The 2025 Autumn Budget: what it means for your small business

The 2025 Autumn Budget will not go down as a fireworks display. No rabbits, no champagne moment. What it does try to offer is something most small business owners secretly value far more than drama: stability, a clearer view of the tax landscape, and a nudge to invest in people and kit.

Below is a practical run-through of the key changes that matter for UK SMEs, and how to turn them into something useful rather than just more noise from Westminster.

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1. Business rates: a quieter win for high street firms

If you are in retail, hospitality or leisure in England, this is the bit to pay attention to.

From April 2026, qualifying retail, hospitality and leisure properties with a rateable value below £500,000 will get a business rates multiplier that is 5p lower than both the standard and small business multipliers.

In very rough terms:

• If your rateable value is £100,000, a 5p lower multiplier is worth around £5,000 a year off your bill compared with the standard rate, all else equal.
• The saving scales with the size of the property, up to that £500,000 cap.

At the same time, properties with a rateable value above £500,000 will pay a higher multiplier, 2.8p above the standard rate. This cross-subsidy is what lets the Treasury keep the small end of the market cheaper.

There will also be:

• A transitional relief scheme from 2026 to 2029, capping how fast bills can rise after the 2026 revaluation.
• A 100% relief for electric vehicle charging points.

For many high street SMEs, this is one of the most tangible positives in the Budget. It will not rescue a broken business model, but it should blunt some of the pain of higher costs and give you space to reinvest on the shop floor.

What to do

• Check your latest rateable value and model what a 5p discount does to your bill.
• If you are close to the £500,000 line, think carefully about future expansions or refurbishments that might push you above it.
• If you own or manage car parks or roadside sites, assess whether EV chargepoints become more viable with 100% rates relief.

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2. Tax and investment: more upfront relief, more tax on “unearned” income

Capital allowances

From April 2026 the main writing down allowance on qualifying plant and machinery will fall from 18% to 14%, but there will be a new 40% first year allowance on that spending.

In practice:

• Invest £100,000 in qualifying kit in 2026.
• You can deduct £40,000 immediately as a first year allowance.
• The remaining £60,000 then moves into your pool and is written down at 14% a year.

This favours businesses that are investing regularly and want the cash flow benefit up front. It is less generous if you have large legacy asset pools you were slowly writing down at 18%.

For many SMEs, especially manufacturers, trades and digital firms investing in hardware, the message is simple: if you are going to invest, do it in a planned, regular way and design your capital programme around that 40% spike.

Tax on dividends, property and savings

If you pay yourself mainly in dividends, or have significant rental or savings income alongside your business, there are some quiet but important shifts.

• Dividend tax rates rise by 2 percentage points for basic and higher rate taxpayers from April 2026.
• From April 2027, tax on the property and savings elements of your income will also be 2 percentage points higher at each band.

The Budget is very clear about its direction of travel. Income from assets will be taxed more heavily, while employer pension contributions remain NICs free and investment in productive assets gets a more generous upfront allowance.

What to do

• Review how you extract profits from the business. Heavy reliance on dividends and property income will become more expensive from the second half of the decade.
• Speak to your adviser about the balance between salary, pension contributions and dividends.
• Map your capital spending from 2026 onwards so you actually capture the value of the new 40% allowance.

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3. People, pay and skills

National Living Wage

From April 2026 the National Living Wage for those aged 21 and over rises by 4.1% to £12.71 an hour. Younger rates rise faster: up 8.5% for 18 to 20 year olds, and 6% for 16 to 17 year olds and apprentices.

There is no way round it: if you are in low margin, labour intensive sectors this increases your wage bill.

However, two positives are worth noting:

• The increases follow Low Pay Commission recommendations, which helps remove political surprises.
• Higher minimum pay, combined with energy bill support for households, should support consumer spending in your local area, especially for everyday services.

Build the rise into your medium term pricing and staffing plans now rather than treating it as a nasty shock in 2026.

Growth and Skills Levy & Youth Guarantee

The current apprenticeship levy will be replaced by a new Growth and Skills Levy, with an extra £725 million of funding to 2028/29, alongside £425 million for a Youth Guarantee that offers every 18 to 21 year old further learning, a job or an apprenticeship.

