Sones Accountancy Services: Autumn Budget 2025 – what it means for your business

The Autumn Budget was delivered on 26 November, after a slightly chaotic start (the full report appeared on the OBR website before the Chancellor even began speaking!). Now that the dust has settled, here is a simple breakdown of the announcements that matter most to small business owners, directors, and employers.

No Changes to VAT, Corporation Tax or Income Tax Rates

Despite all the rumours, there were no changes announced to VAT, Corporation Tax or Income Tax rates.

Dividend Tax is Increasing

From April 2026, dividend tax will rise by two percentage points. If you pay yourself through a low salary and dividends, this will increase your personal tax bill. It is worth planning your drawings and cash flow with this in mind over the next couple of years.

Salary Sacrifice Pension Changes (From 2029–30)

At the moment, when employees sacrifice part of their salary to contribute to their pensions, employers save Employer’s National Insurance.  However, from 2029-30, those NI savings will be reduced.

This is not a direct tax rise, but it acts like one as your NI bill increases even though NI rates have not changed. Many businesses may eventually revert to standard employer contributions.

Capital Allowances Are Changing (From 2026)

Two key updates:

1.     Writing Down Allowances decreased from 18% to 14%.

This spreads tax relief over time, rather than allowing a full deduction up front. Writing Down Allowances provide gradual, ‘drip-fed’ relief on assets instead of an immediate 100% write-off.

2.     A new 40% First Year Allowance.

A new 40% First Year Allowance is available for certain qualifying assets, allowing businesses to claim accelerated tax relief in the first year. However, the Annual Investment Allowance (AIA) remains unchanged, offering 100% tax relief on up to £1 million of qualifying expenditure each year. For most trades and construction businesses purchasing vans, tools, machinery, or equipment, the AIA continues to provide full coverage.

New Electric Vehicle Mileage Tax

From April 2028, electric vehicles will face a new mileage-based charge of 3p per mile for fully electric and 1.5p per mile for plug-in hybrids.  This will rise with inflation. Electric vehicles remain cheaper to run than petrol or diesel, but the gap is narrowing.

Personal Allowances Frozen for Another Three Years

Personal tax allowances and thresholds are frozen again for another three years.
As wages and profits rise with inflation, more of your income is pushed into tax, even though the tax rates themselves have not changed. This is a classic ‘stealth tax’, and it hits business owners particularly hard as profits often rise faster than wages.

If you would like to discuss how these changes impact your business or your personal tax planning, please click below to book a free 15-minute consultation.
https://calendly.com/sonesaccountancy/15min

I am happy to talk through your numbers and help you plan with confidence.