Our monthly business news highlights themes affecting business owners right now, including economic conditions, planning priorities, and areas where businesses are adapting and building resilience.
Looking ahead to 2026
Reflections for business owners
As we move through the early part of 2026, you may already be reflecting on how the past year unfolded in your business.
Your expectations may have been exceeded in some areas. Perhaps you found a new source of revenue that grew faster than you anticipated, or you had a new customer relationship that really took off. On the other hand, you might have found you were limited by rising costs, difficulties in finding staff, or changes in what your customers expect.
The economy itself has been far from predictable. While inflation does seem to have eased slightly in recent months, higher wage costs and shortages in skills have been significant factors for many businesses.
You may also be thinking about how the business has contributed toward your broader goals. For instance:
• Did it grow in the ways you planned?
• Did it give you the flexibility, resilience or capacity to pursue new opportunities?
These questions perhaps show where the business supported your ambitions, or where it might have held you back.
With these thoughts in mind, this point in the year can provide a natural opportunity to consider some of your strategic priorities for 2026.
What can you do to build on this year?
For instance, did you notice any patterns emerging over the past twelve months in which of your products or services truly delivered growth for your business? Or which customer or client relationship were the most valuable? Where did your business feel most stretched by things like rising costs, difficulties in finding staff, or changes in customer expectations?
Your observations may well help you in thinking about what your priorities could be for the year ahead.
How can you maintain resilience in the business?
The wider economic environment and day-to-day pressures are likely to continue shaping the decisions you make in 2026.
Have you found areas where the business has shown resilience in dealing with rising costs, maintaining customer loyalty, or responding to opportunities quickly?
These are strengths you can really continue to build on.
What could be your goal for 2026?
You might be thinking about growing your business in 2026. For instance, reaching new customers in different areas, adding to your team, or investing in new technology to make your business run more efficiently.
Or maybe you see value in consolidating the gains you made in the past year, concentrating on what has delivered the strongest returns and taking a leaner, more focused approach in 2026.
However you are thinking at this time of year, we hope that you are able to take some time to reflect on recent progress and plan ahead. The past year has required a great deal of hard work and any opportunity to pause and reset is well deserved.
We look forward to supporting you in 2026, helping you to build on the progress you have made, and seeing what the year brings for your business.
Dividend Tax Rates Rising in April 2026
What Does It Mean for Profit Extraction?
The recent Budget confirmed that dividend tax rates will increase from April 2026. The ordinary and upper rates of dividend tax will both rise by 2%.
For many small and medium-sized companies, dividends are central to how owners pay themselves. With the tax rates rising, your pay and profit extraction strategies will likely need a fresh look for 2026/27.
What’s Actually Changing
From April 2026:
• The dividend ordinary tax rate increases from 8.75% to 10.75%.
• The dividend upper tax rate rises from 33.75% to 35.75%.
• The dividend additional tax rate remains at 39.35%.
• The tax-free dividend allowance remains at £500
The rate you pay on your dividends will depend on the amount of your total income and your other sources of income. These rates apply only to dividends – salary, bonuses and savings are taxed differently.
What the Changes Mean for Profit Extraction
As dividends have usually offered a tax advantage over salary, many directors/shareholders adopt a mix of a low salary and higher dividend income.
However, with dividend tax rising, the balance is shifting slightly. The best extraction strategy for one director may look quite different for another, especially when factors like income levels, other earnings, pensions and company profits are taken into account.
It may therefore be worth reviewing:
• Whether a different mix of salary and dividends is now more efficient for you.
• Bringing forward dividends before April 2026, where appropriate.
• The impact on cash flow if you switch to taking a larger salary instead of dividends.
If you want to review how you take money from your company, or see how the upcoming dividend tax changes could affect your take-home pay, get in touch. We can guide you through the options and help you make sure your remuneration is as tax-efficient as possible.