By Jim Leeves Oct 2026
Can we be honest about the Budget? 🤔
Stability is welcome. No big changes to income tax, National Insurance or VAT, and being able to plan is worth something. We all like being able to make a plan…
But stability isn’t the same as ambition. For years now, governments of both colours have played it safe. Small tweaks, plenty of pre-Budget headlines, and very little that’s genuinely bold and very little offered from the opposition as to how they’d do things differently. We think there’s a real opportunity still on the table.
And as for freedom, relief and delight – it’s been a while since there was much of that in a Budget.
Smoke and mirrors
Headline rates stay put, but the overall personal tax burden keeps creeping up. This year dividend tax has risen by 2%. From April 2027, tax on savings and rental income rises by 4%. Frozen thresholds pull more people into higher bands each year.
None of this is new. It’s the path of least resistance, and it has been for a long time.
But, hey, a manifesto pledge has been kept (kind of?) and a lot of people will get a £100 offset against their energy bill this winter. Easy headlines and votes sorted for next time?
The cost of hiring
Employing people has become steadily more expensive. Employer National Insurance is now 15%. Corporation Tax tops out at 25%. And the National Living Wage rises again.
Here’s what that looks like. From April 2027, one person aged 21 or over, on the National Living Wage, working 40 hours a week, costs:
- Wages: £27,477
- Employer National Insurance: £3,372
- Workplace pension (3%): £637
- Total: about £31,500 a year 💸
That’s before holiday cover, training, a laptop or a desk to sit at.
For a small business weighing up its first or next hire, that’s a big decision. We’d love to see it made easier.
Young people
We didn’t hear anything new on student debt, or on how we help young people learn, train and get on.
At the same time, AI is changing roles massively. Many of the entry-level jobs that used to be the first rung on the ladder are being reshaped, or disappearing altogether. 🤖
So are we asking young people to take on £50k to £60k of debt, only for there to be no-one in a position to give them a job? That feels like a question worth tackling head on.
Reducing the cost of university tuition whilst incentivising employers should surely be top of the agenda.
Making tax digital (difficult?) and paying tax more often
From 2029, payments on account become smaller and more frequent. The government are consulting further on this.
Alongside Making Tax Digital, the direction is clear: report more often, pay more often. We’d love to see the same energy go into making things simpler for the people doing the paying.
Is there an upside to all this reporting or are we just spending a lot of time doing needless admin?
What could make a difference
We don’t have all the answers. But here’s where we’d start: 👇
- Raise the VAT registration threshold from £90,000 to £200,000, so small firms can grow without a cliff edge
- Reduce Corporation Tax for Micro and UK-owned SMEs to a fixed 20% rate (or 15% to match the minimum rate for large multinationals if you wanted to go really wild!)
- Optionally let Micro companies use the cash basis to prepare their accounts, reducing the compliance burden
- Reduce Employer National Insurance for SMEs, and introduce reduced rates that reward hiring under-30s to build for the future
- Properly overhaul student finance making the cost of attending University not a tax for life as it is now for many
- Lift the higher rate threshold for income tax to £70,000 in line with where it should be thanks to inflation
- Rethink whether basic rate taxpayers should be brought into Making Tax Digital letting them focus on growing their businesses and paying more tax
We don’t think these are particularly radical. But together, they’d send a clear message: if you want to build something, we’re behind you.
For us, the opportunity is still there. It just needs leaders bold enough to make it happen. 💡
Where we stand
At Shapes, we champion better businesses. Ones that are digitally enabled, make the world a little better, and give young people a real chance to enjoy meaningful work. 💛
Do you feel the same? Drop us a message. We’d genuinely love to hear how this week’s Budget has landed for you.
And if you want a breakdown of all the key announcements and what action you need to take check out Chris’s blog here
