Autumn Budget 2025 – What it Means For You

The chancellor has delivered the Autumn Budget, outlining tax changes and spending plans that will shape the next few years for business owners. While much of the announcement confirmed earlier leaks and forecasts, there are several measures that directly affect small and medium-sized enterprises (SMEs) and family-run firms.

Below is a clear breakdown of the changes most likely to matter to you, along with what they could mean in practice.

Wage rises every business needs to prepare for

From April 2026, the legal minimum wage for over-21s will rise to £12.71 per hour, with the 18–20 rate increasing to £10.85.

For many businesses with close-knit teams, wage costs form a significant part of everyday spending. These increases will have a noticeable impact on payroll budgets, especially in sectors such as retail, hospitality, trades, personal services, and care.

What to do now:

• Review staffing levels and rotas
  
• Forecast how changes affect your cash flow from April 2026 onwards
  
• Consider revisiting pricing, service packages, or operational efficiencies

The Budget also confirmed that employer National Insurance thresholds will remain frozen until 2031, which means employer NI costs will continue to rise as wages increase.

Tax rises through frozen thresholds

Income tax thresholds and National Insurance thresholds for employees are now frozen until 2031. As wages rise over time, more individuals will move into higher tax bands. For employers, this means:

• Higher payroll tax exposure for staff
  
• Greater importance on understanding the true cost of salary reviews
  
• A stronger need for accurate forecasting

For owner-managers drawing a mix of salary and dividends, planning around these freezes will be essential.

Dividend, savings, and property income tax increases

The Budget confirmed that:

• Dividend tax rates will rise by 2 percentage points from April 2026
  
• Income tax on rental and savings income will rise by 2 percentage points from April 2027

This matters for:

• Directors who pay themselves partly through dividends
  
• Owners with rental properties tied to their business or family wealth
  
• Anyone relying on investment income as part of their household finances

These increases make tax-efficient profit extraction more important than ever.

Salary sacrifice changes affecting employer benefits

From April 2029, the amount an employee can sacrifice from their salary for pension contributions free of National Insurance will be capped at £2,000 per year.

This affects businesses that use salary sacrifice as a benefit for directors or key staff. You may need to revisit your remuneration strategy ahead of 2029.

Rising costs for importing supplies

The tax exemption for overseas packages under £135 will be scrapped from 2029. Many SMEs rely on lower-value imports for:

• Packaging
  
• Tools and equipment
  
• Replacement parts
  
• Online-sourced stock

Removing the exemption means these items will become more expensive. Reviewing your supply chain and local alternatives may help control costs.

Alcohol, tobacco, and sugary drink duty rises

From 1 February 2026, alcohol duty will increase in line with RPI inflation. This will affect businesses selling alcoholic drinks as part of their offer, such as restaurants, bars, cafés, and event venues.

From January 2028, the sugar tax will be extended to pre-packaged milkshakes and lattes. If your business sells bottled or canned sweetened drinks, suppliers are likely to pass on the cost.

Fuel duty freeze – a small relief for business travel

The current 5p cut in fuel duty has been extended until September 2026. While modest, this does give some stability for businesses that rely on:

• Deliveries
  
• Site visits
  
• Mobile services
  
• Tradespeople travelling between jobs

However, a new mileage-based tax for electric and plug-in hybrid vehicles will begin in April 2028. If your business is moving towards an electric fleet, factor this into long-term planning.

Support through apprenticeships and training

There is positive news for employers developing young talent. Apprenticeship training for under-25s will be free for SMEs, making it more accessible for smaller firms to bring in and train new staff.

For businesses aiming to build long-term capability, this could be a valuable opportunity.

Changes affecting household budgets and customer spending

While many Budget measures target business taxation, everyday households will also feel the impact of:

• Frozen income tax thresholds to 2031
  
• The minimum wage rise
  
• State pension increase of 4.8%
  
• Changes to child-related benefits

What this Budget means overall

The Autumn Budget brings a continued mix of rising wage costs, increasing tax pressure, and a handful of supportive measures for business growth. For you, the most important shifts will likely be:

• Higher payroll costs from 2026
• Higher employer NI costs each year through to 2031
• Tax changes affecting directors’ pay and family investment income
• More expensive low-value imports
• Duty rises that affect small retailers and hospitality
• Opportunities through apprenticeship support

Now is the right time to review forecasts, revisit your pricing and profit structure, and check you’re making the most of the reliefs and allowances available.

How we can help

We specialise in supporting family-run and owner-managed businesses. We can help you understand tax changes early and build plans that protect profit and cash flow. To work with us, call our team on 01709 589 439 or book a discovery call with Frances. We'd love to hear from you.