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The Autumn Budget, announced on 26th November 2025, sets out the government’s plan to boost growth, simplify regulation, and provide UK businesses with greater stability after a challenging few years.
The government describes this as a turning point: one that combines long-term investment incentives with a drive to reduce red tape, modernise compliance, and support the UK high street.
With productivity at the centre of the economic plan, many of these measures are designed to help small and medium-sized businesses invest, hire, and scale with greater confidence.
Below, we break down the UK Budget’s key updates in plain English for SMEs.
1. Tax & business costs
Corporation Tax and investment reliefs
The main Corporation Tax rate is staying at 25%, keeping the UK in line with its current tax roadmap. But while the headline rate doesn’t change, the incentives around investment do.
- From 1st January 2026, there will be a new 40% First-Year Allowance (FYA) for plant and machinery. This means you can deduct 40% of the cost of qualifying main-rate assets in the first year. (Worth noting: cars, second-hand equipment, and items leased overseas don’t qualify.)
- The Writing Down Allowance for main-rate assets will drop to 14% from April 2026. This reduction is offset by the new 40% FYA so that businesses are still encouraged to invest upfront.
Full expensing remains available, allowing businesses to deduct 100% of qualifying investments immediately.
If you’re planning to upgrade equipment, improve production capabilities, or invest in growth-focused assets, the new system still heavily rewards doing so – especially from 2026 onward.
Business rates support
The Autumn Budget brings several changes high street businesses will want to be aware of:
- Permanent lower business rates for retail, hospitality and leisure properties.
- From 2026–27, RHL (retail, hospitality, and leisure) multipliers will sit 5p below the national rate.
- A new higher multiplier (50.8p) will apply to properties with rateable values over £500,000 – generally large online retailers or major commercial sites.
- SMEs moving into a second premises will now have a three-year grace period for Small Business Rates Relief (up from one year).
- A £4.3 billion support package will ease businesses into the new valuations.
These changes are intended to support those running shops, cafés, salons, restaurants, or venues. High-street businesses benefit, while big online operators help fund the difference.
Other tax and compliance announcements
The Budget 2025 also introduces several changes designed to simplify compliance and increase fairness across the system.
Employer NICs
The Employment Allowance, which reduces employer National Insurance contributions by up to £5,000 per year, will stay frozen until April 2031.
E-invoicing becomes mandatory
From April 2029, all VAT-registered businesses must use e-invoicing for business-to-business and business-to-government transactions.
Salary sacrifice changes
From April 2029, NICs relief on pension salary sacrifice will only apply to the first £2,000 of pension contributions per person.
This mainly impacts higher earners and large employers.
Customs duty on low-value imports
The current relief on items valued at £135 or less will be removed by March 2029, helping level the playing field between UK retailers and overseas sellers.
VAT changes for private hire operators
From January 2026, ride-share apps will need to pay VAT consistently, closing a long-criticised loophole.
2. Investment and innovation incentives
“Our job is to make Britain the best place in the world to start up, to scale up, and to stay.”Rachel Reeves, Budget 2025 speech
A major theme of Rachel Reeves’ UK Budget is that the UK must be an attractive place for founders to start and scale companies. To do this, several longstanding investment schemes are being upgraded.
Enterprise Management Incentives (EMI)
From April 2026, EMI will become more accessible for scaling companies:
- Employee limit increases to 500
- Gross assets test rises to £120 million
- Company share option limit increases to £6 million
This is particularly relevant for high-growth SMEs, tech companies, and businesses starting to expand overseas. EMI is widely regarded as one of the most generous share-option schemes in the world, and these tweaks help more companies benefit from it.
Venture Capital Schemes (VCT) and Enterprise Investment Scheme (EIS)
Annual and lifetime investment limits are increasing. This helps founders secure follow-on investment as their businesses mature, rather than ageing out of schemes too early.
Stamp Duty relief for UK listings
To boost the competitiveness of UK capital markets, from 27th November 2025, there will be a three-year exemption from Stamp Duty Reserve Tax (SDRT) on the transfer of company securities.
This aims to make listing – and staying listed – in the UK more attractive.
Electric vehicles and clean energy
If your business is part of the electric vehicle (EV) supply chain, or if you’re investing in greener company cars or infrastructure, the Autumn Budget includes several incentives:
- 10-year, 100% business rates relief for EV-only forecourts and EV chargepoints.
- The 100% First-Year Allowance for zero-emission vehicles and EV infrastructure is extended until March/April 2027.
- Benefit-in-Kind changes to Employee Car Ownership Schemes are delayed until 2030/31.
- Energy-intensive industries benefit from ongoing support through the British Industry Supercharger and the upcoming British Industrial Competitiveness Scheme.
Employee Ownership Trusts (EOTs)
Capital Gains Tax relief on qualifying EOT disposals will be cut from 100% to 50% from 26th November 2025 because costs to the Treasury have exceeded forecasts.
For owners planning an EOT-based succession, early planning will be essential.
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3. Labour market and skills
The government is investing heavily in workforce development as part of the UK Budget.
National Living Wage increase
From 1st April 2026, the National Living Wage for workers aged 21+ will increase by 4.1% to £12.71 per hour.
If your business relies on entry-level or hourly workers, consider factoring this into future budgets and recruitment plans.
Skills, training and apprenticeships
Over £1.5 billion is being invested in employment and skills, including:
- Fully funded apprenticeships for eligible under-25s in SMEs.
- Investment in the Youth Guarantee and the Growth & Skills Levy.
- Support for training programmes tailored to future growth sectors.
The aim is to make it easier for SMEs to hire young workers and develop skills internally.
International talent
Reforms to visa routes, including High Potential Individual, Innovator Founder and Global Talent visas, aim to simplify the system and help businesses access specialist skills more easily.
If you recruit globally or plan to, these changes should reduce administrative friction.
4. Regulation, enforcement and fair competition
The government is increasing enforcement funding to clamp down on non-compliant businesses and criminal activity.
Targeting illegality and fraud
Key actions include:
- Increased funding for Trading Standards and law enforcement.
- A new multi-agency task force to disrupt money laundering.
- A “hidden economy” team within the Fair Work Agency from April 2026, starting with the hand car wash sector.
- 50 new Insolvency Service staff in an Abusive Phoenixism Taskforce, targeting directors who misuse insolvency to avoid tax.
Reducing red tape
The Budget 2025 also includes steps to reduce day-to-day administrative burdens:
- Licensing authorities will be encouraged to prioritise economic growth.
- A new Retail and Hospitality Envoy will advocate for those sectors in government.
- A consultation will be launched to modernise product safety rules and tackle unsafe goods sold online.
What this means for SMEs
If you only remember a few things from this Autumn Budget, make them these:
1. Investment is being strongly encouraged
The new 40% FYA, extended EV incentives, and improved EMI/VCT/EIS rules aim to make it easier to grow.
2. High-street businesses get a boost
Permanent lower rates for retail, hospitality and leisure aim to rebalance the market.
3. Compliance is going digital
Mandatory e-invoicing in 2029 is a major change – start preparing early.
4. Wage costs will rise
The National Living Wage is increasing to £12.71 in April 2026.
5. Enforcement is tightening
The government is cracking down on illegality, phoenixism and tax evasion – good for compliant SMEs.
Header image: HM Treasury
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