Autumn Budget 2025 – What does it mean for UK businesses?

The Chancellor of the Exchequer, Rachel Reeves, delivered the 2025 Autumn Budget today (26 Nov), with a razor-sharp focus on plugging a £20 billion financial hole, cutting national debt and gripping the cost of living.

Starting the announcement with a promise to build a fairer, stronger and more secure Britain, the Chancellor unveiled a series of tax changes likely to impact UK businesses.  

Key points from the Autumn Budget for small businesses

The Autumn Budget was a noteworthy affair for UK’s small businesses as the Chancellor announced her tax and spending plans in response to poor productivity, high inflation and the cost of living crisis.

Here is a summary of the Autumn Budget for small businesses:

Taxes, Pensions and Savings

NICs and Income Tax – National Insurance Contributions (NICs) and income tax thresholds will be frozen for another three years from 2028.

Salary Sacrifice Scheme - The amount you put into a salary sacrifice scheme to make tax-free pension contributions will be capped at £2,000 from April 2029. Contributions over £2,000 will be subject to employer and employee NICs.

State Pension – The full New State Pension will rise from £230.25 to £241.30 from April 2026.

Living Wage / Minimum Wage – National Living Wage will increase by 4.1% from April 2026 to £12.71 per hour (currently £12.21). National Minimum Wage will increase for 18 to 20 year olds by 8.5% to £10.85 per hour (currently £10).

Dividends, Property and Savings Income - The tax rates applied to dividends, property income, and savings income will increase by 2 percentage points. For example, income tax on rental income will increase to 22% for basic rate taxpayers, 42% for higher rate taxpayers and 47% for additional rate taxpayers.

Business Rates – There will be permanently lower tax rates for more than 750,000 retail, hospitality and leisure properties.

EOTs and Business Sales – The capital gains tax relief on businesses sold to employee ownership trusts (EOTs) will reduce to 50% from 100%.

UK Listings Relief – A stamp duty holiday will be granted for three years for new UK stock market listings.

ISA Limit – The full £20,000 allowance for Individual Savings Accounts (ISA’s) will remain, however, £8,000 will be designated exclusively for investment. Over 65s will retain the full cash allowance of £20,000.

Investment

Startups – The availability of startup schemes will be widened to support startups as their grow, helping them start up, scale up and stay in the UK. Wales will host two investment schemes relating to AI investment and small nuclear reactors.

Apprenticeships –  Training for under 25’s on apprenticeships will be made free for SMEs.

Travel

Fuel Duty – The 5p cut in fuel duty will be extended until 2026.

Electric Vehicles – A new vehicle excise duty for electric vehicles will be introduced from April 2028. This is a mileage charge at 3p per mile for electric cars and 1.5p for plug-in hybrids. Vehicle excise duty is essentially the equivalent of fuel duty for electric vehicles.

Tourism Tax – Locally-elected mayors will have the power to levy a tourism tax for hotel stays and rentals, in line with Scotland, Wales, New York, Paris and Milan.

Sectors

Gambling – Remote Gaming Duty will increase from 21% to 40% from April 2026 and Duty on online betting will increase from 15% to 25% from April 2027. Bingo Duty will be abolished from April 2026.

Manufacturing - Electricity prices for manufacturing businesses will be cut, the details are due to published.

Drinks – The Soft Drinks Industry Levy (SDIL), also known as the ‘sugar tax’, will be extended to pre-packaged, milk-based drinks with added sugar from January 2028, this includes bottled milkshakes and coffee drinks. Milk substitutes with added sugar containing 4.5g or more of total sugars per 100ml will also be subject to the sugar tax. The tax will not apply to drinks served in cafes, restaurants and bars.

Farming and Agriculture - Any unused £1 million allowance for agricultural property relief and business property relief, an inheritance tax relief, will be transferable between spouses and civil partners.

Other

Mansion Tax – A high value council tax surcharge, also known as the ‘mansion tax’, will be introduced for high value homes from April 2028, alongside council tax. A £2,500 annual surcharge will incur for properties worth over £2 million and £7,500 for properties worth over £5 million.

Director Fraud – HMRC will have new powers to pursue the promoters of tax avoidance schemes, conduct targeted checks to root out fraud and error, and recover fraudulently obtained money. This supports the efforts of the Covid Counter-Fraud Commissioner, Tom Hayhoe.