Autumn Budget – everything that was announced for UK businesses

In today’s Autumn Statement, the deputy speaker opened with a remark about the “disappointing” number of recent leaks to the media about the contents of the Budget.

That concern could hardly have been rooted in a fear of spoiling good news for business owners. In fact, the steady stream of media briefings appears to have coincided with a decline in SME optimism about what Chancellor Rachel Reeves planned to reveal.

Thankfully, there were few nasty shocks for business owners. Much of it had been a long time coming; as planned, corporation tax will be capped at 25% for the rest of parliament, while Business Asset Disposal Relief (BADR) will rise to 18% in April.

Notably, reforms to Enterprise Management Incentives (EMIs) also went ahead in what could be a huge boost for the UK’s tech ambitions.

Employers can breathe a sigh of relief that the dreaded forecast of hiked employer National Insurance rates did not materialise. But other measures, including a surprise hike to Dividend Tax, have thrown many entrepreneurs off kilter.

Dividend tax rate hiked

Reeves made a call for evidence into the UK’s tax system, and said the Government will ask for feedback about how it can better support entrepreneurs. One measure that certainly won’t have helped them is the hike to Dividend Tax, leaked by the OBR this morning.

The Chancellor has introduced a two percentage point increase to the basic and higher rates of tax on dividends, which many business owners use to pay themselves, raising them from 8.75% to 10.75% and 33.75% to 35.75% respectively from April 2026.

Kate Underwood, Founder & Chief People Strategist at Southampton-based Kate Underwood HR and Training describes the move as a “tax raid”.

“If you live off dividends, that extra 2% is your mortgage, food shop and kids’ stuff, not some abstract number,” she adds. “You’re the last one to get paid and they’re still coming for you. Keep squeezing owner-managers like this and lots of people will quietly decide a normal job looks a lot more appealing. The UK’s entrepreneurial spirit is being crushed.”

Business rate surtax for large premises

Business rate reform was a major focus area for the Government in its manifesto pledge, but two years in and SMEs have yet to see any impact on their rising rates bills. And, earlier this year, plans to impose a surcharge on larger commercial properties next April were blocked.

In a sudden U-turn, though, the Government has now confirmed the new “surtax” on commercial properties worth over £500k, paid by larger firms, like warehouses. It will fund a permanent discount for over 750,000 smaller retail, leisure and hospitality (RLH) properties.

Despite previous reports that large supermarkets would be exempt from the charge, the Treasury has said that big supermarkets will in fact be affected.

The relief is desperately needed for SMEs. Experts have warned that business rates could increase by £1bn in April; a financial blow that could sink some small ventures.

Still, shifting the burden to large commercial properties could have disastrous implications for coworking, a vital resource for many startups and small businesses. One flexible office provider warned it will “suffocate investment, jobs, and the future of town and city centres”.

Freeze on income tax thresholds extended

One of the headline measures unveiled in this year’s Autumn Budget – and one that will have a big impact on sole traders or those in a business partnership – has been a freeze on income tax thresholds until April 2031.

Ideally, these thresholds increase to ensure that lower earners aren’t punished for receiving a pay rise in line with inflation. But more recently they have been frozen, leaving people paying more in tax, even if the actual tax rates stay the same (known as fiscal drag).

Whether they pay the basic rate, higher rate, or additional rate, sole traders or partnerships who pay income tax on their business profits will likely end up with a hiked tax bill if their earnings increase next year due to inflation. The rates for April 2026 remain:

• 20% on earnings between £12,571 to £50,270 (basic rate)
• 40% on earnings between £50,271 to £125,140 (higher rate)
• 45% on earnings over £125,140 (additional rate)

Colette Mason, Author & AI Consultant at London-based Clever Clogs AI comments: “Yet again every pound you earn above the frozen threshold gets taxed at a higher total, while your costs, energy, materials and wages keep climbing.

“As a business, you’re running harder to stand still, and HMRC gets a bigger slice without Parliament voting on a single rate increase.”

Support for the IPO market

While thin on details, Reeves hinted at various measures in an attempt to strengthen the UK IPO market. They include stamp duty relief on shares for firms that list in the UK, raising the cap on EMIs, as well as a pledge to increase Enterprise Investment Scheme (EIS) limits.

