2025 Autumn Budget: 5 Business Recommendations
After weeks of predictions, concerns and even leaks, RH Rachel Reeves MP, the Chancellor of the Exchequer, has introduced her 2025 Autumn Budget Statement to the House of Commons.
To help you make sense of it, our team has reviewed the budget and developed recommendations for SMEs. While we haven’t included conversation on consultations, such as the removal of the £135 customs duty relief for low-value imports, we have provided information on what will take effect for you in the near future.
Join us as we cover:
- workforce planning and payroll
- tax planning and cash flow
- property, premises and assets
- operational and strategic considerations
- and long-term planning.
1. Workforce Planning and Payroll
Minimum wage increases:
With the rise in both the National Minimum Wage (to £10.85 per hour) and the Living Wage (to £12.71 per hour) from April 2026, we recommend that businesses review payroll budgets to ensure compliance early.
In doing so, you will also need to consider how potential recruitment or retention strategies impact adjustments to pay scales to maintain a competitive compensation package.
However, there is some good news. Training costs for under-25s through apprenticeships will become free for SMEs, enabling more small businesses like yours to invest in future talent at the grassroots level and potentially offset pay increases elsewhere. But the key will be to get these offerings right if you want to preserve skills and productivity across your businesses.
Salary sacrifice pension schemes:
From 2029, employees will start to pay NI on salary sacrifice contributions over £2,000/year. SMEs with salary sacrifice schemes must review how they plan to communicate changes to staff early to manage expectations and reassess the attractiveness of current benefits packages.
For those who usually make larger sacrifices, it may be time to consider how and if the proposed ISA reforms will offer alternative savings opportunities.
Workforce support policies:
Universal/child tax credit limits are being lifted, and you may find that some employees have slightly improved disposable income. To retain or attract talent, it is worth considering how and when you highlight employee benefits and financial well-being programs (including making employees aware of schemes like Make the Help to Save).
Work from home relief removed:
Tax relief on non-reimbursed homeworking expenses will be removed from 6th April 2026. Therefore, if you require employees to work from home, consider providing COBO devices (Corporate-Owned, Business-Only) and how you will compensate for other related costs. Or if a return-to-work policy affects operating costs.
2. Tax Planning and Cashflow
VAT rates:
These will remain unchanged until 2028.
Corporate tax and business profits:
While no direct change was noted for general SME corporate tax rates, it is worth reviewing investment timing to optimise allowances. And also to ensure accurate VAT, MTD, and MTD ITSA accounting amid potential shifts in consumer spending due to tax changes.
Dividend and savings taxation:
Higher taxes on savings, property income, and dividends (+2% on basic/higher rates) could affect owners and shareholder withdrawals.
With this in mind, it is worth exploring profit retention versus dividend strategies, as well as pension contributions or other tax-efficient investment opportunities for business owners.
Landlord taxation:
The Chancellor is looking to close the gap between what Landlords pay in tax and what other businesses pay. A 2% increase in both the basic rate of tax and property tax will come into effect from April 2027.
We suggest reviewing how this affects the profitability of your product portfolio in line with the Tenant Rights Acts.
Writing down allowances:
The main rate writing-down allowance will reduce to 14% from April 2026, while a new 40% first-year allowance will apply to company assets from 1st January 2026.
We suggest reviewing your capital allowance data to ensure compliance and make the most of investment opportunities.
HMRC compliance:
HMRC’s ability to root out fraud is being extended with further powers, and so it is vital that businesses understand their compliance position.
We suggest meeting with your tax advisors to ensure you know how to present your accounts and make submissions on time.
3. Property, Premises, and Assets
Capital Gains on property:
Under this budget, Capital Gains Tax relief will now be reduced to 50% on qualifying disposals to employee ownership trusts from 26th November 2025. To ensure your compliance, it is worth reviewing existing property valuations and understanding your company’s compliance obligations.
Fuel and transport:
The temporary 5p cut in fuel duty remains in place until September 2026. It is essential to consider how longer-term transport costs will increase for both company and personal vehicles, as well as other modes of transport, under employee expenses.
Electric vehicles will also be subject to mileage-based taxation from 2028. Reviewing fleet stock or company car running costs may be required. However, there are proposals to add tax relief for building electric charging points on your premises.
Business rates:
As consulted, business rates in England will be updated to reflect the changes in property values since the revaluation in 2023 (starting 1st April 2026). Reductions in small-business multipliers across most sectors will also occur, although hospitality and leisure will remain lower.
If your company falls under this change, you should review how the Transitional Relief Scheme might help.
Energy bills:
The government is continuing to invest in homegrown energy initiatives, aiming to reduce energy bills by April 2026. We recommend adding a note to your diary to research which providers offer the best rates.
4. Operational and Strategic Considerations
While the OBR now forecasts 1.5% GDP growth in 2025 (up from 1%), it has reduced its forecast for the underlying rate of productivity to 0.3% (down from 1%), which ultimately increases inflation. Their leaked document also suggests that business profits are likely to continue to fall before they improve, albeit at a reduced forecast rate.
It is crucial to continue reviewing supplier contracts and, where feasible, negotiating fixed rates. It may also mean considering gradual price adjustments to maintain margins without impacting competitiveness.
Diversification or adding alternative income streams may be possible in some cases, which could reduce revenue fluctuation risk (and tax liabilities in certain situations).
5. Long-Term Planning
Capital allocation:
Rising taxes on dividends and investment returns may incentivise reinvesting profits back into the business. It is worth reviewing where and when capital allocation may benefit you.
Succession and exit planning:
For family-owned SMEs, it is critical to review estate and succession plans considering higher taxes on savings, dividends, and property. Having a clear plan in place ensures both a company’s compliance and a healthier return for those involved.
Technology and efficiency investments:
To offset rising labour and operational costs, we suggest considering automation, cloud solutions, and digital transformation initiatives. Developing a clear plan for how and where you implement technology and efficiencies could improve profitability for existing products and services.
2025 Autumn Budget: Final Thoughts for Business Owners
RH Rachel Reeves MP, the Chancellor of the Exchequer, has chosen to continue with the government’s theme of “building on choices” with the full support of RH Sir Keir Starmer MP, the Prime Minister.
While earlier leaks left us relatively unsurprised by those choices, there were a few: frozen income tax thresholds, a mansion tax, a tax on EVs, reduced ISA tax-free savings amounts, and the two-child benefits cap was scrapped.
So what are our next steps as business owners? Where do we start to build on what we’ve learned from this announcement? At Smith Butler, we recommend taking some time to weigh the pros and cons of what you’ve heard. Work out how it both impacts and provides opportunities for your business.
If you need further business advice from financial experts, get in touch.
You can call our team on 01274 588115 or write to us at email@smithbutler.co.uk
Image Credit – NY Times