The Chancellor has delivered the Autumn Budget 2025 and confirmed a long list of tax and spending changes that will affect millions of small business owners.
Many of the measures were known in advance, and embarrassingly, the ONS released its own analysis of the Budget announcements this morning, hours before the Chancellor started her speech.
We’ll publish a separate analysis of some key changes (e.g., dividend tax) shortly.
For the official source material, see the Budget documents on the HM Treasury site.
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Key tax changes for small business owners
- Dividend tax rises by 2p from April 2026, taking the basic rate to 10.75% and the higher rate to 35.75%. The £500 dividend allowance stays in place. See our report here.
- Income tax and National Insurance thresholds remain frozen until 2031, so more people are pulled into higher bands as wages increase. This will raise the same amount of money as the abandoned 2p income tax rise, mooted before the Budget.
- New separate property income tax bands of 22%, 42% and 47% are introduced from 6 April 2027.
- Cash ISAs capped at £12,000 a year from 2027, still within the overall £20,000 ISA allowance.
- Savings income tax rates (basic, higher and additional) all rise by 2 percentage points from 2027 to 2028.
- No changes to VAT at all – despite rumours of threshold changes before the Budget.
Compliance, avoidance and the Loan Charge
- New powers aimed at promoters of tax avoidance schemes, allowing HMRC to shut schemes down more quickly, impose stronger penalties and pursue those behind them.
- Renewed focus on disguised remuneration and Loan Charge cases, with legislation to implement the response to the latest Loan Charge review and a new settlement opportunity for those still affected.
- Up to 30% rewards for whistleblowers who provide information in high value tax fraud cases where more than £1.5m is recovered.
- 350 additional HMRC criminal investigators allocated to tackle serious fraud and evasion in small businesses and on the high street.
- Construction Industry Scheme (CIS) rules tightened, including stronger checks around gross payment status and scheme abuse.
Changes for employers, workers and payroll
- National Living Wage rises to £12.71 an hour for over 21s from April 2026.
- National Minimum Wage for younger workers rises sharply, including £10.85 for 18 to 20 year olds and £8.00 for 16 to 17 year olds and apprentices.
- Salary sacrifice pensions change in April 2029, with employer and employee NICs charged on contributions made under salary sacrifice that exceed £2,000 a year. See our salary sacrifice guide for limited companies.
- State Pension and Pension Credit uprated by 4.8% from April 2026 under the Triple Lock.
- Help to Save scheme made permanent and expanded from 2028, continuing bonuses for eligible low income savers.
ii SIPP — from £5.99/monthA Which? Recommended pension option for the self-employed — simple, flexible, and low-cost.
Corporation Tax, capital allowances and investment
- New 40% First Year Allowance (FYA) for most main rate assets from 1 January 2026, available to both companies and unincorporated businesses.
- Main rate writing down allowance falls from 18% to 14%, which reduces the annual tax relief on longer term capital spending.
- No change to headline Corporation Tax rates, but the dividend tax rise and frozen thresholds increase the overall tax take from many owner managers.
- Business rates reform package includes permanently lower multipliers for retail, hospitality and leisure properties, plus a new high value multiplier for premises with a rateable value over £500,000.
- Small Business Rates Relief grace period extended from one year to three years for firms that expand into a second property.
- Long term regional growth funding through new and extended business rates retention zones, local growth funds and mayoral revolving funds across England.
VAT, digital reporting and Making Tax Digital
- E invoicing becomes mandatory for all VAT invoices from April 2029. Businesses will need accounting or invoicing software that can issue VAT invoices in a specified electronic format.
- New digital prompts for VAT and Corporation Tax software from 2027 and 2028 to nudge taxpayers when returns look incomplete or late.
- More flexible powers for Making Tax Digital from April 2026, so that HMRC can adjust penalties, exemptions and administrative rules as MTD expands.
- Consultations on more in year tax collection, including the possibility of extra payments via PAYE for those with Self Assessment liabilities from 2029.
- Crypto reporting tightened, with UK based crypto service providers required to report data on UK resident customers from 1 January 2026, with first reports due in 2027.
Motoring, fuel and transport
- Fuel duty cut and freeze extended for five months after April 2026, followed by staged increases from September 2026.
- Electric Vehicle Excise Duty (eVED) introduced from April 2028 as a mileage based charge for electric and plug in hybrid cars. Electric vehicles will pay half the equivalent petrol or diesel rate.
- Ten year 100% business rates relief for eligible electric vehicle charging points and EV only forecourts.
- Rail fares in England frozen for one year for regulated journeys.
- Additional funding for EV charging infrastructure, including extra support for local authorities and public bodies to roll out chargepoints.
Household and cost of living support
- Warm Home Discount extended to cover around 3 million additional households.
- Average energy bills expected to fall by around £150 a year from April 2026, driven by changes to how low carbon and renewable levies are funded.
- Cap on Universal Credit and Child Tax Credit for third and subsequent children removed from April, ending the so called two child limit.
- Prescription charge in England frozen at £9.90 for another year. Charges remain free in Scotland, Wales and Northern Ireland.
- High Value Council Tax Surcharge introduced from 2028 for homes in England worth more than £2 million, with annual charges between about £2,500 and £7,500.
ByteStart’s brief summary
James Leckie, ByteStart’s founder, said:
Overall, this Budget is not easy for small business owners. Dividend tax has gone up yet again, income tax thresholds remain frozen for years, while the cost of complying with new rules continues to increase.
While there are some isolated pockets of support for small firms, the bigger picture is one of higher costs and more red tape for people running their own businesses.
I can’t remember a time when there was less of an incentive to run a small business – but for business owners like me, who couldn’t imagine life working for someone else, we have no choice but to absorb the latest battery of tax hikes.
Check back soon for further analysis on some of the key measures which affect small businesses in today’s Budget.