“The decision to raise EIS limits is a significant step in backing British businesses,” says Tim Mills, Managing Partner at ACF Investors. “This is the most immediate and cost-effective way to encourage risk-taking and innovation, and this decision will hopefully supercharge the momentum of successful, ready-to-scale ventures.”

On a related note, the government will reform the cash ISA system to push more households to invest in UK stocks. Consumers will still be able to save up to £20,000 in a cash ISA tax-free every year, but £8,000 of this will now need to be designated for investment.

If the Chancellor can successfully encourage us to invest rather than save in cash, this will channel household wealth into nascent firms to strengthen the wider startup ecosystem.

Whitehall has previously sought greater participation in the stock market via its Private Intermittent Securities and Capital Exchange System, called PISCES, a new regulated trading platform for private companies operated by the London Stock Exchange (LSE).

Free apprenticeship training for SMEs

Reeves also announced that the government is to fund a new “youth guarantee” which she says will provide £820m over the next three years.

Promising to deliver access to an apprenticeship, training, and education opportunities to every 18 to 21-year-old in England, Reeves declared that apprenticeship schemes will become entirely free for under-25s, specifically for SMEs.

Paramita Chatterjee, Vice President, People Business Partner at Cornerstone, describes the change as “encouraging”.

““With 40% of employees’ skills projected to become obsolete within the next four years, many traditional entry-level roles have already been automated. This makes the demand for new, adaptable skill sets more urgent than ever,” says Chatterjee.

R&D tax credits left alone

While more generous R&D tax credits would have been welcome for entrepreneurs, the current state of the UK economy made that an unlikely result.

Previous budgets reduced the benefit to SMEs by lowering the additional deduction rate from 130% to 86%. There were rumours of both positive and negative changes, but in the end, the Chancellor chose to leave this area alone which Fred Soneya, co-founder & General Partner at Haatch, says was “a good outcome” for the tech sector.

“SMEs need certainty and stability if they are to plan for the future effectively,” says Soneya, “and this isn’t possible when policy and taxation are constantly changing, so the Chancellor was right to avoid the temptation to tinker with this.”

Hospitality licensing reforms restated

The Autumn Budget was an opportunity for the government to restate its commitment to the National Licensing Policy Framework, a set of legislation to protect hospitality from red tape.

Among the changes, the new laws will aim to make it easier for late-night venues in the UK to serve food outside, play live music, and stay open later.

Tax loophole fix on “de minimis”

Reeves confirmed that the UK’s “de minimis” tax loophole – which allows overseas retailers to avoid import duties on parcels worth under £135 – will be scrapped, though reports state that the change could be delayed until at least March 2029.

Existing rules have given ecommerce giants such as Shein and Temu an unfair advantage, with large international players facing zero import bills while UK sellers must pay tariffs on all goods they bring in from outside the UK/EU that exceed the zero-rated VAT threshold.

With today’s statement, this advantage may be prolonged for at least four more years, creating more opportunities for large companies to undercut domestic sellers on price.

Minimum wages to rise by 4.1%

We’ve known for a few weeks now that the minimum wage and living wage for workers will rise in April 2026. Yesterday evening, the Chancellor confirmed the increase.

Over 21s will see their hourly pay increase to £12.77, up from £12.21, while workers between 18-20 will get an 8.5% rise to £10.85 from April next year, up from £8.60. Meanwhile, apprentices and under 18s will now earn £8 an hour, up from £7.55.

It’s a smaller increase than last year, when rates rose by 6.7% and 16.3% respectively – alongside employer National Insurance Contributions (NICs). It’s also a way off the Real Living Wage, which is now £14.80 in London and £13.45 across the rest of the country.

That said, the surge still adds up. Employers will likely react to the added employment costs by raising prices and cutting jobs. That’s particularly true in hospitality, where about 4.1% of all jobs in the sector have been lost since NICs rose in last year’s Budget.

Caps for salary sacrifice schemes

Another policy published today relates to employee salary sacrifice schemes. Under the current rules, an employee agrees to pay part of their contractual salary into their pension pot. It is treated as an employer contribution, which means both the employee and the employer save money by paying a lower National Insurance (NI) rate on the amount saved.

