Self-employed on alert: Andy Burnham’s rise sparks tax fears — protect your limited company dividends
Keir Starmer’s resignation as Prime Minister and Labour Party leader leaves many questioning British politics. Deep down, those living in Great Britain know the grim answer: we are no better off financially (some even worse) despite many leadership changes over the past decade.
Will Andy Burnham, if he wins the challenge for the top spot at No. 10, put the right Chancellor of the Exchequer in charge to safely manage limited company dividends? And will this leadership duo actually create a stable economic environment that benefits both traditional workers and the growing number of self-employed?
Starmer will hold his office as PM until July. Until then, all eyes will be on Labour MP Andy Burnham following his landslide by-election victory in Makerfield. Yet, even before Starmer’s resignation announcement on 22 June, Burnham’s historic win sent shockwaves through the UK’s financial sectors.
According to a deVere Group analysis, Burnham’s win clears his path to challenge for power. Reports from The Guardian show he won a massive majority. This victory sparks immediate fears of incoming tax raids on private capital.
For self-employed people running limited companies, these macroeconomic changes could target limited company dividends. You must act early to protect your finances.
Britain Under Burnham: Will it be good for the self-employed and small businesses?
Starmer’s allies are reportedly furious, according to political commentators interviewed by the BBC. They claim Burnham has no real plan to lead the country. Arguably, we all want an economically confident nation that propels employment and self-employment. Instead, critics, both official and not, see pure ambition.
For example, Len Sharps, a Transformation Professional and business owner, is not convinced. He doubts the self-employed will be a priority for Burnham.
“He won’t have a clear position on anything……think about it, why is he standing in a by-election?”
Sharps proposed this view in a recent LinkedIn comment. He continued:
“Well, he sees it as a route to the PM job, right? No mention at all of how he will make change for the better for the public. He is a career politician just like 99% of all politicians.”
Will Rachel Reeves survive the fall?
The political fallout stretches directly into the Treasury. Many now wonder if Chancellor Rachel Reeves can survive Starmer’s sudden departure.
Reeves has already launched a strong rearguard campaign to save her job. She insists that her strict fiscal rules are vital to maintain UK market stability.
However, senior political commentators, namely Nick Robinson from BBC Radio 4 suggest her position is highly precarious. If Burnham takes 10 Downing Street, a clean break from the old guard is widely expected. Reports suggest Burnham’s allies plan to remove Reeves to reset the party’s economic agenda.
The top candidates positioned to take Reeves’s place as Chancellor include:
Ed Miliband: The current Energy Secretary remains popular with the Labour grassroots. His appointment would signal a definitive swing toward green industrial investment and wealth redistribution. That said, reports have suggested Burnham is considering appointing Ed Miliband as chancellor if he makes it to No 10. But Reeves’ allies are warning that the energy secretary would not be trusted by the bond markets, which set the government’s borrowing costs.
Wes Streeting: The former Health Secretary resigned from the cabinet earlier this year. Commentators view him as a key player who could take the Treasury in a compromise deal.
Wealth tax threat
Nigel Green, CEO of deVere Group, warns that investors view British politics through a lens of rising taxes. In an official briefing published on the deVere Investment platform, Green shared his outlook:
“Burnham’s victory materially increases the likelihood of Britain moving towards wealth taxes and other measures, aimed at private capital.”
The UK faces high debt and weak growth. Green argues that governments will inevitably look to small business owners for money:
“At some point, governments start looking for additional sources of revenue. Wealth becomes an obvious target.”
Green believes capital gains tax, inheritance tax, and wealth taxes are now urgent political topics. He warns that capital can move quickly.
“The risk isn’t limited to the tax itself. Wealth taxes change behaviour. They encourage capital and entrepreneurs to move.”
He also warns that bond markets could react violently, similar to the 2022 mini-budget crisis.
“The Liz Truss mini budget crisis of 2022 demonstrated how brutally gilt investors can react when confidence evaporates.”
How it affects your limited company dividends
National tax raids rarely just hit billionaires. They usually slide down to squeeze everyday business owners.
Many plumbers, electricians, and tech consultants use a specific setup. They take a low salary and draw the rest as limited company dividends. This keeps their tax bills manageable.
If political pressure grows, a new administration might raise dividend tax rates to match the standard income tax. This move would instantly destroy the main tax benefit of running a limited company.
Business owners also face a hit when they close their companies. Many rely on closing down via a liquidation process. This lets them pay a lower capital gains tax rate on their saved business reserves.
If capital gains taxes rise alongside wealth taxes, your final business nest egg could shrink dramatically.
Actionable steps to protect your finances
You should not wait for the government to announce new laws. Green notes that waiting is a major mistake.
“People who wait until wealth taxes are announced have often waited too long, likewise for exit taxes.”
You can take specific actions right now to secure your hard-earned money.
- Review your retained profits
Look at the cash sitting inside your business bank account. Talk to your accountant about withdrawing these profits as limited company dividends under current tax rates. Paying tax now might be cheaper than waiting for a future tax hike.
- Maximise your pension contributions
Money moved from your business directly into a personal pension is highly tax-efficient. These contributions reduce your corporation tax. They also keep cash out of the reach of future personal wealth taxes.
- Consider upgrading your tools
If your business has excess cash, invest it back into your operations. Buy new tools, vans, or computer software now. This reduces your current taxable profits while boosting your long-term efficiency.
Prepare before the law changes
The political climate is moving toward targeting private cash. Self-employed directors must stay ahead of the game. Take time this week to review your company structure with a professional accountant.
