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The Autumn Budget 2025 introduces a wide range of financial, regulatory, and tax changes that will impact business owners, sole traders and contractor workers across the UK. With updates affecting everything from National Insurance to investment reliefs, this blog outlines the key takeaways from the budget and what they mean for your business.
From 6 April 2026, dividend income will be taxed at rates 2 percentage points higher than current rates at both the ordinary and upper bands. Meanwhile, from 6 April 2027, the government will also increase tax rates on savings income by 2 percentage points across all bands.
Additionally, new separate tax rates for property income will come into effect from 6 April 2027, set at 22% for basic rate, 42% for higher rate and 47% for additional rate taxpayers. Reliefs and allowances will now be applied to these income types after other income sources.
NIC thresholds for employees, employers, and the self-employed will be frozen until April 2031, effectively raising liabilities as earnings increase.
The salary sacrifice scheme will see a significant change from April 2029, with the tax-advantaged pension contributions via salary sacrifice capped at £2,000 per year.
Voluntary Class 2 NICs for those abroad will also be removed from 6 April 2026, with a new requirement of at least 10 years of UK contributions or residency to be eligible for Class 3.
The government will defer Making Tax Digital (MTD) requirements for some small businesses until April 2027. Businesses donating to registered charities will benefit from VAT relief starting 1 April 2026.
Cross-border VAT grouping rules will be simplified from November 2025, enabling unconditional, whole-entity grouping.
From 26 November 2025, the CGT relief for disposals to Employee Ownership Trusts (EOTs) will be reduced from 100% to 50%.
Inheritance tax reforms will maintain current thresholds until 2031, but from 2027 a new £1 million cap on relief for agricultural and business property will apply. This cap will be transferable between spouses or civil partners.
The Enterprise Management Incentive (EMI) scheme will be expanded from April 2026 to include scale-ups. Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) will see increased investment thresholds, though VCT tax relief will be reduced. A new 40% first-year capital allowance will be introduced from January 2026 for eligible investments.
From 1 April 2026, new transitional business rate relief schemes will be introduced, alongside a reduction in multipliers.
Two new lower multipliers will be created for retail, hospitality, and leisure businesses. The British Industry Supercharger scheme will also offer targeted support to energy-intensive industries.
The National Living Wage will rise to £12.71 per hour from 1 April 2026. A new jobs guarantee scheme will support 18–21-year-olds on Universal Credit with 6-month paid work placements. These reforms aim to increase employment and workforce participation.
The government is allocating £1.5 billion towards skills and apprenticeships through a new Growth and Skills Levy. A targeted R&D Advance Assurance Service for SMEs will be launched in Spring 2026 to simplify claims under the R&D tax relief system.
A High-Value Council Tax Surcharge will be introduced from April 2028 for properties valued over £2 million. Changes to carried interest mean it will now be taxed as income from April 2026.
The nil-rate bands for Inheritance Tax and Agricultural Property Relief will remain fixed, but a new transferability clause for unused allowances will be added.
New administrative powers will be introduced from April 2026 to improve MTD compliance and penalty systems.
The requirement to actively claim incorporation relief for transferring a business to a company will also apply from April 2026. HMRC will gain powers to enforce corrections to tax returns when taxpayer errors are found.
The Autumn Budget 2025 sets a clear direction for increased compliance, revenue raising, and economic modernisation.
While there are incentives for investment and innovation, business owners, sole traders, and contractors should prepare for higher tax liabilities and stricter rules in the years ahead.
At CloudAccountant.co.uk, we’re here to help you navigate these changes, maximise your reliefs, and stay compliant in an evolving financial landscape.