How could the Autumn Budget 2025 impact businesses?

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With Rachel Reeves set to deliver her Autumn Budget on Wednesday 26 November, speculation and uncertainty have been in the headlines.

In a significant U-turn on 14 November, the chancellor scrapped plans to raise income tax rates – a move that caused swings in bond markets.

Sterling has come under sustained pressure as some investors bet against the pound on fears that the chancellor's tax-rising policies could damage economic growth²⁶.

The chancellor is under pressure to address a multi-billion pound deficit while avoiding direct tax rises on working people. The upcoming budget is poised to introduce a series of changes that could impact businesses across the UK.

This guide will break down what to expect from Reeves’ Autumn Budget, from potential tax reforms and spending plans to the likely impact, providing you with the insights you need to prepare your business for the changes ahead.

Table of contents
Date and time of the Autumn Budget 2025 What is the Autumn Budget and how does it work? A multi-billion pound deficit and the productivity puzzle What tax changes could affect your business? How could currency markets react to the Autumn Budget? How Wise Business can help FAQS on the Autumn Budget 2025

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Date and time of the Autumn Budget 2025

The government has confirmed that this year's Autumn Budget will be released on Wednesday 26 November.

The statement is typically delivered by the Chancellor of the Exchequer (in this case, Labour’s Rachel Reeves MP) at around 12:30 PM (UK time), immediately following Prime Minister’s Questions.

The chancellor typically delivers a speech standing up for an hour, to craft the government’s narrative around the Budget. After the speech, they sit down – at which point the full Budget document is published online.

The timing is significant, with some commentators suggesting the late November date could give the economy more time to recover from a period of sluggish growth.

What is the Autumn Budget and how does it work?

If you've heard about the Autumn Budget but aren't quite sure how it all fits together, here's a quick breakdown.

How it works	Description
What gets announced?	The Budget is when the chancellor sets out the government's tax and spending plans. This includes changes to business taxes, income tax, VAT, public spending, and fiscal policy for the year ahead.
When do the changes take effect?	Most tax changes announced in the November 2025 Budget will come into force from April 2026 – the start of the new financial year (2026-27). Some measures might be introduced immediately, while others could be phased in over several years. Once implemented, these changes typically remain in place indefinitely unless a future Budget reverses or modifies them.
The five-year forecast	Alongside the Budget, the Office for Budget Responsibility (OBR) produces a five-year economic forecast. This projects what will happen to the economy, tax revenues, and government spending from 2025-26 through to 2029-30. The OBR's forecast determines whether the government is on track to meet its financial commitments and helps Rachel Reeves decide how much room she has for tax cuts or spending increases.
Fiscal rules and the 2029-30 target	The government sets itself fiscal rules – specific targets for managing the nation's finances. Current rules require: day-to-day spending to be covered by tax revenues by 2029-30 and debt to fall as a share of the economy by 2029-30. If the OBR's forecast shows the government won't meet these targets, the chancellor must find ways to raise more revenue (through tax increases) or cut spending to balance the books.
Example of the Budget in action	Hypethetically, if Reeves announces corporation tax will increase to 27% in the Budget, this would typically apply from April 2026 onwards (and would continue indefinitely unless changed in a future Budget). The OBR then forecasts how much revenue this will raise each year from 2026-27 through 2029-30, helping determine if the government meets its fiscal rules by the 2029-30 deadline.
Why this matters to your business	The chancellor's room for manoeuvre – determined by the OBR forecast – directly influences whether your business faces tax rises, benefits from new reliefs, or operates in a higher or lower-growth environment.

Understanding how the Budget process works helps you anticipate what might be announced and prepare your business accordingly.

A multi-billion pound deficit and the productivity puzzle

At the heart of the Autumn Budget is a substantial financial challenge.

Estimates of the government's fiscal challenge vary widely, with forecasters suggesting it could be anywhere between £20bn and £30bn.

The National Institute of Economic and Social Research (NIESR) previously estimated the hole at £41.2 billion¹, while recent analysis from Goldman Sachs suggests it could reach £30bn².

