What the 2025 Autumn Budget means for business owners
The 2025 Autumn Budget is expected to raise an additional £26 billion in taxes by 2029/30, and it presented a mixed bag for business owners.
Budget 2025:What it means for you
... as a business owner
with Nick Cohen
Chancellor Rachel Reeves outlined a series of measures that will directly affect businesses, including changes to dividend taxation, pension arrangements, wage costs, reliefs, and customs duties.
It’s important to understand these measures and how they could affect your business to ensure you’re prepared for the reforms ahead.
To help make sense of the changes, we asked Nick Cohen, Chartered Financial Planner at Amber River Leodis Wealth in Leeds, to highlight the changes he believes will matter most to his clients that own businesses.
“It's really important to start thinking if there's more tax efficient ways of extracting money from the business."
1. The rise in Dividend Tax rates could increase your tax bill
As a business owner, you may choose to pay yourself through dividends, either alongside or instead of a salary, as they are typically taxed more favourably.
However, this advantage is set to narrow from April 2026, when Dividend Tax rates will rise by two percentage points at the basic and higher bands.
The new rates will be:
- 12.75% for basic-rate taxpayers (up from 10.75%)
- 37.75% for higher-rate taxpayers (up from 35.75%)
- 39.35% for additional-rate taxpayers (unchanged).
So, if you rely on dividends for part or all of your income, your tax bill will likely increase from April.
Dividends will still remain more efficient than a regular salary charged Income Tax, but the gap is tightening. So, you may need to revisit your remuneration to ensure your take-home pay stays the same.
As Nick says: “It’s really important to start thinking if there’s more tax-efficient ways of extracting money from the business… Pension contributions are a great one to consider for limited company directors as there’s no tax to pay on the money that goes into the pension and the business receives Corporation Tax relief too.”
2. The new cap on salary-sacrifice pension contributions could increase your costs
Salary sacrifice on pension contributions can help save National Insurance contributions (NICs) for both your employees and your business. However, this advantage will soon be limited.
From 2029, the amount that can be paid into a pension via salary sacrifice without incurring NI will be capped at £2,000 a year. Employees can still contribute more, but any amount above this threshold will attract full employer and employee NICs.
This change may increase your employment costs and reduce the appeal of pension contributions for staff.
However, Nick is quick to point out that: “If you’re a limited company director making pension contributions directly, this won’t affect you.”
It’s worth reviewing your benefits packages now to understand how the cap will affect your workforce and your budget.
A financial planner can help you model how the additional National Insurance (NI) costs could impact your business.
3. The freeze on tax thresholds may pressure employers
The existing freeze on Income Tax and NI thresholds was originally due to end in 2028, but Reeves extended it by a further three years to 2031. This could have long-term implications for both your team and your business.
As wages rise, more employees will be pulled into higher tax bands through “fiscal drag”. This may increase pressure on you as an employer, as staff look for additional benefits or higher compensation to offset the impact.
Recruitment and retention could also become more difficult, particularly for smaller organisations, as competitors may offer more rewarding benefits.
To stay competitive, now is a good time to review your pay structures and packages, ensuring they remain both attractive and sustainable. You may also want to consider salary sacrifice options that employees can choose instead of a pay rise, which can help them stay below key thresholds while still receiving more for their work.
A financial planner can help you assess your pay and benefit offerings and can recommend strategies that ensure your business remains both competitive and efficient.
4. Wage rises and apprenticeship funding could affect staffing costs
A series of wage increases will take effect from April 2026, which could significantly increase your payroll costs if you employ lower-paid, entry-level, or junior staff.
From April:
- National Living Wage will rise to £12.71 an hour
- National Minimum Wage will rise to £10.85 an hour
- Apprentice rate will rise to £8 an hour.
Reviewing your staffing budgets now can help you plan for the higher wage bill and avoid unexpected pressure when the new rates begin.
Alongside these increases, the chancellor confirmed that apprenticeships for under-25s will be fully funded, also starting in April 2026. With apprenticeship training becoming effectively free, you may be able to reduce recruitment and training costs.
Together, the wage rises and increased apprenticeship funding may raise short-term costs but could also open up valuable opportunities for workforce development. Incorporating both into your planning can help you balance the potential short-term financial pressures with future benefits.
5. New business reliefs could provide a boost, while others are scaled back
The budget also included several measures directed at businesses.
Some are designed to support growth and early-stage companies, including:
- Stamp Duty relief for businesses newly listed on the London Stock Exchange
- Business rates reductions for over 750,000 retail, hospitality, and leisure businesses.
Others present challenges, such as:
- Capital Gains Tax relief on sales to Employee Ownership Trusts (EOTs) will be cut from 100% to 50%, effective immediately
- Customs Duty will apply to all parcels regardless of value from 2029, removing the current exemption for items under £135.
A financial planner can help you review how these changes could affect your business and what adjustments you can make to accommodate them.
6. Changes to VCT relief and EMI limits could affect fundraising and talent retention
Venture Capital Trust (VCT) Income Tax relief will drop from 30% to 20% in April 2026. This reduction is expected to lower overall VCT fundraising.
Meanwhile, Enterprise Management Incentive (EMI) scheme limits have been increased to:
- 500 maximum employees
- £120 million maximum gross assets
- £6 million maximum share option value.
These changes give growing start-ups greater flexibility to attract and retain talent, and could help offset some of the impact of reduced VCT relief.
Many of the changes in the Autumn Budget could significantly affect your business, so it’s important to take action now.
Plan ahead with expert financial guidance
Many of the changes in the Autumn Budget could significantly affect your business, so it’s important to take action now.
But as Nick says: “Make sure to speak to your trusted professionals, as they’ll be able to recommend things specific to your personal circumstances and guide you on the best things to do going forwards.”
An Amber River financial planner can help you prepare for the measures, and with their guidance you can ensure your business remains efficient and resilient over time.
Want clear guidance on what the Autumn Budget means for you?
Visit our Budget Hub for expert insights, predictions and analysis to help you understand how potential changes could affect your financial plans.
Or speak directly with an Amber River adviser for personalised guidance.
