Autumn Budget 2025: what business owners need to know

Today at lunchtime, we were all in for quite the treat: following an unprecedented leak from the OBR that set a lively tone in the House of Commons, Chancellor Rachel Reeves delivered her Autumn Budget. Over the course of an hour, she outlined a wide ranging package of fiscal measures, policy changes and investment commitments. Small businesses were placed firmly at the centre of this year’s announcements, and in this article, I’ve broken down the key points thematically so you can focus on what matters most to your business, whether that’s tax changes, sector specific measures or regional investment.

The gist of it

The Autumn Budget set out by the Chancellor focuses on stability, long term investment and steady economic growth. The government reiterated that day-to-day spending must be funded through tax receipts, while investment can increase so long as national debt keeps falling as a share of GDP. Against this backdrop, the Chancellor emphasised that there would be no return to austerity and that the government’s priorities remain supporting investment in the economy and public services, reducing the cost of living, bringing down inflation, and cutting debt and borrowing.

Supporting business growth

A central theme of the Budget is strengthening the UK as a place to start, scale and stay. The Chancellor highlighted the role of founders, innovators and employers in driving growth, noting that half of new jobs in the UK are created by scale-up businesses. Several policy changes are designed to widen access to investment and help firms attract talent. 

• The Enterprise Management Incentive scheme will be expanded so more companies can offer tax advantaged share options

• Both the Enterprise Investment Scheme and Venture Capital Trust regime will be re-engineered to support businesses beyond the early stage, encouraging investors to stay with companies as they grow.

• The government will also introduce “UK listings relief”, providing a three year exemption from stamp duty reserve tax for companies choosing to list in Britain.

• The Treasury has launched a call for evidence on how the tax system can better back entrepreneurs, supported by a targeted review involving founders and investors to ensure competitiveness for growing businesses.

• To encourage business investment, a new 40% first year allowance will allow firms to write off more of a wider range of qualifying investments upfront including leasing. This comes with an adjustment to the main rate writing down allowance to reflect fiscal constraints. The Annual Investment Allowance and the Full Expensing Allowance remain, so the most appropriate for each asset should be claimed.

Regional and local growth

The Budget places significant emphasis on devolving power and funding to regional leaders. 

A package worth £13 billion will be made available to seven mayors for investment in skills, business support and local infrastructure. Existing business rates retention pilots in the West of England, Liverpool City Region and Cornwall will be extended to 2029. Additional targeted investment includes £30 million for the Cornwall Industrial Growth Fund, the creation of the Leeds City Fund to support regeneration projects such as the Leeds Southbank development, and new allocations for cultural and scientific facilities in Peterborough and Darlington.

The Chancellor made further sizeable commitments: Northern Ireland will receive £17 million to support advanced manufacturing and the internal market. Wales will host two new AI growth zones projected to create more than 8,000 jobs, supported by a £10 million semiconductor investment. In Scotland, funding includes over £14 million for low carbon technologies in Grangemouth and £20 million each for infrastructure at Inch Green in Inverclyde and for the redevelopment of Kirkcaldy town centre and seafront. Additional devolved funding of £370 million for Northern Ireland, £505 million for Wales and £820 million for Scotland was also announced.

Infrastructure, planning and energy

The Budget confirms continued investment in major transport infrastructure, including the Lower Thames Crossing, the Midlands Rail Hub and the TransPennine Route Upgrade, along with ongoing commitments across the Northern Growth Corridor and Northern Powerhouse Rail. To accelerate development, the government will also provide further funding to expand planning capacity, addressing concerns raised by business organisations about slow decision making.

On energy infrastructure, the government intends to act on the recommendations from John Finkleton’s review aimed at reducing regulatory barriers for nuclear projects. A plan for implementation will be published within three months. The Budget also confirmed support for the construction of the UK’s first small modular nuclear reactors, delivered in partnership with Rolls-Royce in Anglesey.

Skills and apprenticeships

For employers looking to expand their workforce, the Chancellor announced that training for under 25 apprenticeships will become fully funded for SMEs. The government is also investing £820 million over the next three years into a new “youth guarantee”, offering every young person a place in college, an apprenticeship or personalised employment support, with paid work available after 18 months for those aged 18 to 21.

Sector specific measures

High street businesses will see a series of regulatory changes, including a new national licensing framework intended to strengthen support for pubs and late night venues. Business rates will be permanently reduced for more than 750,000 retail, hospitality and leisure properties, bringing them to their lowest levels since 1991. The government also intends to ensure customs duty applies to all parcels entering the UK, closing a gap that previously allowed some online retailers to undercut domestic businesses.

In the automotive sector, the threshold for the expensive car supplement on electric vehicles will rise to £50,000, saving many EV motorists £440 a year. Funding for the electric car grant will increase by £1.3 billion and be extended to 2030, with an additional £200 million allocated to accelerate the installation of EV charge points. Businesses installing charge points will benefit from 100% business rates relief for the next decade.

The Budget also reinforces support for the defence sector through investments in Glasgow, Portsmouth, Barrow and Plymouth, as well as backing the Team Derby initiative focused on growth in defence manufacturing.

Compliance and regulation

HMRC and the new Fair Work Agency will increase enforcement activity to address non compliance in areas such as the minimum wage, gig economy practices and the use of fraudulent structures to avoid tax. The government also plans to raise property related tax rates on assets valued above £500,000, including certain warehouse and logistics properties commonly used by online operators.

Across government, a wider programme to reduce fraud, error and waste is expected to raise almost £10 billion a year by 2030. Measures include new powers for HMRC to pursue the promoters of tax avoidance schemes, a series of measures were mentioned (changes to asylum accommodation contracts, reforms to welfare administration and adjustments to voluntary National Insurance arrangements for people living abroad).

Tax changes

The Chancellor confirmed that all income tax and National Insurance thresholds will remain frozen for another three years from 2028. The repayment threshold for plan 2 student loans will also remain unchanged for three years. 

Taxes on property, interest, savings income and dividends will rise by two percentage points at both the basic and higher rates, with the additional rate increasing by the same amount. Dividend income is not included in these rises.

The changes announced in last year’s Budget, regarding the change to reliefs for Inheritance Tax on business and agricultural assets, are still valid and come into effect from 6/4/26. There was a small change relating to transferring unused 100% relief to spouses after the first death.

From 2028, a new high value council tax surcharge will apply, with annual charges of £2,500 for properties worth more than £2 million and £7,500 for those above £5 million.

From 2029, the amount that is exempt from National Insurance contributions (NICs) will be capped at £2,000 a year for employee contributions made via salary sacrifice.

Changes to fuel and motoring taxation include the introduction of a per mile excise duty for electric and plug-in hybrid vehicles and the extension of the temporary 5% cut to fuel duty until September 2026. Alcohol and tobacco duties will rise in line with inflation, and a vaping duty will be introduced in 2026. Remote gaming and online betting duties will increase to 40% and 25% respectively.

Cost of living measures

The Budget also introduced a range of measures that indirectly support employees and consumers. 

The basic state pension will rise by 4.8%, while the National Living Wage will increase from £12.21 to £12.71 an hour. Wages for 18–20-year-olds will rise from £10 to £10.85 an hour. 

Prescription charges and rail fares will be frozen, and the national bus fare cap will be extended. 

A new “fuel finder” scheme will require petrol forecourts to publish real time prices to help households access cheaper fuel. A further £150 reduction in household bills will take effect from April 2025, with details still to come. 

The government also confirmed the removal of the two child limit and related policy provisions.

We’ll be publishing further articles in the coming days to explore some of the small business impacts in more detail.