This shortfall (the difference between the government’s total spending and its total income) could also be exacerbated by weaker predicted growth, rising debt interest payments and other spending commitments.

Chancellor Rachel Reeves has been explicit about her primary focus: to solve the UK's long-standing productivity puzzle³.

Productivity growth, or the measure of output per hour of work, has stalled for years, contributing to slow economic growth since the 2008 financial crisis.

The OBR forecast: a tough pill to swallow?

The pressure on Reeves rose in October 2025 after the Financial Times reported that the Office for Budget Responsibility (OBR) – the UK's independent economic forecaster – is set to downgrade its official productivity forecast by 0.3%, potentially increasing public sector net borrowing by £21 billion⁴.

With government borrowing already reaching multi-decade highs this year, the news initially appeared to be a setback for the chancellor. The downgrade was expected to challenge her fiscal plans, potentially leading to manifesto-breaking tax rises.

The income tax U-turn

However, by mid-November, the picture had shifted – leading to one of the most dramatic U-turns of the Budget cycle.

On 14 November, Reeves abandoned plans to raise income tax rates by up to 2p – a measure that would have broken Labour's flagship manifesto pledge not to increase taxes on working people²⁹.

The U-turn was triggered by improved data from the OBR. While the productivity downgrade remained, the watchdog provided better-than-expected forecasts in other areas:

• Higher wage growth: Stronger wage data meant more tax revenue flowing into the Treasury
• Nominal GDP boost: Higher-than-expected inflation and wage growth in 2025-26 could add roughly £9-20bn to the OBR's tax revenue forecast by 2029-30⁵
• Narrowed fiscal gap: The feared £30-50bn hole shrank to approximately £20bn³⁰

💡 Why higher inflation might help the chancellor
While productivity is falling, higher-than-expected inflation and wage growth mean more pounds flowing through the economy. Since the government collects taxes based on cash amounts (not inflation-adjusted figures), this generates more tax revenue – even if the economy isn't really growing faster in real terms.

This "nominal GDP boost" gave Reeves just enough fiscal headroom to avoid the most politically toxic tax rise – but it came at a cost.

Market reaction

Following the change in direction of income tax, UK government bonds (gilts) sold off sharply – with 10-year yields rising 13 basis points to 4.57%²⁵.

The pound also weakened against both the dollar and the euro as investors questioned the stability of the government's economic strategy²⁵.

As one Bloomberg commentator noted, the gilt market "can see straight through" what appeared to be politically motivated U-turn rather than genuine fiscal improvement³¹.

What does this mean for businesses?

Instead of one large tax rise, Reeves is now pursuing what has been described as a "smorgasbord" approach – multiple smaller tax increases spread across different areas³².

This strategy may feel less dramatic politically, but for businesses it could mean:

• Less clarity on total tax burden: Rather than one headline change, you'll need to assess multiple smaller adjustments across various taxes
• Stealth taxes becoming the norm: Threshold freezes and targeted levies may become the government's preferred revenue-raising method
• Continued policy uncertainty: The last-minute U-turn has raised concerns about the government's grip on economic policy, potentially leading to further changes down the line

Key takeaway for businesses: While avoiding a headline income tax rise may seem positive, the alternative – a patchwork of smaller tax increases – could be harder to plan for and potentially more disruptive to business operations.

What tax changes could affect your business?

The chancellor has publicly confirmed she is "looking at tax and spending" to address the fiscal gap⁸.

Labour had originally pledged not to raise the rates of income tax, National Insurance, or VAT⁹, however, speculation is growing that no taxes are off the table with Reeves confirming in October that the Treasury is considering a 2p increase to income tax¹⁰.

Alongside these potential changes, commentators have suggested that businesses and high-value assets could be subject to new levies.

Changes to Business rates

Alongside tax, the Autumn Budget will include other policy changes like business rates that could directly influence your business outgoings and growth.

