.png)
The Autumn Budget 2025 doesn’t bring overnight shocks, but it quietly increases business costs over the next 18–24 months through higher wages, frozen tax thresholds and rising taxation on dividends and investment income.
The winners will be the businesses that prepare early, not those that wait until the cost pressure shows up in payroll and cashflow.
This guide explains what’s changing, what it means for your margins and what to do next to stay profitable and confident.
| Area | What’s Changing | When |
| National Living Wage | Up to £12.71/hr | April 2026 |
| Cost per employee | £1,000+ extra per full-time worker | From April 2026 |
| Income Tax & NI thresholds | Frozen until 2031 | Gradual impact |
| Dividend Tax | +2 percentage points | April 2026 |
| New dividend rates | 10.75% basic • 35.75% higher • 39.35% additional | April 2026 |
| Salary sacrifice NI saving | First £2,000 only NI-exempt annually | April 2029 |
| Government revenue impact | £26.1bn raised by 2030 | Long-term |
| Business Rates | 750,000 smaller premises benefit; large sites £500k+ pay more | April 2026 |
| EV Road Tax | 3p/mile (≈£300+/vehicle) | April 2028 |
| Fuel Duty | Frozen | Until Sept 2026 |
| Capital Allowances | Full expensing retained + 40% first-year allowance from 2026 | Ongoing |
The headline tax rates haven’t moved, but the Budget changes the underlying cost landscape:
None of these hurt on day one, but together, they squeeze margins if businesses don’t plan ahead.
Think of it as cost pressure by stealth.
National Living Wage rises to £12.71/hr by April 2026
Adds £1,000+ per full-time worker per year
Biggest impact on hospitality, retail, care and labour-heavy industries
Action: Update 2025/26 payroll forecasts now to avoid cashflow shocks.
From April 2026, dividend tax rises by 2 percentage points, meaning new rates of:
10.75% - basic rate
35.75% - higher rate
39.35% - additional rate
Action: Directors relying on dividends should review their salary/dividend mix for 2026–27.
Thresholds remain frozen until 2031, driving “fiscal drag”, as salaries go up, a bigger share is taxed.
The NI saving on salary sacrifice will be capped at £2,000 from April 2029, with contributions above this becoming fully NI-chargeable.
Action: Pension and benefits strategies should be modelled ahead of 2029.
Two major incentives continue:
A significant tax reduction opportunity for manufacturing, construction, logistics and facilities management.
| Factor | Effect |
| Inflation easing to ~2.5% by 2026 | Cashflow relief |
| RHL relief 40% capped at £110,000 in 2025–26 | Short-term support for many high-street operators |
| Fuel duty frozen to Sept 2026 | Positive for travel, delivery and trade businesses |
| EV road tax 3p per mile from 2028 | Costs increase for electric fleets |
| Sector | Main Pressure | Main Relief |
| Hospitality | Wage bill increases | RHL relief for smaller venues |
| Retail | Wage increases & multiple locations | Relief for small premises only |
| Manufacturing | Payroll + NI drift | Full expensing + 40% allowance |
| Logistics & Warehousing | EV taxation + business rates | Fuel duty freeze (short term) |
| Care | Highest wage impact | Apprenticeship routes may offset recruitment costs |
| Construction | Labour increases | Capital allowance support |
| Property Investors | Higher dividend/property income tax | None targeted |
The most common mistake? Not re-forecasting. The businesses that adjust early are the ones that protect margins.
At Veritus Consultancy, we know that shifting policies, rising wages and increased payroll taxes can become overwhelming, especially when you’re trying to grow.
Our role is simple:
Turn uncertainty into clarity, and clarity into confident decisions.
We support SMEs with:
Whether you are stabilising cashflow, growing your team or preparing for succession, we make sure your numbers give you options, not stress.
Small adjustments today protect margins tomorrow.
The Autumn Budget 2025 isn’t here to disrupt businesses overnight, but it will change staffing, tax and investment economics significantly over time.
With early planning, you can stay profitable, support your team and grow with confidence.
Ready for tailored support? Book a free consultation with Veritus Consultancy.
We’ll walk through the numbers step-by-step and build a plan that fits your goals, clearly, calmly and without jargon.
How much is the National Living Wage increasing in 2026?
From April 2026, it will rise to £12.71 per hour for workers aged 21 and over.
Why will tax bills rise even if tax rates haven’t changed?
Because income tax and National Insurance thresholds are frozen until 2031, meaning more of your income is taxed as wages increase.
Who is most affected by the dividend tax increase?
Business owners who take a mix of salary and dividends.
Does every business get business rates relief?
No. Relief mainly applies to smaller retail, hospitality, and leisure premises. Large commercial properties, especially sites valued at £500,000+, will pay more
