It is the morning of 6 April, the first day of the new British tax year, and I have spent the last hour staring at a payroll spreadsheet that has, by some entirely legal arithmetic, just deducted another £1,360 a month from the operating margin of our smallest subsidiary.
We have not hired anyone new. We have not given anyone a pay rise. We have not bought a new piece of kit. The state has, simply, in the manner of a particularly assiduous Italian waiter, returned to the table to refill our glass with a wine we did not order.
Welcome to the British New Tax Year. It is a bit like a New Year’s Eve party, if New Year’s Eve had been organised, in a hurry, by your accountant.
Let us tot up what has actually changed today, on a payroll for a fifteen-person company with an average salary of £42,000. Employer National Insurance, having gone up to 15 per cent in April 2025, has not gone down. The threshold remains depressed. That continues to cost the company, on present figures, around £19,500 a year more than it cost two years ago. The minimum wage has gone up another 4.6 per cent. The apprenticeship-levy contribution, despite the “Growth and Skills” rebrand, still bites at the same point. The dividend allowance, having been £5,000 a few years ago, sits this morning at £200, with the Chancellor briefing, quietly, that she would like, eventually, to abolish it. The capital gains rate on shares has crept up by another point.
The business-rates revaluation, in its glorious 2026 manifestation, has now landed properly. For our hospitality client in central Bristol, the bill has gone up by 19 per cent. For our small manufacturer in Wiltshire, by 7. The promised reform of the rates multiplier, which Labour campaigned on in 2024 and which has been kicked, gently and apologetically, down a series of consultations, has not, in fact, materialised.
Inheritance tax on agricultural and business property, which used to be a relatively quiet corner of the British tax code, has been narrowed in three successive moves under different headings. The cumulative effect is that a perfectly ordinary family business, turnover under £10 million, two locations, twelve people, is now, on its founder’s death, a tax event that consumes between 20 and 28 per cent of the going-concern value. There is no reasonable way to plan for this without setting up structures whose primary function is to mock the spirit of the legislation, which is what every reasonable person now does, and which is, again, why the country has the productivity figures it has.
I am, before this column slides into pure complaint, not unsympathetic to the bind every Chancellor faces. Demographic pressure is real. Defence procurement is large. Adult social care is unsolved. NHS productivity is, by international comparison, an embarrassment. There are, eventually, only so many places to find money. I get all that, and I have written it before in this magazine.
What I object to is the silent, year-on-year, ratchet-and-pawl character of the way British SMEs and middle-tier earners now experience tax. There is no rally. There is no raised voice. There is no front-page coverage. There is just, every April 6, another spreadsheet, another silent £19,500 here, another £4,200 there, and the polite Treasury press operation insisting that no “tax rate” has been raised. Technically true. Practically a fiction.
I would also note, for any future Chancellor reading: there are limits. Limits to what fifteen years of stealth tightening can be done to an SME sector before that sector reorganises itself in ways the Treasury does not enjoy. Limits to the number of family businesses that will pay another generation’s worth of inheritance tax before they sell to a Dutch trade buyer. Limits to the number of British software founders who will spin up their next venture in Wilmslow rather than Wilmington. Each year, the limit moves a bit closer.
What this morning has reminded me, on its first cup of coffee, is that we are now in the part of the British tax cycle where stealth is the policy and the policy is denial. We will pretend, in newspapers, that nothing has changed today. We will pretend, on the Treasury website, that the changes are minor. We will, in the supplementary OBR fiscal note, find a footnote on page 87 that says the cumulative incidence on the SME sector in this Parliament has been the largest in any Parliament since 1976. Nobody will read it. Nobody, apparently, in Whitehall has.
Happy New Tax Year. The boot, if you were wondering, has been lifted only to come down again. The Italian waiter is back. The bottle, you’ll notice, is no longer free.
