HMRC Autumn 2025 Budget: Key Updates for UK Businesses and Taxpayers
The HMRC Autumn 2025 Budget introduces a series of measures aimed at supporting economic growth, simplifying tax compliance, and encouraging investment across the UK. With a focus on small business resilience, digital transformation, and fair taxation, this year's budget outlines several important changes that individuals and businesses should prepare for as the new financial year approaches.
Overview of the Autumn 2025 Budget
The 2025 Autumn Budget continues the government's commitment to fiscal stability while promoting innovation and productivity. HMRC's latest updates focus on tax simplification, digital compliance, and targeted reliefs for small and medium-sized enterprises (SMEs).
1. Income Tax and National Insurance
The personal allowance remains at £12,570, and the higher-rate threshold stays at £50,270, maintaining stability for most taxpayers. However, the government has announced a further 1% reduction in employee National Insurance contributions, effective from April 2026.
For the self-employed, Class 2 National Insurance contributions will be fully abolished, while Class 4 contributions will be reduced slightly to ease the burden on sole traders and freelancers.
These changes aim to boost disposable income and support the UK's growing self-employed workforce.
2. Corporation Tax and Business Support
The Corporation Tax rate remains at 25% for companies with profits above £250,000, while the small profits rate of 19% continues for businesses earning under £50,000.
To encourage investment, the Full Expensing scheme has been made permanent, allowing businesses to deduct 100% of qualifying capital expenditure on plant, machinery, and technology from taxable profits.
Additionally, a new SME Growth Incentive Fund will provide grants and tax credits for small businesses investing in digital tools, green technology, and workforce training.
3. VAT and Making Tax Digital (MTD)
The VAT registration threshold has been increased to £95,000, giving small businesses more flexibility before needing to register.
HMRC also confirmed the next phase of Making Tax Digital (MTD), which will extend digital record-keeping and quarterly reporting to all businesses and landlords earning over £30,000 from April 2027. This move aims to simplify tax administration and reduce reporting errors.
4. Capital Gains Tax and Dividend Allowance
The Capital Gains Tax (CGT) annual exemption remains at £3,000, while the Dividend Allowance has been reduced to £250, continuing the government's effort to align investment income with other forms of taxation.
CGT rates remain unchanged at 10% for basic rate taxpayers and 20% for higher rate taxpayers.
5. Pensions and Savings
The pension annual allowance stays at £60,000, and the Lifetime Allowance remains abolished, simplifying pension tax rules.
A new Midlife Savings Boost Scheme will offer tax relief for individuals aged 40–60 who increase their pension contributions, encouraging long-term financial planning.
6. Green Investment and Sustainability
The Autumn 2025 Budget introduces enhanced tax relief for businesses investing in renewable energy, electric vehicle infrastructure, and sustainable manufacturing. Companies adopting green technologies can claim up to 130% super-deduction on qualifying investments until 2028.
This initiative supports the UK's net-zero goals while incentivising businesses to adopt environmentally responsible practices.
7. Compliance and Anti-Avoidance Measures
HMRC will continue to strengthen its compliance framework through advanced data analytics and digital monitoring. The budget includes funding for new technology to detect tax evasion and underreporting, particularly in the crypto and digital asset sectors.
Businesses are encouraged to maintain accurate digital records and ensure timely submissions to avoid penalties.
8. Support for Startups and Entrepreneurs
The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) have been extended until 2030, providing continued tax relief for investors backing early-stage businesses.
A new Startup Simplification Programme will streamline registration, payroll setup, and tax filing for new businesses, reducing administrative barriers for entrepreneurs.
What This Means for Businesses
The Autumn 2025 Budget reinforces the government's focus on stability, innovation, and digital transformation. For small businesses and sole traders, the key takeaways include:
- Lower National Insurance contributions and simplified self-employment taxes.
- Permanent full expensing for capital investments.
- Higher VAT threshold and expanded MTD requirements.
- Continued support for startups and green initiatives.
Final Thoughts
The HMRC Autumn 2025 Budget delivers a balanced approach to growth and compliance, offering relief for small businesses while encouraging investment in technology and sustainability. Staying informed and adapting early to these changes will help businesses remain compliant and competitive in the year ahead.