The November 2025 Autumn Budget saw more tax rises but how much of that burden will be felt by business owners? Interestingly, rather than hitting company profits directly, the Budget targets how you pay yourself, invest, and employ people.

Here’s a practical breakdown for UK entrepreneurs, focusing on what actually changes for you and how you can start planning now.
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Summary points for business owners - TLDR

Here are the headline changes:

• No change to corporation tax rates (19% small profits & 25% main rate), but there will be more tax when you pull profits out from the company, personally.
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• Dividend tax up by 2 percentage points from April 2026 (same for both rate bands). This makes our recommended low salary, high dividend strategies more expensive.
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• Income tax & NI thresholds are frozen to 2030/31. Meaning more directors will drift into higher tax bands with time (ie. fiscal drag).
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• Pension salary sacrifice NI-saving capped at £2,000/employee per year from April 2029. This significantly reduces the attractiveness of aggressive sacrifice strategies.
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• Cash ISA allowance slashed from £20,000 to £12,000 for under-65s from April 2027 (overall ISA limit still £20,000). This impacts how you shelter surplus profits you extract and invest.
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• Business rates cuts for small retail, hospitality & leisure businesses, including a support package which caps bill increases from the 2026 revaluation. This is helpful if you’re on the high street.
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• Capital allowances & investment incentives:
  
  • Full expensing stays – Companies can still claim 100% relief upfront on any qualifying plant and machinery.
  • New 40% first-year allowance (FYA) from January 2026. Meaning specific assets that currently only qualify for the main pool will get a 40% upfront deduction. This speeds up tax relief for businesses that don’t qualify for full expensing.
  • Writing Down Allowance reduced fromApril 2026, dropping from 18% to 14%. This means slower tax relief on assets where you don’t get 100% or the 40% upfront.
• EMI, EIS & VCT are now more generous with higher limits for option schemes and investment reliefs, providing growing companies more headroom for attracting talent and raising larger equity rounds.
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• EOT tax relief halved. The Capital Gains Tax relief on selling to an Employee Ownership Trust (EOT) drops from 100% to 50%. EOTs may remain attractive but are no longer a tax-free exit.
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• National Minimum Wage rising from April 2026. You can expect higher payroll costs, particularly in hospitality, retail and other labour-intensive sectors.

The Big Picture: What’s this Budget trying to do?

From a business owner’s perspective, the Budget is essentially:

Keeping corporation tax the same, but

‍Raising more from:

• Your personal tax position (as a director or shareholder).
• Wealth & investment income (ISAs, dividends, savings & property income).
• Specific payroll-related reliefs (salary sacrifice caps, higher NMW).

Essentially, the government is using these measures to fund higher spending on public services and welfare, but without having to announce big rises in the main income tax and corporation tax rates.

In a nutshell, for small limited companies, the message is:‍

“We won’t tax your company more… but we will steadily tax you more as money leaves the company.”‍

This means your profit extraction, remuneration strategy and long-term planning have become even more important.
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1. Profit extraction for directors

Salary, dividends and pensions is where most entrepreneurs will feel the squeeze.

Dividend tax rises

Starting April 2026, dividend tax rates increase as follows:

• Basic rate: 8.75% → 10.75%
• Higher rate: 33.75% → 35.75%
• Additional rate: unchanged at 39.35%

Impact on company directors:

• Our recommended “£12,570 salary + dividends” structure (Mix 1) from our blog on how to pay yourself as a director still works but the post-tax amount you take-home will shrink over time.
• If you generally use up the basic rate band, with the frozen thresholds, more and more of your dividends will enter the higher rate band, where they’ll be taxed at even higher rates.
• Creating a profit extraction plan becomes critical (such as using spouses, timing dividends across tax years, pensions).

Income tax & NI thresholds frozen to 2030/31

The Budget extends the freeze on income tax and National Insurance thresholds by 3 years, up to April 2031.
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Impact on business owners:

• As your salary rises (or benefits increase), more of it will face 40% and 45%.
• Even if rates remain put, you pay more tax as inflation pushes your nominal income up while thresholds stay the same (AKA fiscal drag).

Pension salary sacrifice: NI saving capped

Starting April 2029, only the first £2,000 of pension contributions/employee per year, via salary sacrifice, will be exempt from employer and employee National Insurance (NI). Normal NI applies to any amount above that. It should be emphasised that this only applied to contributions via salary sacrifice schemes, so has very little impact to the majority of ecommerce business owners or entrepreneurs in general.

For director-owners running high pension sacrifice schemes:

• You’ll get less “NI benefit” from large sacrifices.
• Tax relief on pensions remains the same. The change doesn’t impact income tax.
• You should revisit director service contracts and your scheme design (e.g. move from salary sacrifice to “relief at source” or net pay schemes).