The detail is still to come, but two themes matter for SMEs:

• Levy funds should be usable for a broader range of training, not just formal apprenticeships.
• The Youth Guarantee should improve the pipeline of work ready young people, particularly in regions with high NEET rates.

If your business has struggled to use the current levy system, or has been shut out of programmes because of their rigid design, keep an eye on this. It could finally make the training pot feel like your money, not just something large employers talk about.

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4. Transport and operating costs

Fuel duty

Fuel duty stays 5p lower until September 2026, with a staggered reversal of the cut by March 2027, and only from April 2027 do rates start to rise in line with RPI again.

If you run vans, taxis or delivery vehicles, that gives you:

• Another 18 months of relatively stable fuel duty.
• Time to plan for higher rates from 2027 without another sudden cliff edge.

The OBR notes that Budget measures, including the fuel duty freeze and cuts to domestic energy levy costs, are expected to lower CPI inflation by 0.3 to 0.4 percentage points in 2026 compared with doing nothing.

So while pump prices will still jerk around with global oil markets, the domestic tax element is fairly predictable for a change.

Electric vehicle mileage charge

From April 2028, pure and plug in hybrid electric cars will face a new mileage based charge alongside Vehicle Excise Duty, set initially at 3p per mile for battery electric and 1.5p per mile for plug in hybrids, indexed to CPI.

For SMEs, two takeaways:

• The long term cost advantage of EVs over efficient petrol diesels will narrow, but not disappear.
• The policy removes some uncertainty about how government will replace lost fuel duty, which is helpful if you were nervous about a more brutal levy down the line.

If you are midway through planning a fleet switch, this should go in the spreadsheet, not in the panic drawer.

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5. The bigger picture: stability with modest growth

The Office for Budget Responsibility’s forecasts are not exactly thrilling, but they are not catastrophic either.

• GDP growth is expected to sit at around 1.4 to 1.5% a year from 2025 to 2030.
• Inflation is forecast at 3.5% in 2025, 2.5% in 2026, and then hovering around the 2% target.
• Unemployment is seen staying near 5% until 2027 before drifting down towards 4% by 2030.
• Business investment growth is revised up in 2025, but weaker thereafter due to “subdued business confidence” and higher interest rates.

Public borrowing is projected to fall from £150 billion in 2024/25 to £67 billion in 2030/31, while debt as a share of GDP edges up and then slightly down, allowing the Chancellor to meet both fiscal rules but with fairly slim headroom.

For a small business, the message is that the government is trying hard not to frighten the horses. The economy looks set for steady, unspectacular growth with calmer inflation and no immediate lurches in fiscal policy. That environment tends to reward businesses that are disciplined, efficient and willing to invest in their niche while competitors are still sulking about the last crisis.

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6. A simple action checklist for SME owners

Over the next few months, it is worth doing five quiet pieces of homework.

1. Run the numbers on your premises
   • Confirm your current rateable value.
   • Estimate your 2026 business rates under the new multipliers and reliefs, including the impact of the revaluation.
2. Plan your capital spending profile
   • List major equipment and technology investments you expect between now and 2030.
   • Where possible, cluster spend in years where the 40% first year allowance gives you maximum relief.
3. Revisit your pay and staffing strategy
   • Model the 2026 National Living Wage and youth rate increases into your wage bill.
   • Think about productivity improvements that let you pay those rates while protecting margin, rather than simply cutting hours.
4. Prepare for the new skills regime
   • Keep an eye out for Growth and Skills Levy detail and talk to your training providers about how you could use it.
   • Position your firm to benefit from the Youth Guarantee pipeline of 18 to 21 year olds.
5. Review your profit extraction
   • Given higher taxes on dividends, property and savings income from the back half of the decade, sense check your mix of salary, pension, dividends and retained profits.

None of this is particularly glamorous. It will not make front page news. But if you treat this Budget as a chance to reset your medium term plan, rather than something to complain about over a pint, there are genuine opportunities tucked away in the fine print.

And if it all feels a bit dry, remember: boring macroeconomics is usually the best backdrop for interesting small businesses.

How can G&G assist you ?

If you would like any guidence on how to move your business forward, G&G has the necessary skillset to help you manage your business more efficiently and more profitably. if you would like some assistance, please dont hesitate to contact us.

From business planning or Business Administration to assisting with your organisations growth, we are happy to advise and help where we can. Get in touch to start your no-obligation consultation!