Autumn Budget 2025: What It Means for Small Business Owners, Limited Companies, Partnerships & Sole Traders

• Income Tax thresholds frozen, again, stealth tax increases likely

• Class 2 NIC to be scrapped from April 2026 for sole traders

• MTD for Income Tax is still happening from April 2026

• Capital Gains Tax allowance is being reduced (again)

• VAT threshold remains at £90,000

• HMRC compliance checks are increasing…digital-first reviews

• Self Assessment season is the perfect time to get ahead of it all 🙌🏻

😊 Autumn Budget 2025: A Friendly Summary for Small Business Owners

The Chancellor has delivered the Autumn Budget 2025, and while the headlines may be dramatic, what you really want to know is:

“How does this affect me as a small business owner?”

Whether you’re a sole trader, running a limited company, part of a partnership, or wearing many hats, this is your plain English summary from BarrettStacey Accounting ☺️

🧾 Income Tax & National Insurance: What’s Changing?

☑️ Income tax thresholds are frozen again

The personal allowance stays at £12,570, and the higher-rate threshold at £50,271. That means as your income grows with inflation, you could be paying more tax without any real increase in take-home.

☑️ Class 2 NIC to be abolished, but not just yet

If you’re self-employed, Class 2 National Insurance will be scrapped from April 2026.

Great on paper, but expect changes to Class 4 NIC to balance things out. We’ll make sure you’re not paying more than you need to 🤔

💼 Small Businesses & Limited Companies

☑️ Corporation Tax

No changes were made to Corporation Tax rates or thresholds. Most small businesses will continue paying 19% if profits are under £50,000, and the main rate remains at 25% for profits over £250,000

☑️ Dividends

• Additional Dividend Tax Changes: The Autumn Budget 2025 also announced an increase in the income tax rates on dividend income from April 2026. The basic rate will rise from 8.75% to 10.75%, and the higher rate will increase from 33.75% to 35.75%. 

The tax-free dividend allowance remains at £500, having been cut in previous years.

If you pay yourself via dividends, your tax planning needs to be watertight. We can help 😊

🧠 Making Tax Digital: Still Coming for Sole Traders & Landlords

MTD for Income Tax (aka MTD ITSA) has been confirmed again. From April 2026, if you’re:

• A sole trader or landlord

• Earning over £50,000 annually

…you’ll need to submit quarterly returns using MTD-compliant software like Xero or QuickBooks.

Don’t worry… we’re already helping clients prepare with practical, stress-free support 🙌🏻

📩 Want us to handle it for you? Get in touch

🏠 Capital Gains Tax Changes

From April 2026, the Capital Gains Tax (CGT) annual exemption drops to £3,000.

That’s down from £6,000 in 2024/25. If you’re planning to sell shares, investments or property, especially as a landlord, this could significantly increase your tax bill.

Now’s the time to review your strategy.

📊 VAT: No Change to Threshold

The VAT registration threshold remains at £90,000.

That’s great if you’re just below it, but watch out. If your rolling 12-month income crosses that line, you’ll need to register (even if you only go over for one month).

We help our clients track this and register smoothly if needed 😊

🕵🏻‍♀️ HMRC Compliance: More Digital Reviews Incoming

Funding has been increased for HMRC’s digital compliance unit, meaning:

• More tax returns will be reviewed automatically

• More letters asking for clarification

• More pressure on accuracy

The best way to stay safe?

Let a qualified accountant (like us!) handle it all, from bookkeeping to tax return submission.

Don’t forget, Tax Fee Investigation Insurance is also very important.

💰 National Minimum Wage Increases from April 2026

The Chancellor has confirmed that minimum wage rates will rise again from 1 April 2026, offering a pay boost for workers, but also increasing the pressure on payroll for small business owners.

Here’s a breakdown of what’s changing 👇🏻

🙌🏻 What Business Owners Need to Know:

• If you employ staff on minimum wage, your payroll needs updating from 1 April 2026

• This may increase employer NIC, holiday pay, pension contributions and overall payroll costs

• At BarrettStacey, we’re partnered with a specialist payroll team with plenty of capacity, so we can scale with you

• Already a client? Don’t worry, the payroll team will update this for you as part of your service 😊

🤔 What About the ‘Real Living Wage’?

The Real Living Wage is different from the National Minimum Wage, and while not mandatory, it’s gaining traction.

Set by the Living Wage Foundation, this is a voluntary pay rate based on the actual cost of living. As of October 2025, the rates are:

You’re not required to match these unless you’ve signed up to the scheme, but it’s good to know the difference, especially if your employees ask questions.

📆 What You Should Do Now

November is the perfect time to take action, before the January panic hits.

✅ Submit your 2024/25 Self Assessment early

✅ Get a plan in place for MTD if your income is rising

✅ Check your CGT exposure if you’re selling assets

✅ Talk to us if your income is nearing the VAT threshold

✅ Review your director’s salary/dividend split for 2025/26

📞 Book your discovery call today

We’ll help you feel organised, confident and fully in the know 😊

Authored by Hayleigh Barrett
Director of BarrettStacey Accounting…a female-led accountancy practice helping small business owners across the UK stay financially confident and tax-smart.

Known for proactive support, friendly advice and bookkeeping that actually makes sense 😊

📩 Need help with your Self Assessment or MTD prep?
We’re still onboarding clients for 2024/25, but spaces are limited before December!

👉 Click here to book your free discovery call 

Doing your own Self Assessment? Feel free to download our Self Assessment Checklist using the link below.