Here’s what your business could expect:

• Relief is changing: The Retail, Hospitality, and Leisure (RHL) relief continues to extend, however it could be dropping from 75% to 40%¹¹ for the next tax year, with a £110,000 cap. This means many small businesses will see a significant increase in their rates.
• Small business multiplier frozen: Rachel Reeves has promised to keep the small business rates multiplier at 44.9p.
• Standard multiplier up: The standard business rates multiplier increased to 55.5p in April 2025, impacting businesses not covered by the RHL relief.
• Long-term plan: The government is working on a long-term overhaul of the business rates system, with a new structure expected from 2026 that aims to support the high street by taxing large online warehouses more.
• Digitalisation ahead: The entire business rates system is set to be digitalised by 2028. This will require businesses to update property information in real-time under a new 'duty to notify,' starting from April 2026.
• The bottom line: These changes mean that it’s important to review cashflow, seek professional advice and prepare for potentially higher running costs in the future.

Potential VAT reforms

While the government is unlikely to change the headline Value Added Tax (VAT) rate (currently 20%), the Autumn Budget could include changes to its scope or application.

Reeves is looking at VAT adjustments as part of her "smorgasbord" of revenue-raising measures. Here's what could be announced:

• VAT threshold – One of the most likely changes is lowering the VAT threshold, which would bring thousands of smaller businesses into the VAT system for the first time.
• Item reclassification – The government could reclassify certain goods and services, moving them from the zero-rated (0%) or reduced-rate (5%) categories to the standard rate (20%). This would increase tax revenue but could also have a knock-on effect on prices and consumer spending.
• Energy VAT cut – In a move aimed at cost-of-living relief, reports suggest Reeves may reduce the 5% VAT charged on domestic energy bills³⁴. She is also considering removing green levies on electricity bills, which push electricity costs higher than gas.
• Exempt services – Currently, services like financial services and education are exempt from VAT¹². The government could amend legislation to make some of these services no longer exempt, providing a new source of tax revenue.

The bottom line: If you're a small business approaching the VAT threshold, or you operate in sectors that currently benefit from zero or reduced rates, Wednesday's Budget could have affect your pricing and compliance obligations.

Capital Gains Tax and Inheritance Tax

As an alternative to tax on income and other major sources, the government is reportedly considering taxes on large assets and transactions such as Capital Gains Tax (CGT) and Inheritance Tax (IHT).

• CGT – Possible changes could include aligning CGT rates with Income Tax rates, increasing the rates for specific high-value assets, or tweaking the conditions for 'Hold-Over Relief,’¹³ which allows assets to be gifted without paying CGT. In 2024’s Autumn Budget, the rate of CGT on Business Asset Disposal Relief (BADR) increased to 14% for disposals made on or after 6 April 2025 and 14% - 18% for disposals made on or after 6 April 2026¹⁴. Whether this changes in 2025 remains to be seen.
• IHT – A major area of speculation surrounds IHT. Advisers are already reporting¹⁵ that clients are looking into trusts and gifting to plan ahead. The government could tighten rules on gifting money and assets to raise revenue.

