The Autumn Budget 2025 delivered one of the most consequential tax shifts UK family business owners have seen in over a decade. Dividend taxes are rising, inheritance tax relief is being restricted, and the once-popular Employee Ownership Trust exit route has lost its most powerful advantage. For founders, this Budget wasn’t just another policy update — it fundamentally changes how you extract profits, pass on company value, and plan a future exit. As the UK tightens its tax landscape, many high-net-worth entrepreneurs are now re-evaluating their long-term strategies and considering international, zero-tax jurisdictions like Dubai to protect their wealth and secure multi-generation continuity.

60-Second Quick Highlights For You

Here’s the entire Budget impact on family businesses in under a minute:

• Dividend tax rises 2% from April 2026 for basic and higher-rate taxpayers.
  
• Additional-rate dividend tax stays at 39.35%, meaning salary may now be more efficient.
  
• Unlimited Inheritance Tax Business Relief ends 5 April 2026.
  
• A new £1 million per-person allowance applies from April 2026, transferable between spouses.
  
• Business value above allowances faces 20% IHT (half the usual 40%).
  
• Employee Ownership Trusts lose their 100% CGT exemption — now only 50% of gains are tax-free.
  
• The UAE remains a 0% personal tax, 0% CGT, 0% IHT jurisdiction for entrepreneurs seeking long-term wealth preservation.
  
• Early planning (before April 2026) is essential for tax efficiency, succession, and exit strategies.
  

The UK’s Autumn Budget 2025 Just Rewrote the Rulebook for Family Businesses — Here’s What Founders Need to Do Now

If you run a family business in the UK, the Autumn Budget 2025 wasn’t just another fiscal announcement — it was a fundamental reshaping of how you extract profits, pass on wealth, and exit your company.

Dividend tax is rising. Inheritance tax reliefs are being restricted. And one of the most attractive exit strategies for founders — the employee ownership trust — just became dramatically less efficient.

For many entrepreneurs, the message is clear:
The UK is becoming increasingly expensive for wealth retention, just as international alternatives like the UAE remain zero-tax and compliant.

Let’s break down what actually changed — and what this means for your next move.

1. Dividend Tax Increase from April 2026 — What It Means for Family Business Owners

One of the most immediate impacts of the Autumn Budget 2025 is the 2% increase in dividend tax for basic- and higher-rate taxpayers from 6 April 2026.

Who Is Affected?

Anyone taking:

• Dividend income
  
• Property income
  
• Savings income
  

But the biggest group hit?
Family business owners who rely on dividends instead of salary.

Action Window Before 5 April 2026

Because dividend rates rise in 2026, there is a limited opportunity to extract profits at the lower rate now.

Why Dividends Still Matter

Even after the rise, dividends remain more tax-efficient than salary for:

• Basic-rate taxpayers
  
• Higher-rate taxpayers
  

The gap narrows — but doesn’t disappear.

Additional-Rate Taxpayers

No change: dividend tax remains at 39.35%.
For founders at this level, salary or bonuses may now be more efficient for extraction.

2. Inheritance Tax for Family Businesses — A Major Change from April 2026

Until 5 April 2026, family businesses enjoy 100% Business Relief, meaning trading companies can be passed on IHT-free regardless of value.

That is about to change.

The New £1 Million Allowance

From 6 April 2026:

• Each individual receives a £1 million Business Relief Allowance.
  
• Value above £1 million is taxed at 20%, half the standard 40% IHT rate.
  

For most family businesses valued above £1 million, this introduces a significant future tax cost.

Transferability Between Spouses

The allowance can now be shared between spouses or civil partners, creating up to:

• £2 million of protected business value for couples
  

Planning Implications

Families must review share ownership to avoid losing the second allowance.
For example:

• If one spouse owns 100% of shares and dies first, the second allowance might be wasted.
  

Restructuring before April 2026 is essential.

3. Employee Ownership Trusts (EOTs) Just Became Less Attractive

For years, EOTs offered founders a powerful tax-free exit. That benefit has now been cut dramatically.

Old Rule (Before 26 November 2025)

• Selling shares to an EOT allowed for a 100% CGT exemption.
  

