At a Glance

The 2025 Autumn Budget raises taxes by £26 billion by 2029-30, pushing the tax burden to a record 38% of GDP. Welfare reversals and energy bill support offer some relief, but both businesses and consumers will feel the impact of higher taxes and sluggish income growth. Public debt remains high at 96% of GDP.

For Businesses: Key Changes and What to Consider

1. Tax Increases and Compliance

• Corporation tax reliefs cut, raising £1.5 billion by 2029-30.

• Gambling duty reform brings in £1.1 billion; compliance and debt collection measures add £2.3 billion.

• Action: Review capital allowances and consider bringing forward investments. Tighten compliance to avoid penalties.

2. Employer National Insurance

• NICs increases continue to affect wage costs.

• Action: Factor in higher NICs when budgeting for staff and consider salary sacrifice schemes.

3. Investment and Profitability

• Business investment growth revised down; real rate of return on capital falls from 12.5% (2022) to 10.75% (2026).

• Productivity growth forecast cut to 1.0% per year.

• Action: Stress-test cash flow for higher borrowing costs and focus on operational efficiency.

4. Environmental Levies

• New carbon border adjustment mechanism; electricity generator levy ends in 2029-30.

• Action: Audit supply chains for carbon exposure and plan for energy efficiency upgrades.
  
  

For Consumers: Key Changes and What to Consider

1. Personal Tax Rises

• Freezing personal tax thresholds from 2028-29 raises £8 billion.

• National Insurance on salary-sacrificed pensions brings in £4.7 billion.

• Tax rates on dividends, property, and savings income rise by 2 percentage points, raising £2.1 billion.

• By 2029-30, 780,000 more basic-rate, 920,000 more higher-rate, and 4,000 more additional-rate taxpayers.

• Action: Review your tax code, use ISAs and pensions to shelter savings, and check if you’re affected by new thresholds.

2. Wages, Inflation, and Real Income

• Nominal weekly earnings grow 5% in 2025, then slow to 2.25% per year from 2027.

• CPI inflation: 3.5% in 2025, 2.5% in 2026, returning to 2% in 2027.

• Real household disposable income per person grows just 0.25% per year—well below the 1% average of the last decade.

• Action: Budget for slow real income growth and review spending plans.

3. Welfare and Support

• Winter fuel and health benefit cuts reversed (cost: £7 billion by 2029-30).

• Two-child limit in Universal Credit removed, benefiting 560,000 families by an average of £5,310/year (cost: £3 billion).

• Action: Check eligibility for increased support if you receive benefits.

4. Energy and Motoring

• Temporary funding for renewables obligation reduces household energy bills, shaving 0.3 percentage points off 2026 inflation.

• Fuel duty frozen until September 2026 (cost: £2.4 billion next year).

• New mileage-based charge on electric and plug-in hybrid cars from April 2028, raising £1.4 billion by 2029-30.

• Action: Factor in future motoring costs if considering an EV or hybrid.

5. Housing and Investments

• House price growth modest at 2–3% per year; stamp duty threshold changes caused a temporary spike in transactions.

• Action: Budget for higher transaction taxes and slower price appreciation. Review investment portfolios for tax efficiency.

Bottom Line

Businesses face higher effective taxes, stricter compliance, and subdued investment returns. Consumers will see a rising tax burden and slow real income growth, with some relief from welfare and energy policies. Both should review financial plans, seek efficiencies, and stay alert to further policy changes.

Not sure how these changes affect you? Chat with Caira for clear, practical answers. Upload your forecasts, tax returns, or questions—Caira can help you understand the impact and explore your options. Try it free for 14 days.