Autumn Budget 2025: What It Means For Your Business

This was Rachel Reeves’ second Budget and, with an unexpected leak from the OBR (Office for Budget Responsibility) before any announcements were made, it didn’t get off to the best start. The Wow team has been analysing the report closely to help you understand which changes matter and what they mean for you, your family and your business.

The Wow View

There’s little festive cheer for business owners in this budget. With pre-budget leaks and rumours swirling, we were left not knowing what to expect for the most part ahead of today's announcement.

We were hoping for some news that might accelerate growth and inspire confidence in the economy. We were left with little encouragement and an increased tax burden - for both business owners and those working in UK businesses.

At least now the Budget has happened, this will reduce some of the uncertainty that has brewed over the past few months of rumour and speculation. Our advice is always to focus on what you can control, get your plans in place for the year ahead and manage your tax liabilities as best you can.

The key headlines

Increased income tax on dividends, property and savings income
Capped tax relief on salary-sacrificed pension contributions
Homeworking deductions for income tax are to be scrapped
Changes to the Capital Gains Tax (CGT) relief on EOT (Employee Owned Trust) exits
Beneficial updates to Inheritance Tax (IHT) for business property owners, with BPR becoming transferable between spouses

Income tax

Thresholds frozen

Income tax thresholds have been frozen once again and will remain at current levels until at least April 2031. As we’ve said before, this effectively translates into a decrease in take home pay for many.

Increase to rates

Currently, no national insurance is paid on dividend income, property income or savings income such as bank interest. To level the playing field, the Government has announced the following:

From April 2026, Ordinary and Upper dividend tax rates will increase by 2 percentage points to 10.75 percent and 35.75 percent. The additional rate will remain at 39.35 percent.
From April 2027, a separate tax rate will be introduced for property income. Basic rate will be 22 percent, higher rate 42 percent and additional rate 47 percent. The same rates will apply to savings income, although this is simply the application of existing income tax rules rather than a new tax band.

National insurance to be charged on salary sacrifice pension contributions

From 2029, a cap of £2,000 will apply to salary sacrifice pension contributions. Contributions above this cap will be taxed like other employee pension contributions. Employers and employees will therefore miss out on NI savings on any contributions above £2,000 per year.

Increase to minimum wage

National Living Wage (21 and over): £12.71 (increase 50p, 4.1 percent)
18 to 20 year old rate: £10.85 (increase 85p, 8.5 percent)
16 to 17 year old rate: £8.00 (increase 45p, 6.0 percent)
Apprentice rate: £8.00 (increase 45p, 6.0 percent)
Accommodation offset: £11.10 (increase 44p, 4.1 percent)

Corporation tax

Capital allowance rates get an update

The Government has announced that the main rate of writing down allowance will reduce from 18 percent to 14 percent. This means companies will receive tax relief on capital items at a slower rate. To counter this, a new first year allowance of 40 percent for main rate assets has been introduced, allowing a larger capital allowance claim in the first year of an asset's life.

In real terms, the Annual Investment Allowance will still give most companies 100 percent relief on new assets in their first year. The only situation where this wouldn’t apply is if a company exceeds the £1 million per year threshold for new capital items.

Making EIS more accessible

From 6 April 2026, the Enterprise Investment Scheme will become more accessible through increased annual and lifetime investment limits and a higher gross assets threshold for qualifying companies. Currently, companies can raise up to £5 million each year and £12 million in total under EIS (or £20 million for knowledge intensive companies) and must have gross assets below £15 million before investment. While these thresholds will increase, the exact new limits have not yet been published.

Expanding EMI schemes

The Government has announced a significant expansion of the Enterprise Management Incentive scheme to give growing businesses more flexibility in attracting and retaining talent.

From 6 April 2026:

The employee limit will increase to 500
The gross assets threshold will rise to £120 million
The company share option limit will increase to £6 million
The maximum holding period for EMI options will extend to 15 years, including existing agreements

From April 2027, the requirement to notify HMRC of EMI grants will also be removed, simplifying administration. Together, these updates make EMI more accessible for scale ups and high growth companies.

Scrapping of homeworking allowance

The income tax deduction for homeworking expenses will be removed from 6 April 2026. From the 2026 to 2027 tax year onwards, employees will no longer be able to claim £6 per week for working from home. Employers can still choose to pay up to £6 per week tax and national insurance free.

For companies already offering this allowance, nothing changes. If your employees currently rely on claiming it themselves, now is the time to consider whether employer support is possible.

Capital gains tax

Changes to CGT on EOTs

One of the biggest changes in this Budget is the update to Employee Ownership Trust relief. Until now, business owners could sell a controlling stake to an EOT and pay no capital gains tax. The Government has confirmed that, going forward, only half of the gain will qualify for relief. The remaining half will be taxed in the usual way. This follows concern that the cost of the relief had grown far beyond what was expected when the regime was introduced in 2013.

EOTs remain a strong option for founders who want their team to take the business forward, but the numbers will feel different for any transactions completing from 26 November 2025 onwards. The stricter rules introduced last year also remain, including:

UK resident trustees
Proper independence in decision making
A clear link to fair market value

In practice, EOTs will require more care when being set up. For many business owners, they still offer a positive and people centred way to exit, as long as the structure and valuation are handled well.

Inheritance tax

In the 2024 Budget, changes were announced restricting business property relief from April 2026, limiting generous relief to the first £1 million of qualifying assets. The Government has now confirmed that this £1 million allowance will be transferable between spouses and civil partners.

This means that, after the first spouse dies, the second spouse could in theory have £2 million of BPR (Business Property Relief) eligible assets pass through their estate without IHT, provided none of the allowance was used by the first spouse’s estate.

Other taxes

High Value Council Tax Surcharge

A new property tax has been introduced, targeting high-value homes. An annual charge will apply, starting at £2,500 for properties worth more than £2 million, rising to a maximum of £7,500 for properties worth £5million or more. This surcharge is levied on property owners, not occupiers, and sits alongside council tax. Revenue will go to central government. The change will take effect from April 2028.

Duty on electric vehicles

Electric Vehicle Excise Duty will also be introduced from April 2028. Average EV drivers are expected to pay around £240 per year, about half the typical amount paid by petrol or diesel drivers. Electric vans will not be included when the charge is introduced.

Changes to ISAs

For those under 65, the cash ISA limit will reduce from £20,000 to £12,000 from April 2027, in line with the Government’s aim to encourage more investment. The overall ISA limit stays at £20,000, but £8,000 of this will need to be placed into stocks and shares.

General announcements

There were many other measures in today’s Budget. Those that may also affect you include:

A temporary 5p cut in fuel duty until September 2026
Rail fares frozen for the first time since 1996
A reported £150 reduction in the average energy bill

The full autumn budget 2025 is published here on the government website and details everything the Chancellor delivered in her statement today. You can also check out this BBC article for a full run down.

If you’d like to chat to us about any element of your tax position or plan for your future, please get in touch and we’d love to help.

How Wow can help

We can support you in a number of areas related to this Budget, including:

Exit Planning (especially with regards to EOT changes)
Remuneration planning
Inheritance Tax reviews and support
EMI Schemes
Financial planning
Tax Planning

Get in touch to chat through your options.

The information included in this article does not constitute advice. If you would like formal advice on any of the changes discussed here, please get in touch with us at Wow.