Autumn Budget 2025: Key Impacts for Businesses and Individuals

The Autumn Budget 2025 introduces a wave of tax and regulatory changes that will shape the landscape for both businesses and individuals. In this blog we will summarise the most important developments and what they could mean for you and your business:

For Businesses

Corporation Tax

It was announced that the Corporation Tax roadmap from 2024 remain unchanged but we will see the following changes:

• Headline rate capped at 25% for the foreseeable future.

• Small Profits Rate and marginal relief remain unchanged.

• Permanent full expensing for qualifying investments continues, supporting business investment.

• 100% first year allowances for zero emission cars and EV charge points extended to 2027.

• Penalties for late corporation tax returns will double from April 2026.

Making Tax Digital (MTD)

As we already know, MTD comes into play for sole traders and landlords with an income over £50,000 from April 2026. Followed by those with an income of £30,000 or more from April 2027. We were informed that the following will happen:

• Extended to sole traders and landlords with income over £20,000 by end of the current Parliament 

• Some groups receive a one-year deferral; certain vulnerable tax payers are permanently exempt.

National Minimum/Living Wage

As expected it was announced that the national living wage would be increased for all age brackets from April 2026 as follows:

• National Living Wage will increase by 4.1% to £12.71 per hour 

• The National Minimum Wage for 18-20 year olds will also increase by 8.5% to £10.85 per hour

• Those under 18 and apprentices will increase by 6.0% to £8.00 per hour

The proposed increase will mean that the cost of hiring an employee above 21 years for 40 hours a week would be over £30,000 for the employers.  

Business Rates

The government says it’s taking steps to support businesses, enabling them to expand and grow. They will do this by providing an additional two years of Small Business Rates Relief for businesses expanding into a second property.

• New high-value multiplier for properties over £500k rateable value from April 2026.

• Additional relief for expanding small businesses and ongoing reforms under consultation.

Capital Allowances

Key features in the Capital Allowances regime were maintained such as;

• Full expensing and 100% first-year relief for new plant and machinery up to £1m continues.

• New 40% First-Year Allowance for main-rate assets from Jan 2026, including leasing sector. Cars, second-hand assets and assets for leasing overseas will not be eligible.

• Main rate writing-down allowance drops from 18% to 14% from April 2026.

VAT

There were no changes to current VAT rates or thresholds.

For Individuals

Income Tax

I’m aware that most people fully expected the income tax thresholds to still be uprated with inflation from 2028 but it was welcomed that the freeze will be extended until 2030-32 meaning the thresholds remain the same at £12,570 and £50,270.

However we did hear that Dividend rates will be increased from April 2026 as follows;

• Ordinary rate will increase from 8.75% to 10.75%

• Upper rate will increase from 33.75 to 35.75

• Additional rate will remain the same at 39.35%

Rates on property and savings income will also increase from April 2027;

• Basic rate - from 20% to 22%

• Higher rate - from 40% to 42%

• Additional rate - from 45% to 47%

Salary sacrifice schemes for pensions

From April 2029, the pension salary sacrifice National Insurance Contributions exemption has been capped at £2,000 a year. 

Whilst from April 2026 the state pension will increase by 4.8%

Capital Gains Tax (CGT)

In 2025 the Business Asset Disposal Relief rate rose from 10%-14% and yet again it’s on the rise along with making a cut to tax relief to employee ownership trusts;

• Business Asset Disposal Relief and Investors’ Relief rates rise to 14% (2025) and 18% (2026).

• EOT CGT relief cut from 100% to 50% for disposals after Nov 2025.

Inheritance Tax (IHT)

Thresholds remain frozen until 2031 but some allowances to rise with inflation from 2031.

Taxation of company cars 

The government set company car tax rates (benefits-in-kind) for tax years 2028/29 and 2029/30, with further details to be published. 

• Zero emission and electric vehicles will increase by 2% per year in 2028/29 and 2029/30, rising to a percentage of 9% in tax year 2029/30.   

• All cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in tax year 2028/29 and 19% in tax year 2029/30.    

• All other vehicle bands will increase by 1% per year in tax years 2028/29 and 2029/30. This will be to a maximum percentage of 38% for tax year 2028/29 and 39% for tax year 2029/30. 

Electric car drivers will be subject to a pay-per-mile charge (eVED) on battery electric and plug-in hybrid cars from April 2028. The mileage-based charge has been confirmed to be 3p per mile for battery electric cars and 1.5p per mile for hybrid vehicles for the tax year 2028/29.

What This Means

Businesses

It will be important for business owners to plan ahead for the wage increase. It may only seem like a small amount but this can have a big impact on businesses who have many employees.

Businesses will be pleased to hear that corporation tax will remain frozen at 25% and those making a small profit of under £50,000 will not be affected either.

If you have difficulty paying your corporation tax it’s a great idea to budget accordingly and make appropriate changes to avoid late payments now that the fines are increasing. 

Individuals

For those in the minimum wage bracket, they’ll feel a little better off each month. Whereas those who are earning a higher salary won’t see a difference in the short term but may do in the long term as the thresholds for earnings remain the same. 

Anyone contributing towards a pension via salary sacrifice will be affected by the £2,000 cap meaning they are now paying more national insurance if they exceed the cap.

Those receiving a state pension I’m sure will welcome the 4.8% increase next year. The government is exploring the best way to ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027/28 if the new or basic State Pension exceeds the Personal Allowance from that point. More details will be set out next year.

From April 2029, the government will require Income Tax Self Assessment (ITSA) taxpayers who also have PAYE income to pay more of their tax payments through the year via the PAYE system. They will also consult in early 2026 on detailed design options, and on options for timelier tax payment for those with self-assessment income only.

I hope this blog has given you a good summary of the budget and how you may be affected. If you need advice on how these changes affect you, please get in touch with us here at Pinnacle Advisory Services for tailored tax planning and business guidance.

Sources: ACCA Guide to Autumn Budget 2025

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