Chancellor Rachel Reeves delivered the 2025 Autumn Budget today, outlining a package aimed at restoring fiscal stability at a time of weak productivity and sustained high borrowing costs.
Below is a practical breakdown of the provisions most likely to affect SMBs, Limited Company Contractors and sole traders, along with considerations for planning ahead.
From April 2026, dividend tax rates will rise by 2 percentage points, reaching 10.75% for basic-rate taxpayers and 35.75% for higher-rate taxpayers. Savings income taxes will increase from April 2027, with rates set at 22% (basic), 42% (higher), and 47% (additional).
Action: Review planned dividend distributions and assess whether salary adjustments or pension contributions may offer more efficient outcomes.
A parallel 2 percentage points increase applies to property income tax from April 2027, with rates set at 22% (basic), 42% (higher), and 47% (additional).
Action: Businesses that hold rental property, such as hospitality or franchise operators, may need to reassess property strategies, especially with commercial valuations already under strain.
From April 2029, employer pension contributions over £2,000 per employee will be subject to 15% National Insurance, while employees will pay 8% (or 2% on earnings above £50,270).
Action: Evaluate current pension schemes to quantify future costs and consider revising benefit structures.
The government will freeze personal income tax thresholds through 2030–31, a move that the OBR estimates will generate significant revenue as it gradually pushes more taxpayers into higher rate bands.
Action: Make full use of allowable expenses and tax-planning opportunities early in the tax year.
Duties will apply to parcels of any value from April 2026 to address undercutting by online retailers.
Corporate tax remains largely unchanged providing some welcome stability, though ongoing scrutiny over remuneration and benefits is expected.
The new National Living Wage will rise 4.1% to £12.71 an hour from April 2026. While this increases payroll costs, it may help strengthen retention and morale in high-turnover sectors such as retail and care.
Action: Review employee rates prior to April 2026.
A 3p-per-mile levy for EVs will be introduced from April 2028, generating an estimated annual cost of around £255 per vehicle.
Action: Factor in this charge when assessing the financial case for electrifying fleets.
The Budget includes measures to shift some energy policy costs off household bills and into public spending, a step the Treasury says will reduce bills modestly. Independent analysis and industry bodies have set out possible savings and option. The government expects to absorb 75% of Renewables Obligation costs until 2029. This is expected to reduce average domestic energy bills by £76 per year and provide associated relief for commercial users.
Action: Revisit energy supply contracts to ensure savings are reflected in pricing.
Fuel duty remains at 52.95p per litre until at least September 2026. For logistics dependent businesses, this offers short-term stability. Planned increases from 2027, indexed to inflation, reinforce the case for fuel-efficient or hybrid fleets.
Online Budget Update from Prospera Wealth Management LLP – Wednesday 26th November 7:30pm
You may have been introduced to Adam Ellis and his team at Prospera Wealth Management LLP previously, but if not, now is a great time to get in touch for personal wealth management and tax planning. He will be holding a webinar on the 26th November 2025 at 19:30, to provide an overview of the changes following the budget. For more details and a link to the invite, please click here.
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