Autumn Budget 2025: What's on the Horizon for UK SMEs?
With Chancellor Rachel Reeves set to deliver her Autumn Budget on Wednesday, November 26th, small and medium-sized business owners across the UK are waiting with bated breath. After a challenging year marked by high inflation, tax hikes, and digital disruption, the SME community is hoping for some much-needed relief.
However, against a tough economic backdrop, this year's statement could be a mixed bag. Let's break down what might be in store.
The Economic Context
This Budget comes at a critical time. It follows last year's challenging statement, which saw a rise in employer National Insurance Contributions (NICs) and reduced business rates relief. While the government's Small Business Plan in July provided some hope by tackling late payments, many, like Aman Parmar of BizSpace, noted that "without targeted tax relief measures... SMEs may struggle to invest in growth."
The Chancellor is reportedly looking to raise around £20bn and is expected to favour tax rises over increased borrowing. This sets the stage for a budget focused on fiscal prudence, meaning widespread giveaways are unlikely.
Potential Relief for Businesses
Despite the tight fiscal constraints, there are several areas where the government may offer targeted support to stimulate growth.
Business Rates Reform: This is a top priority for many businesses. The current system is widely seen as outdated and a significant burden, especially for those in retail, hospitality, and leisure. Labour has previously pledged to permanently lower rates for these sectors on properties with rateable values below £500,000 in 2026. A concrete step towards this reform would be a major win for the high street.
Targeted Investment: We may see announcements related to infrastructure investment and further funding for digital transformation. These initiatives aim to boost productivity and help SMEs compete on a larger scale.
Energy Cost Support: With energy prices remaining a concern, some form of continued, targeted relief for businesses could be on the table to help manage overheads through the winter.
Potential Hurdles to Prepare For
SME owners should also be prepared for some potentially difficult news as the Chancellor seeks to balance the books.
Tax Increases: A commitment to avoid further tax rises seems improbable. An increase in Capital Gains Tax is one of the more widely circulated possibilities that could affect business owners planning their exit strategies.
Rising Employment Costs: A rise in the National Minimum Wage is anticipated. While positive for employees, this will add to the payroll costs for businesses. Furthermore, potential changes under the Employment Rights Bill could introduce new administrative and financial responsibilities for employers.
No Reversal on NICs: Many founders, like Tony Redondo of Cosmos Currency Exchange, are calling for a rollback of the recent hikes in employer NICs. Redondo urges the Chancellor to "promote economic growth, which means encouraging businesses, not tying them up in ever more taxes and red tape." However, given the revenue pressures, a reversal is highly unlikely.
Zyla's Verdict: Prepare for a Pragmatic Budget
The overarching theme for the Autumn Budget 2025 is likely to be pragmatism over generosity. While we can hope for meaningful reforms to business rates and other targeted support, SMEs should brace for further financial pressures, particularly around taxation and employment costs.
The government faces a difficult balancing act: supporting the backbone of the British economy while shoring up public finances. For business owners, the key takeaway is the need for proactive planning.
How can you prepare?
Review Your Forecasts: Stress-test your cash flow projections against potential cost increases, such as higher wage bills or other tax adjustments.
Assess Your Tax Position: Understand how potential changes to Capital Gains Tax or VAT could impact your business and personal finances.
Seek Professional Advice: Navigating the aftermath of a Budget can be complex. The right advice can help you identify both risks and opportunities for your business.
The Zyla Accountants team will be providing a full breakdown and analysis immediately following the Chancellor's announcement on November 26th. In the meantime, if you have any concerns about how the upcoming changes might affect your business, please don't hesitate to get in touch with us.