Michael Ball, tax partner at Streets, helps businesses prepare for this month’s Autumn Budget.
As the UK government prepares to unveil the Autumn Budget 2025, SMEs are watching closely, with trading conditions still challenging due to:
- Rising wage costs
- Persistent inflation
- Ongoing tax pressures
Many are hoping the Chancellor will offer targeted relief to the backbone of the UK economy: its smallest employers.
Recent reports suggest business confidence has dipped again, particularly among small firms feeling squeezed by mounting overheads and unclear policy direction. With that backdrop in mind, here are our four key predictions for the Autumn Budget and why they could affect you directly if you’re operating your business.
Budget prediction 1: Expect small increases across the main taxes
Despite government pledges to the contrary, growing fiscal pressure makes modest rises in income tax, National Insurance, VAT, or corporation tax more likely. These four taxes account for nearly three-quarters of total tax revenue, and spreading small increases across them could raise funds without causing the economic disruption that targeted hikes can trigger.
How this could impact you
Even slight increases in these core taxes could reduce take-home pay, increase business costs, or raise prices for consumers. If you’re an employee, business owner, or consumer, these changes could affect your bottom line—directly or indirectly.
Budget prediction 2: Business rates freeze or extended relief for small premises
Business rates remain one of the most frustrating fixed costs for small high-street and office-based businesses. While a full reform is unlikely this year, the Chancellor is under pressure to ease the burden on small premises. One likely move is a freeze in business rates or an extension to the Small Business Rates Relief (SBRR) threshold—possibly raising the eligibility ceiling for premises with slightly higher rateable values.
How this could impact you
If you rent or own a small shop, salon, studio, or workspace, this could directly affect your monthly outgoings. An extension of SBRR or a freeze on revaluations would help protect cashflow, particularly if you’re on the edge of qualifying for relief. On the other hand, if no changes are made, you may face higher bills in 2026, requiring advance planning to manage costs. It’s especially relevant to small businesses in sectors like retail, hospitality, creative industries, and services.
Budget prediction 3: Possible incentives or reliefs around energy costs and equipment investment
With ongoing concerns over energy bills and productivity among smaller businesses, the government may look to either extend or reshape existing support. This could include energy efficiency grants, targeted subsidies for energy-intensive businesses, or continued access to full expensing (100% capital allowances) for qualifying investments.
How this could impact you
Planning to buy equipment, upgrade your space, or cut energy use? Incentives like full expensing can lower your tax bill, making investment cheaper—while their removal could raise costs. Grants and subsidies can also ease upfront expenses, especially as energy prices stay unpredictable.
Budget prediction 4: The government softens the proposed inheritance tax changes for OMBs and farming businesses
There is growing concern about the impact of the reforms announced last November, especially on the farming community. The House of Commons Environment, Food and Rural Affairs Committee warned in its 2024–25 report (HC 906) that the changes could harm vulnerable farmers, particularly older individuals or those on less profitable or tenanted land. We believe the Government may consider raising thresholds to lessen the impact on smaller owner-managed businesses and modest farming interests.
How this could impact you
If you are currently considering undertaking planning steps to mitigate the changes announced last October and have not made any gifts of business or farming assets or undertaken any planning steps yet. If the proposed steps are not softened, you will need to bring to the fore any steps that need to be completed prior to 6 April 2025.
What else is influencing the Budget?
A few wider trends could shape how supportive this Budget is toward small and medium sized businesses:
Election timing: With regional elections coming in the next 6 months, the government may want to win favour with small business voters by offering support, although fiscal constraints may limit how generous any measures are.
Falling confidence: Recent analysis from the ICAEW suggests that small business confidence has fallen again this quarter, with concerns about rising tax burden and stagnant growth front and centre. This could push the government to include modest relief measures targeted at small employers.
Wage and NI pressures: Increases in the minimum wage and employer National Insurance contributions have hit small teams particularly hard. While a full reversal is unlikely, the Chancellor may acknowledge these pressures in policy tweaks or deferrals.
Supporting you and your business after the Autumn Budget
Join our webinar where we’ll provide a ‘first reaction’ to the Budget announcement and the implications it will have on businesses.
See this column in the November issue of East Midlands Business Link Magazine here.
