With much speculation, and many leaks, ahead of the 2025 Autumn Budget it will likely one of the most talked about budgets of recent times.  But was it better or worse than we were expecting? And what are the key impacts on businesses?

Rising costs

There are higher business rates to be absorbed, higher labour costs through increased Minimum Wage rate, and inevitably higher raw material costs due to the aforementioned rises.  As a result, the price consumers pay will rise.

This is likely to lead to job losses, as businesses are forced to readjust their strategies to cope and will look to reduce the workforce in a drive for operational efficiency.

There was no roll back on the increases to national insurance contributions put in place by last year’s budget.

These increases are making life difficult for employers in the first place. Job vacancies fell for the fastest at any time since 2021 in the run up to the budget.   2021 was of course when the knock-on effects of COVID were working through our economy.

Tax rises

The Chancellor has put up tax on dividends, (as well as on savings income and property income) by approximately 2%.

This has immediate consequences for contractors, small business owners, and investor-led businesses, particularly those structured around personal service companies (PSCs) or owner-managed limited companies.

Many business owners will need to collaborate with their tax advisers to reevaluate their current remuneration structures, to determine if they remain optimal or whether alternative models, such as share schemes, bonuses or hybrid salary/dividend blends may be more effective.

Business owners, be on the lookout for you accountant being pro-active, and prioritise the opportunity.

One of the most immediate areas of change for SMEs is corporation tax. Several reforms were confirmed, resulting in reduced tax relief and higher tax exposure for many businesses.

The reduction in the Writing Down Allowance is expected to raise £1.5bn, meaning businesses will receive less tax relief when deducting depreciation on qualifying plant and machinery.

This will lead to larger tax bills for businesses who need to make significant capital expenditure, and increased pressure on purchasing or upgrading vehicles, machinery and equipment.

What was concealed was another barrier to growth, the reduction in tax relief on Venture Capital Trust (VCTs) share purchases.

This is a very important way of British businesses accessing capital from the markets. The last time tax relief was cut on VCT shares, it took the market 16 years for capital flows to recover. VCT has delivered significant benefits for UK business. To privacy and example, Octopus Energy has its origins in the Enterprise Investment schemes / Venture Capital Trust space, as do a great many other successful UK companies.

An interesting development was “Permanently Lower Tax Rates” for Retail, Hospitality & Leisure which will be a major change for three quarters of million hospitality, retain and leisure properties, to be financed by an increase on rates for properties valued at over £500,000.  This is projected to affect large industrial units and warehouses, such as the used by online retailers.

Administration

What was in the budget will pose further problems for businesses, as they will have to administrate, and absorb the cost of the additional bureaucracy around the limit to salary sacrifices schemes.

As a nation we don’t save as much as we should for retirement in the first place, so making saving for retirement less attractive is deeply contradictory.

Concerned how the 2025 Autumn Budget will affect your business and finances? Taylormade Financial Management is a long established Independent Financial Advisory practice and well equipped to help clients chart the turbulent waters that surround budget announcements.  Our mission is to provide first-class financial planning advice to individuals, companies and trustees.

 

Important Disclosure: content provided does not consider individual circumstances and does not constitute personal advice.  The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.