Other speculated taxes and levies

Tax or levy	Breakdown
Income tax threshold freeze	The most likely revenue-raiser is now an extension of the freeze on income tax thresholds until 2029/30. This "stealth tax" would drag an estimated 1.3 million additional people into paying the higher 40% rate of income tax, raising approximately £7 billion per year40. The Institute for Fiscal Studies found that extending the threshold freeze for another two years would mean 10.1 million people would become higher-rate taxpayers, raising as much as £8 billion41.
Fuel Duty	Fuel duties have been frozen at 52.95 pence per litre since 2011-1216, including a temporary 5 pence cut introduced in 2022-23 which has been repeatedly extended. With transport secretary Heidi Alexander heightening concerns about the first fuel duty rise in 15 years27, this is one to watch. A significant rise could impact economic growth, while a modest rise could provide a new revenue stream with softer economic impact.
Pension salary sacrifice schemes	Reeves is reportedly looking at capping salary sacrifice pension contributions at £2,000 per year before they become subject to national insurance42. This would reduce how much people can put away in their pension pots and could affect take-home pay for those who use the scheme to stay in a lower tax bracket.
Two-child benefit cap scrapped	In a significant spending commitment, the controversial two-child benefit cap is expected to be scrapped entirely43. This will cost approximately £3 billion but could lift 350,000 children out of poverty. The measure demonstrates that not all Budget measures will be revenue-raising – some will significantly increase spending.
Banking	Despite months of speculation and pressure from Labour MPs to raise bank levies, reports suggest banks will be spared from tax increases in Wednesday's Budget. Banks successfully lobbied against higher taxes by warning they would reduce lending to businesses and homebuyers44. In return, the Treasury has asked lenders to publicly praise the Budget and show how they'll boost lending to first-time buyers and small businesses. Bank shares jumped 2-3% on the news45.
Gambling	Former prime minister Gordon Brown urged Rachel Reeves to raise levies on gambling from 21% to as high as 50%18 to cover the cost of lifting the two-child benefit cap. .
Wealth tax	Despite growing calls from within the Labour party for a 2% tax on wealth over £10 million46, the same enthusiasm isn't shared across government and most observers believe this won't appear in Wednesday's Budget.
Non-dom tax status	The government continues to push ahead with its abolition of the non-dom tax status. While initial fears of a massive "non-dom exodus" haven't materialised to the extent predicted, with early data suggesting departures are in line with official forecasts20 this remains a consideration for businesses with international investors. If many international investors were to leave the UK, businesses could see their pool of accessible capital shrink. With these investors now residing overseas, relationships become tougher to form and due diligence harder to conduct.
Mansion tax	Reeves is expected to introduce a council tax surcharge on properties worth over £2 million, affecting around 100,000 homes and raising £400-450 million annually³⁸. The average charge of £4,500 per year is unlikely to be implemented until 2028³⁹. While primarily a personal tax, this could affect recruitment of senior talent to London and the South East, where property costs are already a factor in compensation negotiations.

For these reasons, it's vital to stay on top of the latest developments and consider ways to streamline the process of receiving investment from overseas. With a Wise Business multi-currency account, you can receive funds in 18+ currencies at competitve rates, opening the door to international investors and saving you money.

Action you can take now

With the Budget just hours away and significant changes confirmed or highly likely, being proactive can help you prepare your business for the impacts.

Review your tax strategy immediately

If you're a business owner planning to sell assets or your company, speak to your tax adviser or accountant before Wednesday's announcement for personalised guidance.

Given the confirmed extension of income tax threshold freezes and potential changes to Capital Gains Tax, the timing of transactions could significantly affect your tax liability.

Similarly, if you are a sole trader, discuss with your tax adviser how an extended income tax threshold freeze²¹ combined with wage inflation might affect your personal tax situation as your income rises.

Prepare for a "smorgasbord" of changes

Rather than one large tax change, expect multiple smaller adjustments across different areas³². This means you'll need to:

• Review multiple tax categories rather than focusing on one headline change
• Consider the cumulative impact of several smaller increases on your overall tax burden
• Build flexibility into your budgets for potential surprises

Plan for increased running costs

With business rates relief being scaled back for certain businesses and the standard multiplier already increased, review your cash flow and operational costs now.

Plan for potentially higher outgoings from April 2026, especially as Employer National Insurance Contributions²² and the minimum wage²³ have also recently increased.

Factor in the possibility of fuel duty increases, changes to pension contribution rules, and other operational cost pressures that may be announced.

Stay informed and flexible

The final details will not be known until the chancellor speaks at approximately 12:30 PM on Wednesday 26 November. Given the last-minute U-turns and policy changes we've seen, remain flexible and be prepared for further surprises.

Understanding the changing landscape of threshold freezes, property levies, pension changes, and other targeted tax increases will be key to making informed business decisions in the challenging fiscal environment ahead.

How could currency markets react to the Autumn Budget?

In the run up to Budget statements, currency markets typically price in certain changes to fiscal and economic policy based on their expectations of the announcement.

When reality differs from expectation, these markets can move drastically. If your business sends international payments, sharp swings in currency values can significantly disrupt your financial planning and your bottom line.

