On 27th November 2025, the Chancellor, Rachel Reeves, announced the Autumn Budget 2025. While there were a couple of announcements that affect businesses, the majority of the budget will impact individuals in many ways.
Here are the key highlights of what businesses need to be aware of.
- Tax Thresholds Frozen until 2031
The tax thresholds for Income Tax and National Insurance will remain at their current levels until April 2031.
Income Tax:
Personal Allowance: Up to £12,570, your tax rate is 0%
Basic Rate: From £12,571 to £50,270, your tax rate is 20%
Higher Rate: From £50,271 to £125,140, your tax rate is 40%
Additional Rate: Over £125,140, your tax rate is 45%
National Insurance:
Employees (Class 1 NICS)
Pay of up to £242/week or £1,048/month: 0%
Pay from £242 to £967/week or £1,048 to £4189/month: 8%
Pay over £967/week or £4,189/month: 2%
Employers (Class 1 Category A NI Contributions Only):
Pay from £96 to £481/week or £417 to £2,083/month: 15%
Pay from £418.01 to £967/week or £2,083.01 to £4,189/month: 15%
Pay over £967/week or £4,189/month: 15%
Self-Employed (Class 2 and Class 4 NICS):
Profits up to £6,844 – Class 2 (voluntary): £3.50/week
Profits from £6,845 to £12,569 – Class 2 (deemed paid): £0.00/week
Profits from £12,570 to £50,270 – Class 4: 6%
Profits over £50,270 – Class 4: 6% on profits from £12,570 to £50,270, plus 2% on profits over £50,270
To find out more about the current National Insurance Rates, please visit the Government website. - Minimum Wage will be increased by 4.1% from April 2026
From April 2026, the National Minimum wage paid to workers will be increased:
– Over 21 years of age will increase from £12.21/hour to £12,71/hour
– Between 18 and 20 years of age will increase from £10.00/hour to £10.85/hour
– For 16 and 17-year-olds, and apprenticeships it will increase from £7.75/hour to £8.00/hour - Tax on Dividend Income will rise by 2% points from April 2026
If you receive Dividend income, you currently pay tax on anything that is over your personal tax allowance and the annual dividend allowance, which is £500.00. The ordinary rate will increase from 8.75% to £10.75%, with the upper rate going from 33.75% to 35.75%. The additional rate will remain at 39.35%. - Pension Salary Sacrifice changes
Currently, employees can sacrifice a portion of their salary each month to be paid into a pension plan provided by the employer, and this is tax-free. From April 2029, employees will have to pay National Insurance on any amount of salary sacrificed for their pension above £2,000. - Changes to the Main Rate for Plant and Machinery
Full expensing for main-rate plant and machinery will continue, in line with the 2024 Corporation Tax Roadmap. However, some notable changes are coming:
Starting January 1, 2026, assets that don’t qualify for full expensing (such as those used for leasing or by non-corporation businesses) will be eligible for a new 40% first-year allowance instead.
From April 2026, the standard writing-down allowance rate drops from 18% to 14% (effective 1 April for corporation tax and 6 April for income tax). - Business Rates for Retail, Hospitality and Leisure Properties
The government is introducing a permanent lower rate structure for Retail, Hospitality and Leisure (RHL) properties through a new five-category multiplier system. This creates a clear distinction between RHL and non-RHL properties, plus a separate band for high-value properties.
The five categories and what their Rate will be from 2026/27:
Small Business RHL: RHL Properties under £51k RV – 38.2p
Standard RHL: RHL Properties £51k – £499k RV – 43p
Small Business (non-RHL): Non-RHL properties under £51k RV – 43.2p
Standard (non-RHL): Non-RHL properties £51k – £499k RV – 48p
High-Value: All properties £500k+ RV – 50.8p
The new Small Business RHL multiplier at 38.2p represents a permanent lower rate for qualifying retail, hospitality and leisure businesses – a notable reduction compared to the current small business multiplier of 49.9p.
It’s worth noting that revaluations will also take place from April 2026, so some businesses may still experience bill increases despite the lower multipliers if their rateable value has increased. - Small Business Rates Relief (SBRR)
Small Business Rates Relief will now include a 3-year grace period (up from 1 year), giving businesses more time to keep the relief on their first property when they expand into additional premises. - Business Rates Retention Pilots
The business rates retention pilots that are taking place in Cornwall, the West of England and Liverpool City will be extended to 2028/2029. - Corporation Tax Penalties
The penalty for submitting a Corporation Tax Return late will double from April 1st, 2026. Currently, if your Corporation Tax Return is 1 day late, you will receive a fine of £100.00. If, after 3 months, your return is still late, you will be fined £200.00. After 6 months, HMRC will estimate your Corporation Tax Bill and add a penalty of 10% of the unpaid tax. If you still have not submitted your return after 12 months, then a further 10% of any unpaid tax will be charged. If your return is late 3 times in a row, the £100 penalties are increased to £500 each.
This means that from April 2026, the £100.00 fine will be increased to £200.00 for being 1 day late, and £400.00 after 3 months. If you submit your tax return late 3 times in a row, the fine will increase to £1,000.00.
You can read more about the Autumn 2025 Budget on the Government website.