Autumn Budget reaction 2025

As it turned out the Budget itself, whilst raising taxes, was not as drastic as it could have been, and certainly less draconian for businesses than last year’s speech.  All of that uncertainty was a bit unnecessary, and it’s just as well that our region’s businesses are, on the whole, pretty resilient.

While it didn’t have a bombshell like 2024’s national insurance hike, there was plenty of tough news for business owners: a reduction in capital allowance writing down allowances from 18% to 14%, a 2% increase in income tax on dividends, a cap on salary sacrifice pension contributions, and a further reduction in the tax-efficiency of owning or leasing electric vehicles through companies. 

It wasn’t all bad news: the announcement that SMEs would see training costs for apprentices aged under 25 fully funded, no further changes in corporation tax rates (in particular the small companies rate of 19%), and the news that farmers and family business owners will be able to transfer their zero rate inheritance tax band to their spouses are all welcome, but extremely limited in scope and impact. 

Our hard-pressed hospitality, leisure and retail sectors will welcome the small reduction in business rates, but they will be disproportionately affected by the 8.5% increase in the national minimum wage for workers aged 18-21.  UK retailers may also welcome the levelling of the playing field that imposing customs duty on parcels of any value will bring about. 

In the end, despite indifferent productivity figures, the Chancellor had more headroom than expected when preparing her Budget.  Shame, then, that she and her colleagues felt the need to dent confidence over recent months by briefing doom and gloom. 

It is striking how many of the tax-raising measures don’t kick in until the second half of this Parliament.  Perhaps the government is hoping that some benign economic winds will mean they can row back on some of them in the lead-up to the next election. 

The Chancellor must ensure that she does not come back for more tax for a third time next year.  The increased headroom should provide more insulation against further global events.  As such, I hope that businesses can move into 2026 with increased confidence and this will start to accelerate the growth agenda.