The 2025 budget has been much anticipated / dreaded by many businesses. However, after all the talk around it, there aren’t any of the big headline changes that we were initially thinking there would be.

Here is a summary of the main announcements which will affect businesses and business owners.  I am sure many more details will come out over the next few weeks or months. 

Inheritance tax

Firstly, the good news on Inheritance tax, although the government has not backed down on the changes it made in the last budget it has made one small revision. 

Any unused £1m allowance for the 100% rate of agricultural property relief and business property relief will now be transferrable between spouses and civil partners including if the first death was before 6th April 2026. 

Income tax

Income tax thresholds have been frozen for a further 3 years until April 2031. 

Dividend tax will rise by 2% from April 2026. Dividend tax rates will therefore be 10.75%, 35.75%, the additional rate however will remain unchanged at 39.35%. 

Separate tax rates for income from property and savings, will come in from April 2027, which will be 2% higher than the existing rates. This will mean the basic rate for property or interest income will be 22%, the higher rate will be 42% and the additional rate will be 47%.   These are devolved so the Welsh and Scottish government will have the power to set their own rates if they wish to.  

The government are also changing the order that reliefs and allowances are deductible. Allowances (such as the personal allowance) will first be applied to other sources of income before being applied to savings, dividends and property income. 

National Insurance thresholds for the self-employed will increase by 3.8% for 2026-27 in line with the CPI. 

Employer costs

Minimum Wage to increase from 1st April 2026:

• The minimum wage for over 21s, known officially as the National Living Wage, to rise from £12.21 to £12.71. 
• For 18 to 20-year-olds, the minimum wage will rise from £10 to £10.85. 
• For apprentices and 16–17-year-olds they will get the biggest pay rise, from £7.55 to £8.00 an hour. 

Increased funding has been announced for apprenticeship training. 

Vehicles

The government are introducing a new electric vehicle excise duty of 3p per mile for an electric car and 1.5p for a plug-in hybrid, this will come with effect from April 2028, how this will be administered will be interesting. 

It has also been announced that there will be an annual uprating of the Van Benefit Charge and Car and Van Fuel Benefit Charges for 2026-2027, meaning that they will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6 April 2026.

The government will introduce a temporary benefit in kind tax easement for plug-in hybrid electric vehicles (PHEVs) in the Benefit in Kind system to prevent their tax charge increasing significantly due to new emissions standards introduced by the EU. This easement will be in place from 1 January 2025 to 5 April 2028.

Pensions

Salary sacrifice pensions over £2k will no longer be exempt from national insurance from April 2029. This should not affect employer pension contributions. 

Capital allowances

It seems that full expensing is to stay and there was no mention of the annual investment allowance. 

The government have announced a new 40% first year allowance for main-rate assets, this will only be useful in very specific cases, firstly after a business has utilised their full £1m AIA and even then only if full expensing isn’t available, so usually just for partnerships and sole traders or assets leased out (it’s not available for overseas leasing). 

Also, on main pool assets the writing down allowance is reducing from 18% to 14%, this is the allowances you get on anything in the pool. 

100% First year allowance for zero emission vehicles will be extended until 31st March 2027 for corporation tax and 5th April 2027 for income tax. 

Business rates

Amendments to business rates means for retail, hospitality and leisure businesses, there will be two permanently lower business rate multipliers where the rateable value is less than £500,000. These replace the temporary business rate relief that was set at 40%. 

From 1st April 2026 the government are introducing a high-value business rates multiplier for properties with rateable values over £500,000. 

It is worth noting that rateable value is based on annual market value rent and not on the sale value of the property. All properties have been revalued as at 1st April 2026, and the rates payable have adjusted to reflect the updated revaluations, therefore when you look at the rates in isolation they appear to have been reduced. 

Other items that have been announced

There will be a new ‘Mansion tax’ on properties over £2m with an annual charge of £2,500 and for properties over £5m an annual charge of £7,500, which will be collected along side council tax. 

The government are extending EMI schemes limits to allow some larger to companies to be involved. EMI schemes are tax-advantage share option scheme designed for employees of small, high-growth private companies. 

A new UK listing relief was announced, meaning a three year exemption from Stamp Duty Reserve for companies listing in the UK. 

There will be ISA reforms from April 2027, everyone still gets the £20k annual ISA allowance but if you are under 65, you are restricted to £12k per annum in a cash ISA. 

For employee ownership trusts capital gains tax relief has been dropped to 50% from 100%. 

Items announced separate to tax changes

E-invoicing – from April 2029 the government will require all VAT invoices to be issued in a new electronic format. 

Taxpayers who prepare a self-assessment tax return with Pay As You Earn Income will have to pay more of their tax through their tax code from April 2029.

Business systems integration – The government will publish a call for evidence in early 2026 to develop options to increase the uptake of business systems integration, which enables the automatic transfer of sales and purchase data into businesses’ accounting software.