What the 2025 Autumn Statement means for small businesses

On Wednesday 26 November, Chancellor Rachel Reeves gave a speech to the House of Commons, unveiling the 2025 Autumn Statement.

The Chancellor of the Exchequer is the government's chief financial minister, and the Autumn Statement is their opportunity to set out plans for the UK economy.

An overview of the 2025 Autumn Statement

This is Chancellor Rachel Reeves' second autumn budget, and it’s been hotly anticipated. Some of the tax and spending plans had already been trailed in the days before the statement — others slipped out early thanks to an error by the UK’s budget watchdog, the Office for Budget Responsibility (OBR).

On the same day as the budget, the OBR publishes its economic and fiscal outlook. As the independent public finances forecaster, this is their independent assessment of the expected impact of the policies announced in the statement.

The OBR makes an independent announcement as a sort of checking and balancing exercise, holding the Chancellor of the Exchequer and Treasury accountable on behalf of the public. It forecasts on assumptions, including what’s in the budget and what it thinks will happen to oil and gas prices, as to whether the UK's economy will grow or shrink.

This year, however, they were released early — in what was described as a “technical error”, which caused a stir at the Prime Minister's Questions session before the Budget.

The OBR’s predictions may not come to pass, but it’s effectively a best guess. After assessing this budget, the OBR predicts the UK economy will grow by 1.5% this year, up from a 1% forecast in March. That said, growth is expected to dip to 1.4% in 2026 and hover around 1.5% for the four years after — all lower than forecast in March’s Spring Budget.

Inflation — which is when the price of goods and services goes up, and the value of money goes down — is predicted to average 3.5% this year. The prediction is that it’ll fall to 2.5% next year, then return to the government’s 2% target in 2027.

Despite earlier predictions of a dip, investment is on the up. According to Budget data, whole-economy investment rose by 4.2% in real terms since the start of the year — a sharp contrast to the 0.1% fall that had been forecast in March. Business investment also beat expectations, growing by 2.7% instead of the predicted 1.1%.

So, how do these plans affect small businesses, the self-employed and landlords? Read on to find out:

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National Insurance and income tax thresholds

Minimum wage rises

Salary sacrifice pension cap

Food and drink businesses

Transportation

Council tax surcharge

Some other items to note

National Insurance and income tax thresholds

The government says it’s overhauling the tax system to make it fairer and more future-fit — with everyone chipping in, in what it calls “long-overdue” reforms.

As part of that, income tax and National Insurance thresholds will stay frozen until 2031 — three years longer than originally planned.

Because those thresholds aren’t rising with inflation, even a modest pay rise could push you and your employees into a higher tax band, or mean more of your income is taxed than you might expect.

Impacted: Business owners and employees.

Minimum wage rises

The legal minimum amount that can be paid to workers who are 21 and over, known as the National Living Wage, will increase by 4.1% from April 2026.

An 8.5% increase to the national minimum wage paid to workers aged between 18-20 will also be made.

Workers aged 16 or 17 will see their minimum wage rise 45p, to £8 an hour. Similarly, the separate apprentice rate, which applies to eligible people under 19 — or those over 19 in the first year of an apprenticeship — will also increase to £8 an hour.

For employees, this will bring the rates to:

2025 wage per hour	Category	Increase (£)	Increase (%)	2026 wage per hour
£12.21	Employees aged 21 and over	£0.50	41.%	£12.71
£10.00	Employees aged 18-20	£0.85	8.5%	£10.85
£7.55	Employees aged under 18	£0.45	5.96%	£8.00
£7.55	Apprentices	£0.45	5.96%	£8.00

Impacted: Employees and apprentices, and employers paying the National Living Wage or who hire apprentices.

Salary sacrifice pension cap

From April 2029, there’ll be a cap on the amount that can be put into pensions through a salary sacrifice arrangement.

Only the first £2,000 of salary sacrifice contributions will be exempt from National Insurance. Anything above that will still go into employee pensions, but NI will apply. Employees could still get income tax relief on their pension contributions — but some say the change could put people off saving more.

Salary sacrifice pension schemes are common — used by around a third of private sector workers. They involve giving up a slice of salary in exchange for your employer paying that amount into your pension instead. With this system, both employers and employees save on National Insurance.

Meanwhile, the state pension is getting a 4.8% boost from April, outpacing inflation, thanks to the “triple lock” guarantee. This means that pensioners will receive up to an additional £575 a year.

Impacted: Employers, employees and retirees.

Food and drink businesses

From 2028, the sugar tax will cover pre-packaged milkshakes and lattes — undoing the exemption these drinks got when the tax first launched in 2018.

Elsewhere in food, the government says new trade rules will cut admin and save food businesses up to £200 per shipment on fresh goods — a move designed to ease pressure on prices.

It’s also setting up a “Food Inflation Gateway” to monitor regulations that could drive up costs, with the aim of better coordination and giving businesses a clearer view of what’s coming.

Impacted: Businesses selling sugary drinks or importing fresh food.

Transportation

In the 2024 Autumn Statement, it was declared that the 5p cut to fuel duty on petrol and diesel that was due to end in April 2025 would remain for another year. This has now been extended until September 2026. After that, it’ll rise again gradually over six months.

Also, from 2028, electric and plug-in hybrid drivers will start paying a new mileage-based tax. For battery electric cars, the charge will be 3p per mile, and for plug-in hybrid cars, it’ll be 1.5p per mile

Impacted: Drivers.

Council tax surcharge

Unless you include council tax in your rent, this shouldn’t affect landlords; however, this is worth noting here.

Homes in England worth over £2 million will face a new council tax surcharge — between £2,500 and £7,500 — following a revaluation of properties in bands F, G and H.

Keep up to date with the changes landlords in England need to be aware of in 2026 in our guide to the Renters’ Rights Act.

Impacted: Some landlords.

Some other items to note

Tourist tax — potentially impacting hotels and short-term rentals

Mayors in England could soon get the power to introduce a “tourist tax”. This is a levy on overnight stays. They’d set the rate and decide how the money’s spent locally, to boost growth and support the visitor economy. The government’s now consulting on how the levy would work in practice.

Electronic invoicing — impacting all VAT-paying businesses

From April 2029, all VAT invoices will need to be sent electronically. A roadmap for how this’ll roll out is due next year.

Business growth — impacting businesses that hire

To boost growth and investment, the government says it’s tackling some of the barriers businesses face — from slow planning to skills gaps. It’s updating the National Planning Policy Framework, with changes expected to add 0.4% to GDP by 2034–35. It’s also pushing ahead with skills reforms to build a more job-ready workforce, and unlocking £50 billion through pensions to invest in business and infrastructure.

Online betting tax increases — impacting gambling firms

From April, gambling firms will see the tax on profits from online bets nearly double — up from 21% to 40%. Meanwhile, the 10% bingo tax is being scrapped altogether.

Source: Gov.uk