The Budget Will Show Up In Your Accounts For Two Years

What 28 October means for your self employed mortgage

This is a composite of conversations we have most weeks, written up as one piece. Market figures are accurate as at 18 August 2026.

He asked the question at the end, almost as an afterthought, the way people do when they think it is a silly one. If I take a bigger dividend this year to get ahead of the Budget, does that help me or hurt me? What he was really asking was a self employed mortgage question, and it is the one most people get backwards.

It was the best question anybody had asked me all month. The answer depends entirely on when you want a self employed mortgage, and almost nobody joins those two things up.

Here is the problem in one sentence. A lender assessing a self employed mortgage application looks backwards at two or three years of accounts. A tax decision you make in the next ten weeks does not sit in this year and then disappear. Instead, it sits in the file a lender reads in 2027 and 2028.

The Autumn Budget is being discussed everywhere as a tax event. For anybody who works for themselves and wants to borrow, however, it is also an affordability event with a two year tail.

What is actually on the table, and what is guesswork

The Budget is on 28 October 2026. That much is fixed. Beyond the date, the picture mixes the reported and the speculated, and it is worth being clear about which is which, because a lot of the coverage is not.

Reported and reasonably well sourced

Economists at Capital Economics have warned that the government could raise taxes by up to £25 billion to fund its spending commitments, which would push the overall tax burden to around 39 per cent of GDP. Furthermore, HM Treasury has explicitly declined to rule out further capital gains tax reform. Pension reliefs and some form of new wealth or sector specific levy are both under active discussion in the press.

Speculation dressed as reporting

Specific numbers, particularly the widely repeated suggestion that capital gains tax could rise from 18 and 24 per cent toward 30 per cent or beyond, are being printed well ahead of any Treasury confirmation. They may turn out to be right. Currently, though, they are guesses, and the confident tone in which they are written is doing a lot of unearned work.

Why it is getting attention at all

The reason is the fiscal backdrop rather than politics for its own sake. Andy Burnham took over on 20 July, appointed John Healey as Chancellor, and the gilt market immediately tested him. Ten year yields jumped eight basis points to 5.04 per cent on Burnham’s early remarks about flexibility within the fiscal rules, while thirty year yields touched levels last seen in 1998. They came back once Healey was confirmed. Nevertheless, the message from the bond market was unambiguous: there is not much room, and it will be priced in advance.

That is the constraint the Chancellor works inside. Consequently, “he might just do nothing” is not a realistic base case.

Why tax planning and your self employed mortgage collide

If you are a sole trader or you run a limited company, the levers people reach for before a Budget are the same levers a mortgage underwriter uses to assess you. Unfortunately, they pull in opposite directions.

Pre-Budget move	Likely tax effect	Likely mortgage effect
Crystallise a gain early	Locks in today’s CGT rate	Often stripped out as non-recurring income, so no affordability benefit
Bring dividends forward	May beat a rate change	Creates a spike then a dip. Many lenders take the lower year or an average
Increase pension contributions	Secures relief at current rates	Reduces retained profit, which several director-friendly lenders assess on
Do nothing until 29 October	No change	Keeps two clean, consistent years on file

 

If you crystallise gains early

Selling an asset before a rumoured CGT increase is legitimate to consider. However, a large one off gain lands in a tax year and, depending on how you are structured, can distort the picture a lender builds of your normal income. Underwriters are trained to strip out non-recurring income. As a result, you can end up with the worst of both outcomes: the gain gets taxed, and it does not count toward affordability.

If you change how you pay yourself

Bringing dividends forward, or shifting the salary and dividend split, changes the two numbers most lenders actually key in. For a director that is usually salary plus dividends, or in some cases salary plus retained profit. A one year spike followed by a dip reads badly. In fact, lenders very often take the lower of the two most recent years, or an average, precisely to stop applicants gaming a single year. Anybody telling you a bumper year automatically improves your borrowing is describing a lender that does not exist.

If you increase pension contributions

Pension tax relief has been a talked-about Budget target for years and is in the frame again. Loading contributions before a possible change can be sensible. Be aware, though, that large employer pension contributions reduce retained profit, and retained profit is what several of the more flexible lenders use for directors. In other words, you can improve your tax position and reduce your self employed mortgage capacity with a single instruction to your accountant.

None of these are reasons not to plan. Rather, they are reasons to have the mortgage conversation and the accountant conversation in the same month, not eleven months apart. The people who get hurt are almost never the ones who did something reckless. They are the ones who did something perfectly sensible in isolation.

