Businesses in Milton Keynes and Watford must use “tax planning window”, says KPMG

While many of the most significant reforms will not take effect until 2027 and beyond, KPMG says the lead time gives companies an opportunity to review pay structures, investment plans and systems before changes are locked in.

Peter Rowe, Office Senior Partner at KPMG for Milton Keynes and Watford, said businesses that act early will be best placed to manage costs and unlock value.

“The scale and timing of these changes mean this isn’t just a compliance exercise,” said Rowe. “Using the next few years to plan strategically can improve resilience, manage rising costs and put stronger foundations in place for growth.”

Rising employment costs prompt review of pay structures

Employment costs have increased with the National Living Wage rising to £12.71 and the application of employer National Insurance at 15% to salary sacrifice into pensions. From April 2029, pension contributions made through salary sacrifice above £2,000 annually will be subject to both employer’s and employee’s National Insurance.

“These changes will alter the economics of traditional remuneration models,” Rowe said. “Companies in Milton Keynes and Watford - from green technology companies to automotive and technology - now have four years to reassess pay and benefits, model different scenarios and design reward packages that remain competitive under the new rules. That might be through enhanced employer contributions, different benefit structures or entirely fresh approaches.”

Capital allowances support investment decisions

Changes to capital allowances will also affect investment-heavy sectors across the region. From April 2026, the writing down allowance rate will drop from 18% to 14%, affecting businesses with historic asset pools.

This will be partly offset by a new 40% first-year allowance for leased assets and unincorporated businesses, effective from January 2026.

“For equipment-intensive sectors such as manufacturing and logistics, these changes create opportunities to accelerate tax relief and improve cash flow,” Rowe explained. “Companies claiming these enhanced reliefs as they invest will see immediate benefits. Those planning significant capital investment should factor the new allowances into their financial decisions now.”

Systems upgrades needed ahead of compliance reforms

Several major compliance changes are due between 2027 and 2029 that will create an opportunity for firms to upgrade their systems. From April 2029, all VAT invoices must be issued electronically, while new transfer pricing reporting requirements will apply from 2028. In addition, most employee benefits will need to be processed through payroll from April 2027.

“Together, these reforms represent a fundamental shift in how businesses manage finance and reporting,” Rowe said. “Done well, introducing e-invoicing is a chance to streamline financial operations significantly, but dealing with post invoice adjustments could be challenging. Investing early in systems and processes will help avoid disruption and unlock efficiencies.”

Preparation now key to future success

Rowe said the defining feature of the post-Budget landscape is the time available to prepare.

“For ambitious businesses in Watford and Milton Keynes, like those in the region’s growing tech, robotics and scale-up community, the coming years offer a real opportunity to plan for growth with confidence,” he said. “Expanded access to Enterprise Management Incentives is a very positive step for local start-ups and scale-ups, helping to support and fuel their growth. Ultimately businesses that put the right structures and systems in place early will be best placed to scale smoothly and successfully.”