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Young entrepreneur Grace Hardy said the Budget will make it harder for young people to build wealth, especially those keen to start businesses. She picked out the decision to increase basic rate income tax by 2% on earnings from property, savings and dividend income.
This will hit savers, landlords and those who invest in equities outside of the tax-free Stocks and Shares ISA allowance.
Grace, 22, chief executive of Hardy Accounting, said it’s also bad news for young people starting businesses. “It will hit owners of smaller companies who rely on dividends or have investment property.”
Reducing the Cash ISA allowance to from £20,000 to £12,500 for people under 65 will also make it harder to build personal savings, Grace said, and create a financial cushion for emergencies.
She’s also concerned about the Chancellor’s decision to increase the minimum wage again, with workers aged 18 to 20 seeing an 85p rise to £10.85. “While good for workers, this will add around 5% to 7% to staff costs for many small businesses already operating on tight margins.”
Overall, she called the Budget a “mixed bag”. “The introduction of a 40% first year allowance for new businesses is a standout measure, making it easier to write off investment costs in year one – crucial when cash flow is tight. Combined with free apprenticeship training for under 25s, this creates real opportunities for young entrepreneurs to invest.”
However, the halving of CGT relief for employee ownership trusts and the reduction in Cash ISA limits may impact exit planning as well as personal saving.”
Hardy added: “Despite these pros and cons, the significant changes not mentioned in the statement include mandatory business systems integration feeding into accounting software, compulsory invoicing from 2029 and tougher VAT and self assessment procedures.
It’s vital therefore to take advantage of the apprenticeship offers and investment incentives now, rather than later, when things will get more difficult than even now.”
But there will be more red tape too, she warned. “From 2026 onwards, we’re facing mandatory business systems integration feeding directly into accounting software, followed by compulsory e-invoicing from April 2029.”
Smaller firms also face tougher VAT and self-assessment penalty regimes, and earlier tax payments through PAYE for mixed-income earners. “These represent a fundamental shift in how small businesses will operate and report.
The administrative burden and potential software costs could be substantial, particularly for micro-businesses and sole traders who may not be ready for this level of digital transformation, Hardy added.
