2025 Autumn Budget – what it means for you
This week’s Budget brings a package of tax changes, cost-of-living support, and reforms. Here’s what it could mean for you with a summary of the main items affecting business owners.
National Minimum Wage
From April 2026 the National Minimum Wage for workers aged 21 and above increases to £12.71 an hour, an increase of 4.1%. Those aged 18-20 see an increase to £10.85 meaning an increase of 8.5% and 16-17 year olds see a new minimum wage of £8.00.
However, as the tax brackets, the points at which income gets taxed has remained frozen more and more workers will be liable for increased taxation on their wage increases.
Dividend Taxation
Mainly applicable to those operating through Limited Companies but also those receiving Dividends from share ownership outside of ISA’s. Dividend income from April 26 sees a 2 percentage point rise. The basic rate increases from 8.75% to 10.75%. The Higher rate moves from 33.75% to 35.75%. The additional rate remains at 39.75%.
Capital Allowances
For business claiming writing down allowances on main rate Capital items the main rate reduces by 4% down to 14%. In recognition of this a new first year allowance of 40% is being introduced
Salary Sacrifice
Salary Sacrifice Schemes which are often used for pension contributions for high earners to be capped at £2k for the purpose of National Insurance relief from 2029.
Summary – Things to think about
Review your staff rates of pay, who needs an increase from April 26 to keep in line with Minimum Wage.
Do other members of staff need an increase to keep them above the minimum wage and paid competitively and fairly for the job they do?
What does the increased staffing cost mean to your business? The increased overhead means either a price increase is needed or a squeezing of your margin
If you use salary sacrifice it may be worth reviewing your options
Do you have headroom to pay maximise your Dividends payments before April 26 to take advantage of the lower rate?