Business news 27 November 2025 Autumn Budget Special
A comprehensive breakdown of the Autumn Budget 2025 and what it means for UK small businesses, including threshold freezes, dividend tax changes, capital allowances, compliance measures and market movements.
James Salmon, Operations Director.
Budget sees extension of threshold freeze
More than 1.7m additional people will be pulled into paying income tax after Rachel Reeves extended the income tax and National Insurance threshold freezes to 2030/31. The personal allowance will remain at £12,750, the higher-rate threshold at £50,270, and the additional-rate threshold at £125,140.
By 2029/30, there will be 780,000 new basic-rate, 920,000 new higher-rate, and 4,000 new additional-rate taxpayers. The freeze will raise £8.3bn for the Treasury. Tax experts warn that millions who never expected to enter higher-rate bands will be pushed into them, worsening the squeeze on household income.
Why it matters for SMEs selling on credit:
Customers’ disposable incomes fall, increasing late-payment risk.
Tax burden hits record levels
The tax-to-GDP ratio will reach 38.3% by 2030/31, the highest level in over 300 years. The Budget contains 24 tax rises, bringing in an extra £30bn a year by 2030/31, including £12.7bn from extending threshold freezes.
The OBR says the freeze alone will create 5.2 million more taxpayers, and notes that two-thirds of the overall tax rise since 2019/20 comes from increases in personal taxation.
Why it matters:
Higher personal tax pressure reduces purchasing power and raises credit risk.
Chancellor confirms dividend tax hike
From April 2026, dividend tax will rise:
- Basic rate: 10.75%
- Higher rate: 37.75%
- Additional rate: unchanged at 39.35%
The changes will raise around £1.2bn annually. Critics warn that taxing dividends more heavily will deter investment and weaken the attractiveness of running a small business.
Why it matters:
Owner-managers relying on dividends will see lower net income, restricting cashflow.
Writing down allowance reduced
The writing down allowance on past investments will drop from 18% to 14% from next April, costing UK companies an estimated £1.5bn a year. This raises capital costs and increases corporation tax bills.
As partial mitigation, the Government will introduce a 40% first-year allowance for leased equipment starting January 1. Industry leaders called this a “pragmatic step.”
Why it matters:
Higher tax-adjusted capital costs reduce liquidity available for paying suppliers.
WFH tax breaks to be axed
From April, employees will no longer be able to claim tax relief for unreimbursed home-working expenses. Millions benefited from these deductions during and after the pandemic. Employers may still reimburse eligible costs tax-free.
Why it matters:
While modest individually, reduced relief compounds household cost pressures.
Mansion tax hits high-value property owners
Starting 2028, properties worth over £2m will face an annual surcharge beginning at £2,500 and rising to £7,500 for homes over £5bn. Valuations will be based on 2026 assessments. The OBR expects £400m annual revenue. Experts say the measure complicates an already outdated council tax system.
Why it matters:
Higher annual costs reduce liquidity for high-value property owners, including many business directors.
House prices set to climb by £33k
The OBR forecasts that average house prices will rise to ~£305,000 by 2030, an increase of £33,000, with 2.5% annual growth from 2026. It has, however, downgraded forecasts for property transactions and new builds, suggesting a cooling market.
Why it matters:
Slower housing transactions mean weaker cashflow for trades and property-linked SMEs.
Electric vehicles: mileage-based tax to replace VED
The Budget confirmed that a new mileage-based tax will be introduced for electric vehicles and plug-in hybrids from 2028, replacing the existing system of Vehicle Excise Duty exemptions.
The move is intended to ensure EV drivers contribute to road funding as petrol and diesel receipts decline. Details of the charging structure will be set out closer to implementation, but the Treasury notes that a distance-based system is the fairest approach and aligns with the long-term shift toward zero-emission transport.
Why it matters for SMEs selling on credit:
Transport-dependent customers may see higher operating costs from 2028, affecting margins and payment reliability.
Non-compete clauses: reform options published
The Government has published a working paper exploring reforms to non-compete clauses in employment contracts. The paper argues that non-competes can restrict labour mobility, limit knowledge spillovers, and reduce incentives for innovation.
Options under consideration include caps on duration, mandatory compensation, or even narrower definitions of what constitutes a valid non-compete. No final model has been chosen, and the Government will continue to consult businesses and legal experts before legislating.
Why it matters for SMEs selling on credit:
Greater labour mobility may increase staff turnover for customer firms, raising recruitment costs and temporarily disrupting cashflow.
Tourist tax powers expanded to mayors
As previously announced, mayors in England will be given new powers to impose a tourist tax on overnight stays in their local areas. The measure is intended to give regions more control over funding local services and tourism infrastructure, mirroring models already used in European cities.
Local authorities will decide whether to introduce the levy and at what level, with revenues ring-fenced for local development. Business groups note that while the impact on domestic travellers is likely modest, the levy may be felt more heavily in cities with high visitor numbers.
Why it matters for SMEs selling on credit:
Any reduction in tourism demand pressures hospitality and retail customers, increasing late-payment exposure in those sectors.
Government targets evasion with new measures
The Government aims to raise £10bn by 2029/30 through anti-evasion measures. Plans include:
- A US-style whistleblower reward scheme;
- Stronger director disqualification powers;
- Greater enforcement against illicit trading.
Experts say the crackdown will help level the playing field but warn that simplification of the tax code is essential.
Why it matters:
Honest SMEs benefit from stronger action on fraudulent competitors — but face tougher compliance expectations.
SMEs to ‘share the pain’ of threshold freeze
Business groups warn that the combination of frozen income tax thresholds and higher dividend taxes will squeeze margins and reduce investment incentives. The FSB says rising dividend taxes make investing in one’s own business “one of the least tax-friendly” options available.
Why it matters:
Shrinking margins across the SME customer base increase late-payment and insolvency risk.
Business rates reform criticised
The Budget’s business rates changes have been criticised for raising bills for many small firms while reducing them for large supermarkets. Independent retailers and pubs say the relief offered is too small to offset rising costs.
Why it matters:
Higher fixed costs for high-street businesses significantly increase credit risk for suppliers.
Budget delivers £2k salary sacrifice cap
A £2,000 cap on salary-sacrifice pension contributions will take effect in April 2029, limiting the NI-exempt amount employees can exchange for pension contributions. Business groups say this will increase employment costs, especially for firms with senior staff.
Why it matters:
Rising wage-related costs reduce customers’ ability to pay promptly.
OBR downgrades growth forecast
While 2025 growth has been revised up to 1.5%, forecasts for 2026–2029 have all been downgraded to 1.4–1.5%, reflecting a weaker economic outlook. Borrowing will be £21bn higher this year than expected. The OBR warns the UK remains “vulnerable to future shocks.”
Why it matters:
Slower growth weakens demand and heightens late-payment risk.
Market Summary
UK & Global Equities:
Markets saw steady gains, supported by expectations of US rate cuts. The FTSE 100 rose 0.9%, buoyed by the Budget’s perceived fiscal responsibility. Global tech stocks continued to lead gains.
Commodities:
Metals remain strong, with gold, silver and copper trading near record highs. Oil prices weakened again, with Brent slipping below $63, as investors track Ukraine peace efforts and OPEC+ deliberations.
Currencies:
The pound strengthened for the fifth consecutive day, reaching 1.3210 versus the dollar. The dollar softened broadly, while the yen was the only G10 currency to weaken. Latin American currencies outperformed.
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