"As we dive into the recent Autumn Budget and its sweeping changes, I want to acknowledge the unique challenges that many of you, as business leaders, are currently facing. Since the pandemic, we haven’t seen this level of impact on how businesses need to plan and protect their financial futures. The new tax adjustments, from national insurance contributions to capital gains and corporate tax, bring a mix of opportunities and uncertainties. Navigating these changes will require not only resilience but also a clear understanding of how these shifts affect day-to-day and long-term financial health.
At Futrli by Sage, we’re here to help you make sense of it all. Our advanced forecasting and scenario planning tools are designed to give you a clearer view of how different financial paths could unfold, allowing you to prepare proactively and make decisions confidently. As you respond to this budget and support your clients, know that our tools are here to enhance your ability to guide, anticipate, and strategize for sustainable growth in this new landscape."
Whilst claiming to stick to Labour’s manifesto pledge not to increase taxes for ‘working people’, in her first budget Chancellor Rachel Reeves announced increases to capital gains tax and employer’s national insurance but unfroze the personal tax bands from 2028.
The Chancellor heralded it as a “fixing the foundations” Budget, which was aimed at repairing the public finances and fixing a claimed £22bn black-hole in the previous government’s spending plans.
Labour's manifesto pledged not to increase income tax, national insurance (Labour says the pledge was only for Employee’s NI) and VAT, so the Chancellor decided instead to raise other taxes like capital gains tax, inheritance tax and Employers’ national insurance to find the £40bn needed to balance the books and allow for the investment in growth and public spending that the Chancellor said people had voted for.
Reeves said that she was sticking to the new government’s manifesto pledges not to increase taxes on “working people” with the much-expected rise in employer’s national insurance contributions, taking the employer rate to 15%. Of the £40bn in tax rises, half comes from the increase in employers’ national insurance (NI).
Reeves also announced increases to capital gains tax, where she increased the higher rate from 20% to 24% and the lower rate from 10% to 18% and closed the inheritance tax loopholes, bringing inherited pensions into IHT from April 2027 and a pledge to reform agricultural property relief.
She also scrapped the non-dom regime from 2025, going further than the previously announced changes, and replacing it instead with a new residence-based scheme “with internationally competitive arrangements for those coming to the UK on a temporary basis”.
One rabbit pulled from the hat, as Chancellors like to do, was the announcement that against most pre-Budget predictions, Reeves would not be extending the freeze on personal tax thresholds beyond the current plans, instead announcing that from April 2028 personal tax thresholds will be updated in line with inflation. This will mean an end to ‘fiscal drag’ which has pulled many more people into paying tax since thresholds were first frozen by (then Chancellor) Rishi Sunak in 2021.
Reeves also announced that there will no longer be biannual fiscal events. The Budget will now only be in the autumn, while future Spring Statements will have no tax changes.
KEY BUSINESS CHANGES
Overall, the Autumn Budget was a bit of a mixed bag for businesses. On the one hand, the Chancellor made some significant moves to shore up the Government's finances – the largest hike in employer national insurance contributions in recent memory and a large rise in the National Minimum Wage particularly for younger workers being prime examples.
At the same time, the Budget also included some targeted support and relief for smaller firms. This notably included the expansion of the employment allowance, the NI discount available to eligible (smaller) businesses.
Employer national insurance contributions
The biggest change for most businesses in the Autumn Budget was the increase in employer NICs from 13.8% to 15% from April 2025. This was accompanied by a large reduction in the Secondary Threshold which will drop from £9,100 to £5,000.
Currently, employers pay 13.8% NICs on employee earnings above £9,100. The changes mean that From April 2025, they will pay a higher rate of 15% and start paying this on earnings above just £5,000 – meaning more of each employee's salary will be subject to employer NICs.
To protect smaller businesses from these increases, the Government is reforming the employment allowance – a relief that essentially discounts their national insurance contributions.
The employment allowance increases from £5,000 to £10,500, and the previous £100,000 eligibility threshold for employment allowance has been removed.
According to Government predictions, the net effect of these changes means:
- 865,000 employers will pay no NICs at all next year.
- More than 1 million employers will see no change or save money overall.
- Larger employers will bear the brunt of NICs hikes, with projected revenues of £25bn a year.
