Autumn Budget 2025

The Autumn Budget is out, and while a lot of it focuses on personal finance, there are some important updates for small businesses, sole traders and limited companies. Here’s the simple, straight-talking version of what actually matters.

 Key Headlines at a Glance

• Income Tax & National Insurance: Income-tax thresholds and National Insurance thresholds remain frozen.

• Corporation Tax: The headline rate of corporation tax stays the same; however, some allowances are changing. See below for more information.

• VAT: No new VAT changes announced.

• Rates: The government will lower business rates tax rates for over 750,000 retail, hospitality and leisure properties.

• Minimum Wage: From April 2026, the national minimum wage for 18–20 year olds will rise to £10.85/hr, and the national living wage will rise to £12.71/hr.

What This Means for Small Businesses

Small businesses and sole traders remain at the heart of the UK economy, and this year’s Budget brings a mix of relief and caution. Here’s what’s relevant to you:

1. Business Taxation

Corporation tax rate remains unchanged, and overall tax rates on profits stay stable.

The updated capital-allowance rules: The new 40% first-year allowance for certain assets could benefit businesses making capital investments (e.g. buying equipment). However, for assets depreciated over time, the lower writing-down allowance (14% vs 18%) means future claims will be smaller, worth modelling for medium-term planning.

If you run a limited company, don’t miss your filing deadlines.  From April 2026, late-submission penalties will be twice as high.

VAT stays the same, so no relief there, but no new burdens either.

Taxi and private hire services will be excluded from using the Tour Operators’ Margin Scheme from 2 January 2026, except where these are supplied in conjunction with certain other travel services.

2. Dividend Taxes

From April 2026, the tax you pay on dividends is going up. The basic rate will rise from 8.75% to 10.75%, and the higher rate will move from 33.75% to 35.75%.

The government says this increase is happening because dividends aren’t subject to National Insurance, so they’re adjusting the rates to “balance things out”.

There’s another important change too: The Dividend Tax Credit for non-UK residents is being scrapped.  This means that if you receive dividends after a period of temporary non-residence, those dividends will now be taxable in the UK. This change is also expected to start from 6 April 2026.

If you take dividends from your company or you’re planning time abroad, it’s a good idea to get advice early and make sure you’re set up in the most tax-efficient way.

3. Business & Property Costs 

If you run a retail, hospitality, or leisure business and your premises rateable value is below £500,000, good news: your business-rate multiplier is being cut. That helps cash flow, reduces fixed overheads, and might make your high-street or shop-based business more viable in 2026.

If your premises are larger (rateable value over £500,000) or if you’re considering expansion or moving into bigger properties, expect higher property taxes. That will increase overheads for larger operations or warehouses. 

The £4.3bn support package offers a buffer for those facing steep increases but it’s worth checking if you qualify. 

4. Support & Incentives

Capital allowance changes are the main government “incentive” for investing. Businesses planning to invest in equipment or upgrades from 2026 may benefit significantly. 

No new VAT or broad grant schemes for SMEs were announced, so support remains focused on business-rate relief and tax allowances rather than fresh grants. 

5. Cashflow & Planning Considerations

For small retail, hospitality, or leisure businesses: the business-rate cut may improve cash flow and make it easier to budget, but only from April 2026; 2025/26 bills may still be under the old system.

For businesses planning growth or investing in equipment, now may be a good time to assess whether capital investments make sense under the new first-year allowances.

For larger businesses or those using big commercial premises (warehouses, distribution centres, big offices), factor in higher business rates when projecting budgets or expansion plans.

Given that tax thresholds on income and NI are frozen, individuals (owners, staff) may feel squeezed over time as wages (or prices) increase, which could affect labour costs and take-home pay.

Read the full government fact sheet here.

Need Advice Tailored to Your Situation?

We’re here to help. If you’d like to talk through how the Autumn Budget affects you or your business, get in touch with us:

E: [email protected]

T: 01603 804876