In 2022, Liz Truss and Kwasi Kwarteng’s mini-Budget defied market expectations causing the pound to fall to a 37-year low against the dollar²⁴. For businesses dealing with multiple currencies, this shift could have considerably impacted profit margins and disrupted cash flow.

The memory of the mini-Budget still lives strongly in the minds of investors. In the days leading up to the government’s 2025 Autumn Budget, traders bet on the pound falling against the dollar – citing fears of “season two of the Mini-Budget crisis” as a reason for their concern³³.

As we await the details of the Autumn Budget, preparing your business for any potential impacts is crucial to ensure you don’t face significant losses.

Recent sterling movements

The pound has come under sustained pressure in November:

• GBP/USD: Trading around 1.31, down from highs of 1.37 earlier in the year³⁶
• UK gilt yields: 10-year gilts at 4.54%, with the 30-year yield above 5% – the highest borrowing costs of any G7 nation³⁷
• Market expectations: 80% probability now priced in for a Bank of England rate cut in December, which could further weaken the pound³⁷.

As we await the details of the Autumn Budget, preparing your business for any potential impacts is crucial to ensure you don’t face significant losses.

How Wise Business can help

With a Wise Business account, your business can exchange, send, and receive currencies easily, quickly, and cheaply. You’ll always be offered the real exchange rate – the one you see on Google – with no hidden fees.

This means you can send money to clients, receive funds from overseas investors and exchange currencies all in one place – streamlining your cash flow and saving you money.

You can integrate your own accounting software – like Xero or QuickBooks – too.

Also, with potential volatility on the horizon, your business can capitalise on market movements through our Auto Conversion feature.

If you anticipate the pound rising or falling, you can set a target rate of exchange against another currency which, if met, will automatically be exchanged in your platform. You can achieve maximum value on your currency exchange without having to constantly keep track of market movements.

Open a Wise Business account today to keep control of your business finances ahead of the Autumn Budget.

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FAQS on the Autumn Budget 2025

Below are some of the frequently asked questions on this year's Autumn Budget.

What is the Autumn Budget?

The Autumn Budget is a key financial and economic statement delivered by the UK government, typically in late October or early November.

It's the government's opportunity to set out its plans for taxation, public spending, and borrowing for the year ahead.

It's a significant event that provides an overview of the UK economy and outlines the government's fiscal strategy.

How does the Autumn Budget affect businesses?

The Autumn Budget can affect businesses in numerous ways, even if the government pledges not to raise major taxes like Income Tax or VAT.

With the Budget now just hours away, reports suggest businesses will be affected by changes to business rates relief, extensions to income tax threshold freezes (dragging more people into higher tax brackets), potential changes to pension contribution rules, and possible fuel duty increases.

These changes can impact a business's outgoings, cash flow, and overall financial planning.

What is likely to happen in the Budget tomorrow?

Following a dramatic U-turn on income tax in mid-November, the Chancellor is pursuing a "smorgasbord" approach of multiple smaller tax rises rather than one large increase.

Expected measures include: extending the freeze on income tax thresholds until 2030 (raising approximately £7-8 billion per year), scrapping the two-child benefit cap (costing £3 billion), introducing a council tax surcharge on properties over £2 million, and potential increases to fuel duty and gambling taxes.

Banks will reportedly be spared from tax increases after successful lobbying, whilst business rates relief is confirmed to be dropping from 75% to 40% for eligible businesses.

How will the Budget affect my small business?

The impact of tomorrow's Budget on your small business will depend on your sector and specific circumstances.

Small businesses will be affected by business rates relief dropping from 75% to 40% for the next tax year, meaning higher property costs for many. The income tax threshold freeze will also affect sole traders and business owners' personal tax bills as wage inflation pushes them into higher brackets.

There remains the possibility of changes to the VAT threshold, which could bring more businesses into the VAT system for the first time, though this is less certain than other measures.

To plan ahead, review your cash flow now and prepare for potentially higher running costs from April 2026.

Will Labour change Business Asset Disposal Relief?

While the government has not made a formal announcement on Business Asset Disposal Relief (BADR), it remains an area of speculation.