Business rates support
In the Autumn Budget, the Chancellor made it clear that the Government is focused on providing relief and stability regarding business rates, especially for those in the retail, hospitality, and leisure sectors.
The small business multiplier freeze
The small business multiplier in England will be frozen at 49.9p for 2025/26, protecting over a million small properties from inflationary increases when combined with small business rates relief.
Retail, hospitality, and leisure relief
Business rates relief currently offers a 75% discount, capped at £110,000, which was due to end on 1 April 2025. The Chancellor extended the relief for the 2025/26 tax year but at a reduced discount of 40%.
Dating back to 2020, the policy was introduced for the hospitality industry on the back of the temporary closures enforced during the Covid-19 pandemic.
Future multiplier changes
Looking ahead, the Government plans to introduce permanently lower business rates multipliers for retail, hospitality and leisure properties from 2026/27, which will be funded by a higher multiplier for properties with rateable values above £500,000.
Investing in growth-driving sectors
The Autumn Budget confirmed the Spring Budget’s long-term support for growth-driving sectors:
- £975m over five years for the aerospace sector.
- More than £2bn over five years for the automotive sector, focusing on zero-emission vehicle manufacturing.
- Up to £520m for a new Life Sciences Innovative Manufacturing Fund.
- Tax reliefs providing £15bn of support over the next five years for the creative industries.
Encouraging business investment
The previous Government’s £1m annual investment allowance has been maintained, providing certainty for businesses looking to invest in their future growth.
The Government is also extending the 100% first-year allowances for zero-emission cars and electric vehicle charge points for another year, supporting the transition to cleaner transportation.
Supporting small businesses
The Chancellor confirmed several measures from the previous government’s Spring Budget aimed at supporting small businesses, including:
- Over £1bn across 2024/25 and 2025/26 for the British Business Bank to enhance access to finance for small businesses, including over £250m each year for small business loans programmes, such as Start Up Loans and the Growth Guarantee Scheme.
- Over £200m for wider small business support, including continued funding for Growth Hubs and the Help to Grow Management scheme.
- The Made Smarter Adoption programme, which helps small manufacturing businesses adopt advanced digital technologies, will see its funding double to £16m in 2025/26.
Prompt payment practices
From 1 October 2025, the Government will exclude companies bidding for contracts worth over £5m a year from the procurement process if they don’t pay their suppliers within an average of 45 days.
Research and development investment
The Autumn Budget emphasised the importance of research and development (R&D) in driving innovation and economic growth:
- £20.4bn allocated for R&D investment in 2025/26, including at least £6.1bn for core research.
- £25m in 2025/26 for a new multi-year R&D Missions Programme.
- Real-terms increase in funding for the National Institute for Health and Care Research.
- At least £40m over five years to support the commercialisation of university research through spin-out proof-of-concept funding.
New compliance rules target rogue umbrella companies
The Chancellor also introduced measures to address non-compliance and fraud within umbrella companies. One key measure is the establishment of mandatory due diligence requirements.
Businesses engaging with umbrella companies will need to ensure these entities comply with tax obligations or face penalties. The initiative, effective from April 2026, is expected to enforce stricter adherence to PAYE (Pay As You Earn) tax and NIC regulations within the supply chain.
Additionally, HMRC will now be able to reclaim unpaid taxes directly from other entities in the labour supply chain if an umbrella company defaults. This approach mirrors existing rules for agencies and places responsibility on larger recruitment firms and end clients to ensure compliance throughout their labour networks. These changes could foster greater transparency and protect workers from underpayments while ensuring consistent tax revenues for HMRC.
SUPPORT FOR BUSINESSES
In Labour’s first Budget in 14 years, Chancellor Rachel Reeves presented a series of measures designed to offer targeted support to struggling sectors, promote sustainable investment, and maintain fiscal security, especially for small and mid-sized businesses. However, the reliefs are balanced by increased contributions from large companies.
Financial support for business investment and rates relief
Corporation tax maintained
A critical component of the Budget was the maintenance of corporation tax rates, with the main rate capped at 25% for the duration of the Parliament. Smaller companies with profits under £50,000 will still benefit from the reduced rate of 19%. This consistency is intended to foster long-term planning for businesses.
