Autumn Budget 2025: Key measures for UK businesses

The Autumn Budget 2025 sets out a series of tax, funding, and regulatory changes that will affect businesses and public sector organisations across the UK. These measures include adjustments to allowances, new compliance requirements, and sector-specific initiatives. Below is a summary of the confirmed changes, when they take effect, and which sectors they apply to.

Impact by sector

Manufacturing

Capital Allowances

  • From 01 January 2026, a new First-Year Allowance (FYA) of 40% will apply to main rate expenditure on plant and machinery.
  • From April 2026, the main rate Writing-Down Allowance (WDA) will reduce from 18% to 14%. WDA is the annual percentage businesses can claim on the remaining value of plant and machinery after the first year.

Research & Development (R&D)

  • A pilot Advance Assurance Service will start in spring 2026, allowing small and medium-sized enterprises to confirm key aspects of their R&D tax relief claims before submission.

Real estate & housing

Business Rates

  • From 01 April 2026, two new lower multipliers will apply to eligible retail, hospitality, and leisure properties.
  • A new high-value multiplier will apply to the most expensive properties.
  • A three-year Transitional Relief scheme will cap increases in business rates following the 2026 revaluation. This is partially funded by a 1p Transitional Relief Supplement in 2026/27.
  • The Supporting Small Business scheme will expand from April 2026.

Planning

  • £48 million will be provided over three years to improve planning capacity and capability.

Retail

Business Rates

  • From April 2026, eligible properties used for retail, hospitality and leisure with rateable values below £500,000 will qualify for permanently lower business rate multipliers. Higher business rate multipliers will be applied to properties valued at £500,000 or more.
  • Transitional Relief and Supporting Small Business schemes / support packages will apply from the same date.

VAT

  • From 02 January 2026, Private Hire Vehicle (PHV) services will be excluded from the Tour Operators’ Margin Scheme (TOMS). PHV operators acting as principals will pay 20% VAT on the full fare.

Capital Investment

  • From January 2026, a new 40% First Year Allowance applies to qualifying plant and machinery expenditure. Targeted at businesses impacted by leasing restrictions (e.g., operators using leased kitchen equipment).

Soft Drinks Industry Levy (SDIL)

  • From 01 January 2028, the levy threshold will reduce from 5g to 4.5g of sugar per 100ml and will extend to milk-based drinks and milk substitutes.

E-invoicing

  • From 2029, electronic invoicing will be mandatory for all VAT invoices for business-to-business and business-to-government transactions.

Legal & professional services

Economic Crime Levy (ECL)

  • From 01 April 2026, the former ‘Large’ band will split into two, and the charge for all bands will be set at 0.1% of UK revenue.

Cross-border VAT Grouping

  • From 26 November 2025, unconditional whole entity cross-border VAT grouping will be reinstated.

Employment Rights

  • The qualifying period for unfair dismissal claims will change to six months.

Agriculture

Inheritance Tax (IHT)

  • From April 2026, unused allowances for Agricultural Property Relief and Business Property Relief can be transferred between spouses.

Landfill Tax

  • Lower rate increases from 1 April 2026 in line with the standard rate cash increase.

Funding

  • New Fisheries and Coastal Growth Fund and Environmental Regeneration Fund will provide targeted support.

Local authorities

SEND Funding Reform

  • Extension of the Dedicated Schools Grant Statutory Override until 2027–28.
  • Government commitment to assume responsibility for future SEND costs and address historic deficits through the Local Government Finance Settlement.

Devolution & Integrated Settlements

  • £13 billion confirmed for seven Mayoral Strategic Authorities (Greater Manchester, West Midlands, West Yorkshire, South Yorkshire, Liverpool City Region, North East, and Greater London) for 2026–27 to 2029–30.
  • Launch of a £500 million Mayoral Revolving Growth Fund for commercial projects.

Visitor Levy Powers

  • Mayors in England granted powers to introduce a visitor levy on overnight accommodation; consultation underway on extending this to other strategic authorities.

Business Rates Retention (BRR) Zones

  • Extension of 100% BRR pilots and creation of new BRR zones (e.g., Leeds City Fund) allowing councils to retain growth for up to 25 years.

High-Value Council Tax Surcharge

  • From April 2028, properties valued £2m–£2.5m will pay £2,500 annually; properties over £5m will pay £7,500 annually.

Further education

Additional Revenue Funding

  • £300 million allocated for 2025–26 to support 16–19 participation and address demographic growth.
  • Includes a one-off £50 million grant for FE and sixth-form colleges for workforce recruitment and retention (April–July 2025).

Skills Capital Investment

  • £950 million for skills capital, including £300 million specifically for FE colleges to maintain and improve estates.

Fully Funded Apprenticeships for Under-25s in SMEs

  • Government commitment to cover costs for apprenticeships in small and medium-sized enterprises.

Growth and Skills Levy Allocation

  • £40 million from the Growth and Skills Levy directed to FE initiatives.

National Living Wage Increase

  • Minimum wage rising to £12.71 per hour in April 2026, impacting staffing costs for FE institutions.

More on the Autumn Budget

Other measures affecting multiple sectors

Salary Sacrifice for Pensions

From 06 April 2029, National Insurance relief on salary-sacrificed pension contributions will be limited to £2,000 per year.

 

VAT Relief on Donated Goods

From 01 April 2026, VAT relief will apply to business donations of goods to charity.

 

Fuel Duty

The current 5p cut will continue until 31 August 2026, then rates will increase gradually from September 2026.

Effective dates at a glance

26 November 2025: Cross-border VAT grouping reinstated.

 

27 November 2025: Stamp Duty Reserve Tax relief for newly listed companies begins.

 

01 January 2026: 40% First-Year Allowance introduced; PHV VAT change applies.

 

01 April 2026: WDA reduced to 14%; new business rates multipliers; VAT relief on donated goods; Landfill Tax increase; ECL restructure; IHT allowance transfer begins.

 

Spring 2026: R&D Advance Assurance pilot starts.

 

July 2026: Advance Tax Certainty Service launches.

 

01 January 2028: Sugar Tax threshold change and milk-based drinks included.

 

06 April 2029: NICs relief cap on pension salary sacrifice applies.

 

2029: Mandatory e-invoicing for VAT invoices.

Speak to us

Speak to us

To understand what these changes mean for your business, speak to your Relationship Manager today or visit Lloyds’ Market Insights Weekly for the latest analysis and updates.

Market Insights Weekly