay?
- Start to think about alternative reward structures for key people (e.g. bonus schemes, equity/option plans, enhanced employer pension contributions outside salary sacrifice, etc.).
This isn’t an emergency for 2025/26 – but ignoring it until 2029 will be painful.
Savings & ISAs: less freedom for cash, more nudge towards investment
The Budget keeps the overall £20,000 ISA allowance, but from April 2027 at least £8,000 will have to be invested, rather than held purely as cash (with an exemption for over-65s). Property, savings and dividend income tax rates are also being increased by 2 percentage points.
For agency owners this is mainly a personal wealth planning issue:
- If you’ve been using cash ISAs as a low-risk buffer (for school fees, house moves, or future agency investment), the rules get tighter.
- Over time you may be nudged toward investment risk to use the full allowance.
What to do now
- Review how you’re currently using ISAs – especially if you like to keep things in cash.
- Consider how this interacts with your agency’s own cash reserves: what sits inside the business vs. in your personal name, and at what risk level.
Corporation tax & reliefs: rate capped, but reliefs less generous
The main Corporation Tax rate stays capped at 25% for the life of this Parliament, which gives some certainty.
However there are some less client-friendly tweaks:
- a reduction in the main writing-down allowance rate for capital allowances, trimming the tax relief you get on certain capital expenditure over time;
- reduced CGT relief on disposals to Employee Ownership Trusts (EOTs) – relevant for agencies thinking about EOT as an exit route.
For many agencies (which are people-heavy and asset-light), the biggest CT story is actually what’s happening in owners’ personal tax, not the company rate itself. But if you’re investing heavily in equipment, studio fit-outs or tech, the capital allowances change will nibble at relief.
What to do now
- For any major investment plans, get updated capital allowance projections before you commit.
- If you’ve been considering EOT as an exit or partial-exit route, it’s worth revisiting the numbers under the new CGT relief rules.
Capital gains & succession planning: exits get more expensive
There are some important longer-term changes for owners thinking about selling or passing on their agency:
- Business Asset Disposal Relief (BADR) CGT rate rises from 14% to 18% from April 2026.
- From April 2026, 100% Agricultural / Business Property Relief (APR/BPR) is capped at £1m (per person) for Inheritance Tax purposes, and pensions are to be brought into IHT from April 2027.
For a typical agency owner, the BADR change is the big one:
- if you’ve built a valuable business and hoped to sell with a chunk taxed at the lower BADR rate, that slice just got more expensive;
- if you were banking on generous BPR on your shares for IHT, the cap means larger estates will need more careful planning.
What to do now
- If an exit or partial sale was on your 3–5 year horizon, it’s time to talk through updated CGT calculations and deal structuring.
- Begin an estate and succession planning conversation – especially if your combined business and personal assets could exceed the new relief cap.
Compliance & digital reporting: MTD for Income Tax is coming
The Budget reiterates that Making Tax Digital for Income Tax (MTD ITSA) will begin from April 2026.
This is particularly relevant if you:
- run multiple businesses (e.g. agency + personal consultancy + property);
- have sole-trader side projects, freelance income or partnership income alongside your agency director role.
What to do now
- Make sure any non-company agency activities (e.g. side hustles, advisory work) are ready to be captured digitally.
- Speak to us about aligning all your cloud bookkeeping and app stack (Xero, Dext etc.) so MTD doesn’t turn into admin chaos.
So… what should agency owners actually do next?
Here’s how we’d break it down.
Actions to take in the next 3–6 months
1. Run a personal tax and cashflow review
- Project your salary, dividend and tax position for 2025/26–2027/28.
- Factor in threshold freezes, higher dividend tax and any other income streams.
2. Review your director remuneration strategy
- Salary vs dividends vs pension vs other benefits under the new rules.
- Check whether your current approach still lines up with your personal goals and the company’s cash needs.
3. Audit salary-sacrifice and benefits
- Identify who’s using salary-sacrifice pensions and at what levels.
- Sense-check your wider reward package in light of future NIC changes and higher personal tax rates.
4. Update your agency’s financial plan
- Re-run your forecasts and budgets with higher tax drag and slightly less generous reliefs baked in.
- Stress-test margins, particularly if you’re planning to add headcount or step up salaries to keep key staff.
Longer-term planning (1–5 years)
1. Exit and value-realisation strategy
- If you’re aiming to sell or transition ownership, revisit your timetable and plan around the higher BADR rate and EOT changes.
2. Wealth and estate planning
- Consider how your agency shares, pensions and property fit together for IHT – especially with BPR caps and pensions coming into scope.
3. Business model resilience
- With the tax burden rising, agencies that will thrive are those with:
- strong recurring revenue (retainers, subscriptions),
- good pricing discipline, and
- a clear eye on utilisation and margin after tax.
How Plus Accounting can help agency owners navigate this Budget
The Budget doesn’t change what makes a great agency – strong client relationships, sharp work, a motivated team – but it does change how much of your hard-earned margin you keep.
For agency owners, the winning response is proactive, joined-up planning across:
- remuneration and benefits
- business and personal tax
- savings, pensions and property
- exit and succession
If you’d like us to:
- walk through what this Budget means for your specific agency and your household, or
- sense-check your director pay, forecasting, exit or succession plans
We’re here to help you translate the announcements from the Budget into clear decisions and next steps.
Author: Luke Thomas, Managing Director, Plus Accounting
Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.
Date Published: 2 December 2025