Self employed mortgage affordability is tighter than growth suggests

There is a version of the current story that sounds fine. The UK was the fastest growing G7 economy in the first half of 2026. GDP grew 0.4 per cent in the second quarter. Monthly GDP rose 0.3 per cent in June against expectations of nothing at all. Moreover, EY nudged its 2026 growth forecast up to 0.9 per cent.

Underneath that, however, the numbers relevant to a self employed mortgage are less comfortable.

Indicator	Now	Direction
Unemployment	4.9 per cent	Payrolled employment down 71,000 on the year
Average two year fixed mortgage	Around 5.6 per cent	Up from roughly 4.8 per cent in March
Ofgem price cap	£1,663 a year	Up 13 per cent in July, October figure due by 26 August
CPI inflation	2.6 per cent in June	July print, due 19 August, expected nearer 3.0 per cent
Bank Rate	3.75 per cent	Held on 30 July, next decision 17 September

 

Why a cooling labour market hits the self employed first

Growth holding up while employment falls is not a comfortable combination. For the self employed specifically, a cooling labour market usually shows up first as clients paying later and projects being deferred, rather than as a headline. Lenders know this. Consequently, self employed mortgage applications get looked at harder in periods like this one, not more sympathetically.

If you have had a default or a rough patch in the last few years, that is the context you are applying into. It is not hopeless, and the age of the marker still matters more than most people expect. Even so, the file needs to be tidy and the story needs to be coherent, because there is less benefit of the doubt going around than there was eighteen months ago.

Four things worth doing before late October

 

Work out which year a lender will read

If you are applying in early 2027, ask your accountant which two years will be on the table. Then you know whether a decision taken this autumn lands inside or outside the assessment window. This one question resolves most of the confusion.

Do not restructure on the basis of a newspaper figure

The CGT numbers being quoted are not confirmed. Therefore, restructuring a company or triggering a disposal to pre-empt a rate that may not arrive is an expensive way to be right about the direction and wrong about the size.

Check the wrapper before you check the rate

If part of your planning involves moving money out of a taxable position, the ISA allowance is the obvious first stop and the one that gets skipped, usually because people assume it is only for large sums. Gains and dividends inside an ISA sit outside CGT and dividend tax entirely, which is precisely the exposure being discussed for the Budget. If you have never used one, a straightforward comparison of stocks and shares ISA providers will show you the fee structures side by side, which is where the meaningful differences are for anybody contributing monthly rather than in lump sums.

Get the credit file seen before the accounts are finalised

Not after. If there is a default, a missed payment or a CCJ on there, the sequencing of your accounts and your self employed mortgage application matters, and it is much easier to plan around a problem you already know about.

The thing I would actually say to him

The instinct to act before a Budget is a good instinct. It is just usually aimed at the wrong target.

Most self employed people I speak to are trying to optimise a tax bill they can see. In doing so, they quietly damage a mortgage application they will not submit for another year. The tax bill is a number on a page. The mortgage is the house. When the two conflict, and this autumn they might, it is worth being deliberate about which one you are optimising for.

There is also a decent argument for doing very little. Between the Ofgem announcement on 26 August, the Bank of England decision on 17 September and the Budget on 28 October, there are three points in the next ten weeks where the picture changes with actual information rather than speculation. Acting now, therefore, means acting on the least information you will have at any point in that window.

What people ask before they ring

Will the Budget definitely raise capital gains tax?

No. The Treasury has declined to rule out reform, which is not the same as confirming it. The specific rates being quoted in the press are speculation.

Should I take a big dividend before October?

Ask your accountant about the tax, and ask a broker about the self employed mortgage, before you do either. A spike in one year followed by a drop often reads worse to a lender than two steady years, since many lenders take the lower year or an average.

I have two years of accounts. Is that enough?

For a lot of lenders, yes. Some will work with one year in the right circumstances. Generally it depends more on the profession, the consistency and the file than on the number by itself.

Does a default stop me getting a self employed mortgage?

It narrows the options rather than closing them. How long ago it was registered typically matters more than the amount. However, self employment and a default together mean you need a lender panel that covers both, which is a narrower set than either on its own.

Is now a bad time to be buying?

The housing side is arguably in a buyer’s favour. For example, Rightmove recorded the biggest August fall in asking prices for eight years, and there is a twelve year high in homes for sale. The borrowing side is the harder half, with the average two year fix around 5.6 per cent.

Should I wait until after 28 October to apply?

If your application is straightforward, waiting mostly means waiting. If it involves restructuring, a disposal, or a change in how you pay yourself, then yes, knowing what is actually in the Budget before you act is worth ten weeks.

 

Nothing here is tax, mortgage or investment advice, and none of it substitutes for an accountant who has seen your accounts. Figures quoted are as at 18 August 2026. Tax treatment depends on individual circumstances and can change, including at the Budget this article is about.