How should directors respond?

Over the next 12 - 24 months, you may wish to:

1. Re-model your extraction strategy, including:

• Remuneration via the optimal salary vs dividend mix.
• Pension contributions (inside and outside salary sacrifice).
• Involving a spouse (where applicable) as a shareholder/director.

2. Consider bringing forward dividends (before April 2026) if you were already planning a large distribution.‍

3. Review investment structures (company-funded pensions, ISAs etc.) and whether they still align with your goals.
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2. Business taxes & reliefs are changing

Corporation tax

The headline rates of corporation tax stay put at 19% and 25%.

Instead, the focus shifts to capital allowances and the speed with which you can get tax relief on investment.
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Capital allowances

We know that the Budget:

• Confirms 100% “full expensing” continues for companies that invest in qualifying plant and machinery.
• Brings in a new 40% first-year allowance for specific main pool assets (especially those that are leased), starting January 2026. (also available to unincorporated businesses).
• Reduces the (main pool) writing down allowance from 18% to 14%, starting from April 2026. This slows relief (where you don’t get full expensing or AIA).
• Confirms the Annual Investment Allowance (AIA) stays put at £1m, giving full relief for most SMEs’ spend on plant and machinery.

Impact on business owners

These changes mean there’s a strong incentive to:

• Plan the timing and type of capital expenditure (capex). Planning may allow you to qualify for full expensing or AIA rather than relying on the slower 14% pool. In other cases (e.g. if you fit out furnished properties), the new 40% FYA may prove valuable.
• Produce a multi-year capex plan (if you are a larger, asset-heavy business) to optimise which specific assets fall under which regime.

3. Business rates: some help for the high street

For those in retail, hospitality or leisure (RHL), the Budget confirms that:

From April 2026, permanent lower business rates multipliers for RHL properties, compared to higher standard multipliers for other sectors (e.g. 49.9p - exact value subject to inflation):

• Small business RHL multiplier: 38.2p
• Standard RHL multiplier: 43p

A £4.3bn support package to:

• Cap bill increases for the sectors hit hard by the 2026 revaluation.
• Extend transitional relief and supporting small business schemes, specifically to those losing relief.

How should business owners respond?

If you own or rent commercial premises (particularly on the high street), prepare to:

• Check your property’s new rateable value when the 2026 revaluation is released.
• Review your eligibility for RHL rates (and transitional protections).
• Factor changes to business rates into any strategic decisions (location and expansion).

4. People & payroll: wage bills and compliance

National Minimum Wage (NMW) increases

From April 2026, the National Minimum Wage will rise across all age bands. Exact figures vary by age, but overall, this means higher wage floors.

How should employers respond?

Staffing-heavy business owners should:

• Build these NMW increases into 2026/27 budgets now.
• Review pricing (pass on some of the cost), productivity (automation) and staffing models (rota).

Working from home, benefits & payrolling

This Budget tweaks some of the employment tax rules:

• The flat-rate home-working allowance (currently £6/week) will be abolished from April 2026. Related, there is extended relief for employer-provided/reimbursed home-working equipment.
• Mandatory payrolling of benefits from April 2027 (with option to adopt from 2026).
• Certain company car/PHEV and umbrella company rules have also been tightened / clarified.

Impact on business owners

Small employers will probably need to adjust payroll systems to:

• Manage payrolled benefits.
• Report salary sacrifice contributions accurately.

If you use informal WFH allowances or umbrella staffing models, you may wish to update these arrangements.
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5. Personal finance for entrepreneurs: ISAs & investment income

Beyond your company, the Budget shapes how you manage your personal wealth built from the business.

Cash ISAs: allowance cut for under-65s

Starting 6 April 2027:

• Cash ISA allowance for under-65s drops from £20,000 → £12,000..
• Overall ISA limit stays at £20,000 with the extra £8,000 having to go into a different type of ISA.
• Transfers from stocks & shares ISAs to cash ISAs will be banned.

For entrepreneurs using ISAs to take cash out slowly and shelter it, you’ll need to plan around the lower cash ISA cap.
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Final thoughts

For most entrepreneurs, the 2025 Autumn Budget doesn’t change what your company pays in corporation tax, rather, it steadily increases the tax drag on you as a director and investor, over time.

The winners are those who:

• Plan their profit extraction very carefully.
• Use of the revised capital allowances and equity incentives where applicable.
• Keep personal tax and investment planning aligned with business plans.

If you’d like our help with this and more, please book a Discovery Call with us to see how we can support your business.