Following the income tax U-turn, the government appears to be avoiding manifesto-breaking tax rises on "working people." However, as BADR relates to Capital Gains Tax on the sale of business assets, and CGT changes are still being considered as part of the "smorgasbord" approach, it could still be affected.

We'll know for certain when the Chancellor speaks at 12:30 PM on Wednesday 26 November.

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Sources used:

1. Reeves and Starmer to prepare ground for tax rises in a difficult autumn budget | The Guardian
2. Goldman chief delivers warning to Reeves over bank tax hikes | Sky News
3. Reeves pledges to tackle productivity challenge at autumn budget | The Independent
4. Reeves faces £20bn hit to UK public finances from productivity downgrade | Financial Times
5. What could still swing the UK fiscal forecasts for Rachel Reeves? | Financial Times
6. In our first year Labour fixed the foundations – now we must build a stronger economy for a renewed Britain | The Guardian
7. Labour to revive Northern Powerhouse Rail project | The Guardian
8. Reeves admits she’s looking at tax rises and spending cuts in Budget | The Independent
9. Has the government kept its pledge not to increase taxes on ‘working people’? | Full Fact
10. Reeves eyes up 2p rise in income tax | The Telegraph
11. Business rates reform: Autumn Budget 2024 | Tax Adviser
12. VAT rates on different goods and services | Gov UK
13. Gift Hold-Over Relief | Gov UK
14. BADR | Gov UK
15. What might the Autumn 2025 Budget mean for small businesses? | Velocity Accounting
16. Fuel duties | OBR
17. Windfall tax on banks could raise £11 billion | Positive Money
18. UK's Reeves leaves door open to gambling tax rise in autumn budget | AJBell
19. Could a wealth tax work in the UK? A visual guide | The Guardian
20. UK tax data reportedly suggests claims of non-dom exodus overblown | The Guardian
21. Autumn Budget: inheritance tax and other possible changes | Fidelity
22. Employers’ National Insurance: How 2025 rise affects businesses and what do to now | Sage
23. The National Minimum Wage in 2025 | Low Pay Commission
24. Pound falls below $1.09 for first time since 1985 following mini-budget | The Guardian
25. UK bonds sell off after income tax U-turn | CityAM
26. Currency traders bet against sterling ahead of Budget | Financial Times
27. Reeves given stark Budget warning from business to avoid ‘death by a thousand taxes’ | Independent
28. OBR to downgrade growth forecasts ‘in every year’ to 2030 | CityAM
29. Chancellor Rachel Reeves scraps plans to raise income tax rates at Budget | ITV
30. Rachel Reeves made income tax U-turn after being handed £10bn extra headroom | LBC
31. Rachel Reeves Income Tax U-Turn Puts the UK in a Death Spiral | Bloomberg
32. Will Rachel Reeves’ tax U-turn be disastrous? | The Week
33. Slash spending or risk bond market mayhem: Reeves warned lack of credible plan will spook investors | This is Money
34. Rachel Reeves’s 5% VAT cut on electricity bills will backfire, experts say | The Guardian
35. British Pound / U.S. Dollar | Trading View
36. United Kingdom Rates & Bonds | Bloomberg
37. Bank of England to cut interest rates in December and again in Q1 2026 - Reuters poll | Reuters
38. Reeves to hit 100,000 high-value properties with mansion tax in Budget | The Independent
39. Rachel Reeves set to target wealthy with ‘mansion tax’ | The London Economic
40. Warning 1.3m more people could pay higher income tax rate after Reeves Budget | The Independent
41. How are frozen tax thresholds reshaping who pays personal taxes? | IFS
42. What pension changes is Rachel Reeves considering in the budget? | The Guardian
43. Rachel Reeves signals plan to remove two-child benefit cap in budget | The Guardian
44. Rachel Reeves asks banks to praise her plans as they escape Budget tax raid | Financial Times
45. Budget uncertainty hammers retail confidence; UK bank shares jump after ‘avoiding windfall tax raid’ – business live | The Guardian
46. Millionaires say 'we want to pay more tax' | BBC News

Sources last checked: 25/11/2025