Following months of speculation, the Chancellor of the Exchequer, Rachel Reeves, delivered the Autumn Budget on 26 November 2025. Many of the headline-grabbing proposals rumoured earlier in the year, such as employer National Insurance for LLP members, a broad wealth tax, or an ‘exit tax’ for individuals leaving the UK, did not materialise. Instead, this Budget focused on fiscal stability and targeted, incremental policy changes.
Below, we summarise the key measures concerning businesses and how they might affect business owners in the coming years.
Corporation Tax and Dividend Tax
The main rate of corporation tax will remain capped at 25% for the duration of the current Parliament, offering businesses stability in their long-term planning.
Dividend tax rates will increase by 2% from April 2026, with the basic rate rising to 10.75% and the higher rate to 35.75%.
While the freeze on corporation tax provides certainty, the rise in dividend tax will increase the overall tax burden for shareholders, particularly those in higher income brackets.
Income Tax Thresholds Frozen for Three More Years
The Chancellor confirmed there would be no increase in income tax rates and extended the freeze on the personal allowance (£12,570) and the current tax thresholds by three years, until April 2031.
As wages rise but thresholds remain static, more individuals will move into higher tax bands, a process known as fiscal drag. Businesses may feel the impact through changes in staff take-home pay, recruitment pressures and consumer spending.
National Minimum Wage Increases
From 1 April 2026, the National Minimum Wage will increase as follows:
- Ages 21+: £12.71
- Ages 18-20: £10.85
- Under 18s and Apprentices: £8
The government also intends to phase out the separate 18-20 rate and move towards a single minimum wage for adults.
These increases will place additional pressure on small and labour-intensive businesses, potentially influencing hiring decisions, workforce levels, and pay structures. Employers may need to adjust budgets, update payroll systems, review staffing levels, and maintain appropriate pay differentials for supervisory roles.
Landlord Income Tax
Contrary to earlier rumours, landlords will not be required to pay National Insurance on rental income. Instead, the Budget introduces a 2% increase to the basic, higher and additional rates of property income tax. Increased landlord tax burdens may place further upward pressure on rents.
Salary Sacrifice Cap from 2029
From April 2029, pension contributions made via salary sacrifice above £2,000 per year will no longer be exempt from National Insurance Contributions. Contributions above the threshold will attract both employer and employee NICs.
Employers should review current schemes, communicate early with affected staff, and consider alternative benefits to support recruitment and retention.
Government-Funded Apprenticeships for Small Businesses
Small businesses will soon be able to take on apprentices under 25 at no cost, with the government fully funding eligible apprenticeships. More details, including start dates, are expected shortly.
This initiative will help offset increasing wage costs for young employees, particularly under the forthcoming minimum wage reforms.
Incentives for Investment and Growth
From April 2026, reforms to Enterprise Management Incentive (EMI) schemes, Venture Capital Trusts (VCTs) and listing reliefs aim to support scaling companies and make equity-based incentives more effective.
These measures intend to support scaling businesses by making equity-based incentives more accessible and improving the environment for raising growth capital.
Employee Ownership Trusts (EOTs)
The previously full Capital Gains Tax exemption for selling a controlling interest to an EOT has been reduced to 50%, resulting in an effective CGT rate of 12%.
Although still a valuable relief, this change reduces the attractiveness of EOTs as an exit route, and owners considering succession should reassess timing and structure.
Making Tax Digital (MTD)
From 6 April, landlords and sole traders above certain income thresholds will need to:
- Keep digital records using HMRC-approved software, and
- Submit quarterly updates instead of annual Self-Assessment returns.
Affected businesses should begin preparations now to ensure compliance and avoid future penalties.
What Should Businesses Do Now?
Businesses should take advantage of the opportunities the Budget brings, as well as prepare for emerging risks. Some suggestions include the following:
Review Staffing and Wage Budgets
With minimum wage increases coming in from April 2026, businesses, especially those in retail, hospitality, and leisure, should reassess wage forecasts, pricing structures and operational efficiency.
For many retail, hospitality and leisure (RHL) businesses/buildings, some business-rate relief or protections are being offered under the Budget’s support package from April 2026.
Plan Capital Investment
The new 40% first-year allowance from April 2026 makes this an advantageous time to invest in equipment, machinery or other eligible assets.
Reconsider Exit Strategies
Owners planning to sell through an EOT should reassess timing and structure in light of reduced tax relief.
Prepare for Shifts in Consumer Behaviour
Frozen tax thresholds and higher indirect taxes may restrict household spending. Businesses should consider pricing, value-added offerings and cost control measures.
Need Bespoke Advice?
We can provide tailored guidance on how the Autumn Budget 2025 will affect your business. We can help you understand the new measures, plan and stay compliant.
For more information and advice, please get in touch with us on 0300 303 2071 or by email.
