Autumn Budget 2025
With much speculation around policy U-turns and tax implications to voters, no matter the contents, we were braced for today’s budget. So maybe we shouldn’t have been that surprised, when the Office for Budgetary Requirement, OBR, released the budget in full before the Chancellor Rachel Reeves had a chance to utter a single word of it. Shortly after the OBR’s error the set out her plan for a “fairer, stronger and more secure Britain” with a series of measures aimed at stabilising the economy while supporting growth and investment. For small business owners, the announcement brings a mix of challenges and opportunities.
Understanding the key points and how they’ll affect you and your business is essential for planning ahead.
Income Tax & NIC thresholds frozen
Personal allowance (£12,570), higher-rate (£50,270), and additional-rate (£125,140) thresholds remain will frozen for an additional three years from 2028 until 2030–31.
When combined with the impact of inflation, this means more earners will drift into higher tax bands over time, ultimately paying more tax.
Increase to Tax on Property, Dividend and Savings Income
Currently, those with property, dividend or savings income pay less tax than those whose income comes from employment or self-employment as they do not pay National Insurance Contributions.
The following changes will be made to narrow the gap between tax paid on work and tax paid on income from assets:
Dividend Tax Increase
From April 2026, dividend tax rates rise by 2 percentage points:
Basic rate: 10.75%
Higher rate: 35.75%
Additional rate unchanged.
Property & Savings Income Tax
New property income bands from April 2027:
Basic: 22%, Higher: 42%, Additional: 47%
Savings income tax also rises by 2 percentage points across all bands.
Salary Sacrifice £2k Cap on National Insurance Relief
Introduction of a cap on the amount that can be sacrificed without paying NICs at £2,000 per employee will be introduced from 2029.
This means that employees who contribute up to £2,000 into their pension each year via salary sacrifice can continue to benefit in full, but employee and employer NICs will be charged in the usual way on the amount above £2,000 for those who contribute above this.
Employment Costs
Minimum Wage Increase (April 2026)
Over 21: £12.71/hour
18–20: £10.85/hour
Under 18/apprentices: £8/hour
Real Living Wage outside London: £13.45/hour; London: £14.80/hour
The cost of training for apprentices aged under 25 to be made free for small businesses. We await further detail on when this will kick in.
Tax on High Value Properties
April 2028 will see the introduction of a High Value Council Tax Surcharge (HVCTS) in England for residential properties worth £2 million or more. This charge will be based on updated valuations to identify properties above the threshold and will be in addition to existing Council Tax.
New charges will start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million, will be levied on property owners rather than occupiers and will be collected on behalf of the government by local authorities.
ISA Reform
According to the budget report, investing £1,000 a year in an average stocks and shares ISA every year since 1999 would have delivered a £50,000 better return than if it was invested in a cash ISA.
To encourage investing over holding cash, the annual ISA limit will be maintained at £20,000 with the cash limit reduced to £12,000 for under‑65s from April 2027.
IHT
The inheritance tax (IHT) nil-rate bands are already set at current levels until April 2030 and will stay fixed at these levels for a further year until April 2031.
The £1m allowance for 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) will be made transferable between spouses and civil partners with effect from 6 April 2026.
Allowances maintained for 100% rate of agricultural property relief and business property relief for a further year, from April 2030 until April 2031.
EOT – CGT
The current Capital Gains Tax (CGT) relief available on qualifying disposals to Employee Ownership Trusts (EOTs) allows business owners to sell their shares without paying any CGT. The government will retain a strong incentive for employee ownership whilst ensuring that business owners pay their fair share of tax, by reducing the relief available on these disposals from 100% of the gain to 50%.
E-Invoicing
From April 2029, businesses will be required to issue all VAT invoices as e-invoices, with a roadmap on implementation to be published next year. The good news is, if you’re already using a software like Xero which our clients are, you’ll be ready for this.
Penalties and Fines
The government will double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026. Penalties due for late payment of ITSA and VAT will increase from 1 April 2027
Enterprise & Venture Capital Schemes
VCT & EIS company investment limits doubled (up to £10m and £20m for knowledge Intensive Companies or KICs).
Lifetime limits raised to £24m (£40m for KICs).
VCT income tax relief reduced from 30% to 20%.
Business Rates & Relief
Permanent Lower Rates for Retail, Hospitality & Leisure
Over 750,000 properties benefit from reduced multipliers from April 2026:Small business RHL multiplier: 38.2p
Standard RHL multiplier: 43p
Supporting Small Business Scheme Expanded
Additional Two Years of Small Business Rates Relief
For firms expanding into a second property.
Further Changes of Note:
Introducing a one-year freeze of regulated rail fares – for the first time in 30 years – saving commuters on the more expensive routes more than £300 per year.
The Plan 2 student loan repayment threshold will be frozen from 2027-28 until 2029-30.
There will be a new mileage charge for people driving electric vehicles from April 2028. This charge for electric and plug-in hybrid cars is an extra charge on top of the existing vehicle excise duty.
A one-year freeze on prescription charges, keeping fees at £9.90 for a single charge.
Extending the 5p fuel duty cut until the end of August 2026 with rates then gradually returning to March 2022 levels by March 2027. The planned increase in line with inflation for 2026-27 will also be cancelled. Alongside the introduction of Fuel Finder.
In April 2026, the State Pension will be uprated by 4.8%, so pensioners will receive up to an additional £575 a year.
The two-child benefit cap for Universal Credit will be scrapped.
Average energy bills expected to fall by around £150 a year from April 2026, driven by changes to how low carbon and renewable levies are funded.
The changes announced will present challenges for many small business owners. By taking a closer look at how you take income from your business before the year’s up, you can boost your tax efficiency. We’re here to help with our tax planning services and can guide you through these changes so you can stay on top of your business’s finances. Updating your cashflow forecasts to match the new costs will help you keep things running smoothly, so you’re ready to adapt and keep growing. If you’re interested in discussing how we can assist you, please feel free to reach out.
This summary is to serve as a guide, it does not cover the entire Autumn Budget (which can be found on the Government website) and it should not be taken as professional advice.