New Rule (From 26 November 2025)

• Only 50% of the gain is exempt.
  
• BADR and Investors’ Relief cannot reduce the remaining taxable gain.
  
• Remaining 50% is taxed at standard CGT rates.
  

Holdover Relief Option

Owners may pass the gain into the trust, but:

• Trustees will owe CGT when they later sell shares
  
• This can create long-term liquidity problems
  

Real-World Impact

EOT exits are now far less appealing.
Founders must reassess:

• Third-party sales
  
• Management buyouts
  
• Family succession strategies
  

Why UK HNW Founders Are Looking at the UAE (Especially Now)

With dividend taxes rising, IHT relief reducing, and CGT advantages shrinking, UK entrepreneurs are facing:

• Higher tax leakage
  
• Reduced extraction efficiency
  
• Increased succession tax exposure
  
• Fewer tax-efficient exit structures
  

Meanwhile, the UAE offers:

• 0% tax on dividends
  
• 0% CGT
  
• 0% personal tax
  
• No inheritance tax (structurable via DIFC Foundations)
  
• Re-domiciliation options
  
• Full foreign ownership and asset protection
  

The contrast has never been clearer.

The Dubai Shift Framework: How UK Founders Can Restructure for Tax Efficiency

Step 1 — UK Statutory Residence Test (SRT) Planning

Establish non-UK tax residency efficiently and compliantly without triggering UK anti-avoidance rules.

Step 2 — UAE Residency Setup

Secure residency via:

• Golden Visa
  
• Business
  
• Employment
  
• Property investment
  

This sets the foundation for 0% personal tax.

Step 3 — Corporate Structuring

Depending on business goals:

• UAE Free Zone Company
  
• UAE holding company
  
• UK company re-domiciliation
  
• IP transfer to a zero-tax jurisdiction
  

Step 4 — Banking & Capital Flow

Set up UAE private banking and compliant international payment routes to ensure:

• Efficient profit extraction
  
• No unintended UK tax exposure
  

Step 5 — Legacy & Wealth Protection

Using:

• DIFC Foundations
  
• Holding structures
  
• Multi-generation planning
  

This replaces the limited UK Business Relief system with a 0% inheritance tax alternative.

Before & After Case Study — £2.3M in Future Tax Exposure Eliminated

Situation

• £6 million UK manufacturing business
  
• Founder aged 58
  
• Children expected to inherit
  
• Under new rules: £4 million subject to 20% IHT = £800,000 tax
  

After Dubai Shift Strategy

• Founder becomes UAE resident
  
• Shares placed in a UAE holding foundation
  
• Succession now occurs under UAE’s 0% inheritance regime
  
• No UK IHT applied
  

Total tax saved: £800,000 now + £1.5 million future exposure avoided.

Who This Works For

Ideal for:

• Directors receiving dividends
  
• HNW entrepreneurs with multi-gen businesses
  
• Founders planning an exit
  
• Business owners with companies valued £2m–£100m+
  
• Families facing high IHT under new rules
  

Final Word from Haseena

The Autumn Budget 2025 has made it more expensive to extract, pass on, and sell a UK business. But with early planning and the right international structure, you can still protect — and grow — your family wealth.

Dubai remains one of the most compliant and attractive zero-tax jurisdictions globally. If you’re considering restructuring or relocating, now is the time — before the April 2026 changes reshape the tax landscape permanently.

Next Steps

👉 Take the Wealth Reclaimed Scorecard 
See how much tax you could legally reclaim or eliminate.

👉 Book a 20-Min Strategy Call 
Get personalised relocation, succession, and structuring guidance for your family business.

Read More: How Will the Change to Salary Sacrifice Pension Savings in 2029 Affect You?

Dubai Shift‘s The Autumn Budget Series: Protecting UK Business & Family Wealth — Act Before April 2026. The Autumn Budget has rewritten the rules on dividends, IHT, succession, and exits.
But while the UK tightens its tax regime, the UAE remains a 0% tax, compliant, founder-friendly jurisdiction for long-term wealth preservation. If you’re a founder, director or family business owner, the window for strategic planning closes April 2026.