Autumn Budget 2025 - what could it mean to local businesses?

The Autumn Budget is a key date in the economic calendar where the Government lays out its tax and spending roadmap, unveils economic forecasts and sends ripples and chills through public, business and personal finances alike. Policy shifts take shape, markets, political analysts and reporters react and the morning headlines are written.

But beyond the Westminster theatre the budget carries real-world consequences and can redefine the playing field for entrepreneurs, SMEs, and local enterprises. A tweak in financial policy might mean the difference between hiring new staff or holding back, expanding operations or tightening belts. For many, it’s not just about watching the news it’s about recalibrating strategy, forecasting cash flow, and preparing for the ripple effects that follow.

On the 3rd September in a video message Chancellor Rachel Reeves confirmed that this year the budget would be held on Wednesday 26th November, headlined with "Budget to address economy that's not working well enough for working people" the Chancellor made a number of quotes and outlined her priorities -

• "Britain’s economy isn’t broken. But I know it’s not working well enough for working people"

• "Bills are high. Getting ahead feels tougher. You put more in, get less out. That has to change"

• "We’ve got huge potential - world-leading brands, dynamic industries, brilliant universities, and a skilled workforce"

• "We raised the minimum wage for three million people"

• "Cut NHS waiting lists"

• "Started tearing up planning rules to build 1.5 million new homes"

• "Cost of living pressures are still real"

• "And we must bring inflation and borrowing costs down by keeping a tight grip on day to day spending through our non-negotiable fiscal rules"

• "More pounds in your pocket. An NHS there when you need it. Opportunity for all"

• "Those are my priorities. The priorities of the British people. And it is what I am determined to deliver".

With these quotes in mind, what can small business expect from the Chancellor, when she opens the famous red brief case on Budget day?

The fiscal challenges the Government are facing are significant, with the Independent Office For Budget Responsibility expected to downgrade its growth forecast and Government borrowing rising to a five year high in August.

Consultancy Capital Economics suggests "the Chancellor will need to raise £18-28bn in the Budget to avoid breaking her fiscal rules and to maintain her £9.9bn buffer. With Labour MPs not amenable to spending cuts and financial markets sensitive to borrowing, higher taxes on households will do most of the heavy lifting".

With a pledge not to raise Income Tax rates, National Insurance or the headline rate of Corporation Tax, the options open to the Chancellor are somewhat limited, so could we see a revisit to this pledge as recommended by the Chief Executive of the CBI, Rain Newton- Smith who went as far as to say:

“The fact is that geopolitics and global markets have shifted. The world is different from when Labour drafted its manifesto, and when the facts change so should the solutions. The chancellor cannot raid corporate coffers again so she must look elsewhere, embracing long-term strategic tax reforms rather than maintaining a slavish adherence to manifesto promises on tax or ideas based on the world as it was 18 months ago.”

So if the Government sticks to its manifesto pledge where could the Chancellor be looking to raise money and how could it impact local businesses:

• Business Rates:

  • The Retail, Hospitality and Leisure relief is changing for 2025 / 2026 dropping from 75% to 40% with a £110,000 cap meaning many small businesses could see a significant increase in their rates. The Government has pledged to overhaul the rates system with an expected new structure designed to support the high street by taxing the large online warehouses.

• VAT

  • Whilst the Government is unlikely to change the 20% headline rate, they could lower the VAT threshold bring more smaller businesses into the VAT system for the first time. Industries such as Education and Financial Services are currently exempt, removing this exemptions could provide a new stream of tax revenue. Potentially the Government could reclassify some of the zero or reduced rate goods into the standard rate category.

• Capital Gains Tax

  • CGT has fallen short of Treasury projections over the last few years which could prompt the Government to review rates, possibly aligning with Income Tax rates or making changes to Hold Over relief.

• Inheritance Tax

  • Following recent protests in the Agriculture sector IHT is expected to come under focus, the Government could review the lifetime gifting rule or asset relief which will impact those with family businesses. Rumours include a cap on tax free giving, currently there is no cap on gifts to others, potentially scrapping the seven year rule or changing the percentages applied under Taper relief.

As we count down to the 26th of November, anticipation builds around the Government’s forthcoming fiscal announcement. In the lead-up we can expect a strategic drip feed of information designed to test the waters of public opinion and steer market expectations. investors and analysts will pore over every hint, pricing in potential shifts to fiscal policy long before the Chancellor steps up to the dispatch box. But history reminds us that when the final act diverges sharply from the script as it did with the infamous 2022 Liz Truss mini-budget the consequences can be swift and severe. That moment of misalignment between expectation and reality triggered a dramatic shake-up in the money markets, underscoring just how fragile confidence can be when policy surprises catch stakeholders off guard.

Harvian Consulting helps SMEs in the South West grow with confidence. Blending data-driven insight, digital tools, and creative messaging to unlock business potential. We deliver practical support with a personal touch, always focused on impact, clarity, and community.

“Chancellor Rachel Reeves arrives at HMT” by HM Treasury, CC BY-NC-ND 2.0 https://creativecommons.org/licenses/by-nc-nd/2.0/deed.en