However, as confirmed in the Budget, Reeves will limit the amount that can be sacrificed with the NI exemption to £2,000 a year from April 2029. It’s purely fiscal (officials suggest it could raise up to £4bn annually) but one that will shrink pension pots in the long-term.

Commenting on the news, Simon Thomas, Managing Director of Ridgefield Consulting, says, “combined with the recent rise in employer National Insurance, this could place additional pressure on businesses already managing tight margins and may ultimately weaken their ability to recruit competitively.”

Also affected by this policy will be the Cycle to Work scheme. The government will cap the value of bikes that can be bought through salary sacrifice to curb tax reliefs.

Tourism tax for overnight stays

The news that England will introduce a new tourist tax across major towns and cities was confirmed a day before the Budget, as the government’s Communities Secretary, Steve Reed said mayors will be given the power to impose a “modest” charge on visitors staying overnight in hotels, bed and breakfasts, guest houses and holiday lets like AirBnBs.

In Scotland and Wales, businesses in the accommodation sector are already introducing tourism taxes. For example, in Aberdeen, visitors travelling to the city on or after 1 April 2027 will be charged a levy of 7% on overnight accommodation for the length of their trip.

It’s been reported that ministers would look to charge around £2 per night, which would mean a family of four with an extra £56 bill for a seven-night stay. Business travellers, or company retreats, could cost substantially more for larger teams.

New charge for EV drivers

If your business or employees own an electric vehicle (EVs), you’ll have benefited from various grants, subsidies and incentives for purchasing commercial electric fleets, such as the Depot Charging Scheme and EV infrastructure grant.

However, the government is turning the charger down by announcing a 3p pay-per-mile tax for EVs (a bit less for hybrid vehicles). Due on top of other road taxes, the new charge is expected to come into effect in 2028.

So it’s bad news for EV fleets, but better news for petrol and diesel business vehicles. In 2022, the government introduced a 3p cut to fuel duty. While this was set to expire in April 2026, the Chancellor has confirmed it will remain frozen until next September.

“Milkshake” tax

Yesterday, Health Secretary Wes Streeting said in the House of Commons that Soft Drinks Industry Levy (SDIL) or ”sugar tax” will be extended to “bottles and cartons of milkshakes, flavoured milk and milk substitute drinks.”

From January 2028, the levy will also apply to drinks with at least 4.5g of sugar per 100ml (previously 5g) to incentivise manufacturers to reduce sugar levels.

George Holmes, Managing Director of business finance specialists Aurora Capital, says many firms that sell bottled soft drinks, including retailers and F&B venues, will need to rethink their menus and pricing as a result of the shake-up.

“[The government] has to recognise how exposed small firms are to even small changes in cost and consumer behaviour”, he adds.

No increase to trading allowance

There had been calls to increase the trading allowance, a tax relief that allows self-employed individuals, sole traders, side-hustlers and small business owners to earn up to £1,000 per year in trading income before paying tax, in today’s Budget.

As living and operating costs have risen sharply, the £1,000 threshold has increasingly been viewed as outdated. Many argue that failing to update it means it effectively reduces in value each year. Despite this, no announcement was made.

“The trading allowance has remained stagnant since 2017,” says Andy Fishburn, MD at Virgin StartUp. “Even moving the threshold in line with inflation could have made a huge difference for small business owners in the UK.

“This lack of action will be disheartening news for the many small businesses where every penny counts in their efforts to stay afloat.”

AI investment

Ahead of the Budget, the UK government reiterated its wide-ranging AI Action Plan to accelerate the country’s position in AI, centred on the creation of new “AI Growth Zones”, a new sovereign AI unit, and billions of pounds in public and private investment.

Nik Kairinos is CEO and founder of Fountech AI. Kairinos says the tech-focused measures show “the Chancellor is beginning to make the right sounds about supporting UK tech.”

“The plans for an AI Growth Lab, the creation of a Sovereign AI Unit to scale national capabilities, guaranteed payments for UK startups developing AI hardware, and the decision to maintain R&D tax credits all offer a glimmer of optimism.

However, Kairinos cautions against confusing being supportive, with sounding supportive. “The UK tech ecosystem will only reach its full potential if business leaders can rely on broader economic stability”, he remarks.