Business asset disposal relief (BADR) maintained
The lifetime limit for business asset disposal relief (BADR), which offers a reduced rate for qualifying business disposals, was maintained at £1m to encourage entrepreneurship and business investment. The BADR rate will remain at 10% this year but will rise to 14% in April 2025 and 18% from April 2026, aligning with the main CGT rates.
Investment in green and digital infrastructure
The Energy Profits Levy on oil and gas companies was increased by three percentage points to 38% and extended until 31 March 2030, with the 29% investment allowance also removed.
The money raised will be diverted toward environmental projects. In line with sustainability goals, the Budget introduced green grants and subsidies for energy-intensive sectors, such as logistics and manufacturing, to help businesses reduce carbon emissions.
HMRC digitalisation
The Chancellor also announced a heavy investment in HMRC modernisation to improve tax compliance and close the tax gap. This includes funding for 5,000 additional compliance officers and updates to tax processing systems, which aim to make filing more efficient and lessen the administrative load on SMEs. The enhanced digital capabilities may reduce compliance costs for smaller businesses.
The Budget Red Book also contained an update on Making Tax Digital for income tax (MTD IT). Despite MTD IT not being launched yet, it appears the government has plans to bring even more taxpayers into it.
The red book clearly states that the government is committed to delivering MTD IT. It then goes on to say that it will expand the rollout of MTD to those with incomes over £20,000 by the end of this Parliament, with precise timing to be set out in a future fiscal event.
The overview of tax legislation and rates (OOTLAR) also confirms that the first taxpayers to join MTD IT will be those with income from trading and property of over £50,000, who will be required to join in April 2026. Those with income between £30,000 and £50,000 will then join a year later in April 2027.
Today’s announcement means a third tranche of taxpayers, those with income between £20,000 and £30,000 will then also be required to join at some point, presumably after April 2027.
Sector-specific support and incentives for growth
The Chancellor unveiled a £20.4bn R&D allocation for 2025/26 to assist with industry-specific recovery and encourage innovation, especially within the high-tech, pharmaceutical, and manufacturing sectors.
The annual investment allowance remained at £1m, allowing companies to deduct investments in machinery and other qualifying assets. This provision, combined with the full expensing scheme for capital expenditures, incentivises technology-driven growth and may aid businesses in scaling up by making infrastructure upgrades more feasible.
Additionally, fuel duty remains frozen for another year at a flat rate of 52.95p per litre, which helps to contain costs for logistics and transport-heavy industries.
In an unexpected move, draught alcohol duty will be cut by 1.7% from February 2025, equivalent to a penny off each pint, a relief aimed at supporting the hospitality sector. While largely symbolic, it demonstrated some Government support for an industry significantly impacted by changing consumer behaviours and economic pressures post-pandemic.
Reforms and long-term rate adjustments
The Budget also confirmed that the small business rates multiplier will remain frozen at 49.9p for another year, extending relief to small enterprises across the UK. Looking ahead, the Government has pledged to reform business rates permanently for retail, hospitality, and leisure sectors starting in 2026/27, introducing a lower multiplier intended to reduce long-term costs for high-street businesses.
These upcoming reforms are expected to stabilise property tax expenses for smaller operations, potentially incentivising further investment in physical storefronts and revitalising local economies.
This relief provides a buffer as businesses adapt to other fiscal changes introduced in the Budget, offering consistency amidst broader economic shifts.
Looking ahead
Despite the headline announcement of increases in employer national insurance contributions, this Budget provided immediate and extended support for smaller businesses and promised sustainability and compliance enhancements.
Still, the eventual scaling back of reliefs, like business rates, may present challenges for specific sectors.
The focus on digital compliance improvements may lead to greater efficiency within the tax system, reduce the burden on businesses, and crack down on fraud and malpractice.
How Accountants can help their clients
As well as being able to share the Budget highlights with them, this is an ideal time to remind your clients of the value of good management reporting and detailed forecasting to help them plan for the future.
The Chancellor is hoping that the certainty around corporation tax, BADR, R&D tax and confirmation of full expensing will mean that businesses can confidently invest and make plans for growth.
As an accountant or finance team, having Futrli on your side means you can accurately model and forecast different investment scenarios, highlighting opportunities and building their confidence on vital metrics such as cashflow.