It’s a strange interim time for government, with Keir Starmer and Rachel Reeves’ policies and strategies continuing to unfold despite the appointment of a new leader and Chancellor and a new cabinet. For now they are in post but largely absent from view, except in news interviews, until parliament returns in September.
In the meantime, business owners have been getting to grips with existing, and increasingly onerous, changes. Amended reporting procedures have been introduced to improve transparency in directors’ incomes and ensure HMRC collects the correct amount of tax. Increases in taxation that started in April 2026, with NICs due on all salary payments to directors over £5,000, have now expanded further with an extra two percentage points on both the basic and higher rates of tax on dividends. Loan rates within a close company to a director have also acquired two more percentage points and terms of reporting now require much more detail about all directors’ interests across multiple businesses.
It can often appear tempting to set up on your own, but although self-employment can be fulfilling, there are downsides. While it’s widely understood that people across the board are still not saving enough for retirement, those outside of the payroll are particularly affected. Self-employed workers are falling way behind compared to their employed peers, lacking the easy option of a default plan and employer boosted savings, they are choosing instead to prioritise other funding needs. However, they are missing out on tax relief of up to 45% on pension savings by skirting this issue and potentially in line for a difficult later life.
Employers must prepare for a change in legislation that will allow employees to claim unfair dismissal following six months of employment. This change is coming in from January 2027 and so probation periods will also be restricted to a maximum of six months from that point. While a fixed-term contract of six months will not be affected by this change, any fixed-term contracts over six months could be subject to scrutiny over fair dismissal.
Amid much coverage of the difficulties facing graduates looking for jobs, university students during the years 2012/13 to 2022/23 have been dealt a particularly poor hand by the higher education system when it comes to student loans. Once an income threshold is passed (which varies according to the student loan plan scheme individuals have signed up to) graduates must start repaying their loans, at a rate of 9% of income above that threshold. What is particularly punitive about the Plan 2 scheme, affecting those studying between those academic years, is that the interest accumulating on their loans is variable, comprised of the RPI plus 3%, meaning that when inflation is high, their interest rate also increases. That income threshold has also now been frozen for three years from April 2026, further eroding that cohort’s ability to accumulate wealth.
We discuss these issues and other stories in our latest newsletter.