Autumn Budget 2025
The most talked-about Budget for a long time finally arrived on Wednesday, and with it came several surprises - including one that will have a significant impact on owner-managed businesses. It’s important to consider any actions you may need to take before April 2026.
Below we summarise the key changes that may affect you and your business. As always, please get in touch if you have any questions or would like tailored advice — we’re always happy to help.
IMPACT ON BUSINESSES
National Minimum Wage
From April 2026, the National Minimum Wage will increase as follows (per hour):
£12.71 for those aged 21+ (up £0.50 / 4.1%)
£10.85 for ages 18–20 (up £0.85 / 8.5%)
£8.00 for ages 16–17 (up £0.45 / 6%)
£8.00 for apprentices under 19 or in year one (up £0.45 / 6%)
The government also announced that apprenticeship training costs for under-25s will be fully funded from 2026.
Millward May: These increases, alongside the Employer NI rise introduced in April 2025, will put increasing pressure on small businesses and their margins. If you’d like support working through the impact on your business, please get in touch. We advise all employers to check they are paying the correct amounts. You can use the government calculator here: https://checkyourpay.campaign.gov.uk/. If you have any questions, email our payroll team at payroll@millwardmay.co.uk.
Capital Allowances
The Budget continues to support carbon-reduction efforts:
The 100% First-Year Allowance on zero-emission company cars and EV charging points is extended to 5 April 2027 (31 March 2027 for Corporation Tax purposes).
A new permanent 40% first-year allowance for main-rate expenditure applies from 1 January 2026.
The main pool writing-down allowance will reduce from 18% to 14% from 1 April 2026.
Millward May: These changes are unlikely to affect smaller businesses that already fully expense their capital expenditure. The reduction in writing-down allowance may affect businesses with larger main rate pools, but the impact should be minimal.
Corporation Tax
Corporation Tax rates are confirmed to remain at:
19% for profits below £50,000
25% for profits above £250,000
This is expected to remain unchanged for the duration of this Parliament.
Millward May: We examined the impact of Corporation Tax changes in a previous newsletter: www.millwardmay.co.uk/news/2023/5/18/corporation-tax-changes
Business Rates
Significant changes are expected from April 2026, with a new five-category multiplier structure distinguishing Retail, Hospitality & Leisure (RHL) from other commercial properties. Multipliers are expected to fall for both small (RV under £51,000) and standard properties (RV £51,000–£499,999), with even lower rates for qualifying RHL properties. Detailed rates have yet to be released.
IMPACT ON INDIVIDUALS
Income Tax
Personal tax thresholds remain frozen until 2030/31. Income tax bands remain:
Up to £12,570 – 0%
£12,571–£50,270 – 20%
£50,271–£125,140 – 40% (tapered personal allowance between £100,000 and above)
Over £125,140 – 45% (no personal allowance)
Property Income
From April 2027, property income tax rates will be 2 percentage points higher than standard income tax:
22% basic
42% higher
47% additional
Millward May: This continues to add pressure on buy-to-let landlords, many of whom are now making minimal profits after tax. If planning to sell, please speak with us first and remember the 60-day CGT reporting requirement. If considering a purchase, it may be more tax-efficient to do so through a Limited company.
Mansion Tax
From 2028, a new “mansion tax” will apply to residential properties worth over £2m, starting at £2,500 per year and rising to £7,500 for properties valued above £5m.
Mileage-Based Charge on Electric Vehicles
From April 2028, a new mileage-based tax will apply:
£0.03 per mile for battery-electric cars
£0.015 per mile for plug-in hybrids
Rates will increase annually with CPI. The system is expected to use driver-supplied mileage readings, although the government is still finalising the process.
Millward May: Many of our owner-managed businesses have recently purchased electric vehicles due to the significant tax benefits. At 10,000 miles per year, the new charge would cost around £300, still far lower than the effective fuel duty paid by petrol/diesel drivers.
Electric company vehicles remain very tax-efficient — see our newsletter here (pre mileage-charge changes): www.millwardmay.co.uk/company-electric-car
Savings Income and ISA Reform
From April 2027, savings income will also be taxed at 22% / 42% / 47%, aligning with the increases to property income.
Savings allowances remain unchanged:
£1,000 for basic rate
£500 for higher rate
£0 for additional rate
From April 2027, the cash ISA allowance for those under 65 will reduce from £20,000 to £12,000. The stocks & shares ISA allowance remains £20,000.
Millward May: We recommend speaking to a financial adviser before making any significant investment decisions. You can book a free initial consultation with Jim here: www.millwardmay.co.uk/independent-financial-advisor
Dividend Tax
Dividend tax rates will rise by 2 percentage points for basic and higher-rate taxpayers. The £500 tax-free dividend allowance remains for 2026/27.
New rates on dividends above the allowance:
10.75% basic (up 2%)
35.75% higher (up 2%)
39.35% additional (remains the same)
Millward May: This is the most significant change for our owner-managed limited company business clients. For those taking £12,570 salary + £37,700 dividends, the additional dividend tax payable will be £744.
Should company owners now take more salary instead of dividends? For most, a salary of £12,570 remains the most tax-efficient strategy. We will review each client’s circumstances individually before the start of the 2026/27 tax year.
National Insurance on pension salary sacrifice
From 2029, a £2,000 cap will apply to NI-free salary sacrifice pension contributions. Amounts sacrificed above this will attract employee NI.
Millward May: If you are making significant use of salary sacrifice, consider whether you have unused pension carry-forward to use before 2029. Employer contributions from an owner-managed company directly into a SIPP are not affected - but the government may bring further pension reforms, so consider maximising the £60,000 annual allowance where appropriate. We recommend speaking to a financial adviser before making any significant investment decisions. You can book a free initial consultation with Jim here: www.millwardmay.co.uk/independent-financial-advisor
Self-Employed
Class 4 NIC remains 6% and 2% from April 2026.
Profits over £6,845 qualify for a state pension year without Class 2 NIC.
Those under the threshold can voluntarily pay Class 2 NIC.
You need 35 qualifying years for a full state pension.
Making Tax Digital (MTD)
MTD for Income Tax will begin from April 2026 for sole traders and landlords with turnover above £50,000, reducing to:
£30,000 from April 2027
£20,000 from April 2028
Millward May: Affected businesses will need to make quarterly submissions via digital software. We will contact relevant clients in due course. FreeAgent remains free with a Mettle or NatWest business bank account - and Mettle is free to open. We can help set up your software at no extra charge for monthly-fee clients.
Capital Gains Tax (CGT)
No new CGT changes this year. Current rules:
Annual exemption: £3,000
Rates: 18% basic / 24% higher & additional
Business Asset Disposal Relief (BADR) rate increases to 18% from 6 April 2026
CGT relief on disposals to Employee Ownership Trusts reduced from 100% to 50%, effective immediately
Millward May: If planning to close your business and access BADR, consider doing so before April 2026.
Venture Capital Trust (VCT)
VCT income tax relief will reduce from 30% to 20% from April 2026, so you may wish to consider investing beforehand.
Inheritance Tax
IHT thresholds remain frozen until April 2031. The new £1m 100% allowance for qualifying business and agricultural assets (from April 2026) will be transferable.
Child Benefit
From April 2026, the two-child cap will be lifted so families can claim Child Benefit for all children. The Higher Income Child Benefit Charge continues to apply:
Begins at £60,000 income
Fully withdrawn at £80,000