If you’ve kept an eye on the financial news, you might have seen the announcement of the autumn 2025 budget. This is a yearly event that outlines the government’s plans for spending, borrowing, and taxation for the year ahead, all of which come together to drive (or derail) our economy.
The actual budget announcement lasts for around an hour and is full of different types of taxes and regulations. In other words, it’s one big heap of jargon! But it’s so important that everyone – from our sole traders to our future entrepreneurs – understands what’s in the autumn budget, and what it means for our money.
That’s why our Sussex bookkeepers have put together this handy guide, breaking the UK’s autumn budget 2025 down into simpler terms. Get to grips with the main changes for businesses and take control of your finances in this guide.
National Minimum Wage Increase
From April 2026, the National Minimum Wage will increase to:
- £12.71 an hour for 21+
- £10.85 an hour for 18-20 year olds
- £8 an hour for 16-17 year olds
- £8 an hour for apprentices
This is a must-know for all business owners with employees, including sole traders, partnerships, and limited companies. The increase will require potential changes to your payroll, with anyone currently on the National Minimum Wage seeing an increase in hourly pay.
Not sure how to update your payroll system to adjust for the increase? Get in touch with our payroll team, and we’ll be happy to help.
Income Tax and National Insurance Thresholds Frozen
In not-so-good news, income tax and National Insurance (NI) thresholds have been frozen for an additional three years, extending the current freeze to 2031. This means that the personal allowance threshold remains unchanged at £12,570. Higher or additional rate thresholds are also unchanged at £50,270 / £125,140, respectively.
Why is this news not great? Simply put, the government hasn’t raised thresholds in line with inflation. This causes fiscal drag: inflation pushes your earnings into higher tax brackets even though the actual value of your earnings hasn’t changed, or has even decreased.
As a business owner, that means you could start paying more tax even though your profits don’t go any further, leaving you feeling more out of pocket. When this happens, every penny counts – which is where we come in.
Our bookkeeping services ensure your income and expenses are recorded correctly so that you don’t accidentally overstate your turnover and pay more tax than you should. We’re also clued up on exactly what you can expense, and we’ll help you deduct as much as possible from your final bill to reduce tax strain on your business.
EIS and VCT Changes in the Autumn Budget
The Enterprise Investment Scheme (EIS) is a government-backed scheme to encourage investment in small businesses by offering tax incentives to investors.
Venture Capital Trusts (VCTs) are publicly listed investment groups that collect money from individual investors to pump into small businesses and start-ups in the UK.
The 2025 autumn budget has made changes to EIS and VCT schemes that clearly encourage investment in entrepreneurs – good news for our startup clients! The annual, lifetime, and gross asset limits for these schemes are to be doubled next year. There is, however, a reduction in upfront VCT tax relief, which will drop from 30% to 20%.
Changes to EMI Limits
Enterprise Management Incentives (EMI) is a UK share-option scheme designed to help smaller private companies reward their employees without increasing wages. Essentially, it allows you to grant employees the option to buy shares in your business at a fixed price.
The big attraction of EMI is its tax-advantageous status. Provided the share option follows UK regulations, your employees won’t pay income tax or NI on their investment. Instead, profit falls under capital gains tax, which tends to be a lot lower.
From your perspective as an employer, EMI offers a powerful tool to attract, retain, and incentivise key staff without stretching your finances. In the autumn 2025 budget, accessibility to EMI has been increased by expanding key thresholds:
- Employee headcount is increasing from 250 to 500
- Limits on company options will double (£3 million ot £6 million)
- Gross assets threshold will quadruple (£30 million to £120 million)
- The limits of the exercise period of EMI options will increase from 10 to 15 years
If you’re running a growing business in the UK, now could be the perfect time to look into EMI opportunities for your employees.
Changes to Pension Savings
The government announced in its autumn 2025 budget that salary-sacrifice pension contributions will be capped. This is the money you give up from your monthly earnings that goes straight into your pension fund, thus avoiding income tax and NI.
From April 2029 (not 2026), only the first £2,000 of sacrificed salary will remain exempt from National Insurance. Any contributions above £2,000 a year under salary sacrifice will incur both employee and employer NI.
Dividends, Property Income, and Savings Income
Another headline announcement in the Autumn Budget 2025 is the government’s decision to increase tax rates by 2% on dividends, property income, and savings income from April 2026. This is likely to have a significant impact on business owners and landlords, as well as any investors.
Dividend tax is a key area to watch, especially if you own a limited company and pay yourself through a mix of salary and dividends. With the additional 2% rise across all bands, withdrawing profits in this way becomes slightly more expensive. It could be smart to consider alternatives that offer better tax efficiency moving forward, which we’ll be happy to discuss.
Tax on property income (including rental profits) will rise by the same 2% margin, tightening margins for landlords already dealing with higher interest rates, reduced reliefs, and increased compliance costs.
The tax increase on savings income means interest generated from bank accounts, bonds, and other savings products will now be taxed at a slightly higher rate
Take Control of Your Finances
While the autumn 2025 budget does bring some relief for business owners and landlords, there’s also plenty that could lead to a tightening of your purse strings. The good news? You don’t have to navigate your finances alone.
We provide bookkeeping and payroll services for SMEs, landlords, and private clients, ensuring your financial records are in tip-top shape for accurate tax returns. With financial expertise, we can also deliver financial reports and advise you on next steps, ensuring you can navigate any upcoming changes to your income and tax bills with ease.
To learn more or start working with us, get in touch with our bookkeeping team.