What the Autumn Budget 2025 Means for Small Businesses, Company Directors and Landlords
The Autumn Budget 2025 introduced several important tax changes that will affect small companies, the self employed, owner managers and landlords. This guide explains the key points in a clear and simple format so that you can understand how the changes affect you and your business.
Summary of Main Measures
The table below gives a quick comparison of the previous position and the new rules where rates have changed.
| Area | Previous | New |
|---|---|---|
| Corporation tax | Main rate 25% | Remains 25% |
| Capital allowances | Writing down allowance 18% | Falls to 14% |
| Dividend income tax | Basic: 8.75% Higher: 33.75% Additional: 39.35% | From April 2026: Basic: 10.75% Higher: 35.75% Additional: 39.35% |
| Property income tax | Basic: 20% Higher: 40% Additional: 45% | From April 2027: Basic: 22% Higher: 42% Additional: 47% |
| Savings income | Basic: 20% Higher: 40% Additional: 45% | From April 2027: Basic: 22% Higher: 42% Additional: 47% |
| Income tax thresholds | Frozen until 2028 | Now frozen until 2031 |
Corporation Tax and Capital Allowances
The main rate of corporation tax remains at 25%. This provides stability for companies planning ahead.
Changes to capital allowances are more significant.
New Allowances
- First year allowance of 40% from January 2026 for qualifying main rate plant and machinery.
- Writing down allowance on the main pool reduces from 18% to 14% from April 2026.
What this means for your business:
Timing of purchases becomes more important. If you plan to invest in new equipment it may be beneficial to do so when the first year allowance applies. Assets that do not meet the qualifying criteria will receive slower relief.
Profit Extraction for Company Directors
Company owners who take dividends will face higher taxes from April 2026. These are the confirmed new rates.
Dividend Tax Rate Comparison
What this means:
Dividends become more expensive as a method of extracting profits. A review of your remuneration strategy is recommended. A revised mix of salary, dividends and pension contributions may reduce the overall tax cost.
Self employed individuals
Although the Budget did not change headline income tax rates, the freeze in thresholds until 2031 means more people will enter higher bands as profits increase. The combined effect of threshold freezes and rising minimum wage levels will increase tax liabilities for many unincorporated businesses.
Action Point
Update your forecasts to understand how future income will fall across the tax bands. You may also wish to consider pension contributions as part of your tax planning.
Changes for Landlords and Property Owners
The Autumn Budget brought clear tax rises for landlords. Property income will be taxed at higher rates from April 2027.
Property Income Tax Rate Comparison
The government has also confirmed that property income will be taxed separately from savings and dividends. This may change how allowances apply at different income levels.
What this means:
Net rental income will fall for most landlords. If you are both a landlord and a company director you should review the combined impact of property income and dividend income on your overall tax position.
Savings Income for Business Owners
Savings income will follow the same new rates as property income from April 2027. This includes bank interest and similar investment income.
Why this matters
Many owner managers hold business reserves in personal savings or use savings income as part of their tax strategy. The higher rates will reduce net returns.
Other Important Changes
Minimum Wage Increases
The increase in minimum wage rates will raise payroll costs for small employers. This will affect businesses in sectors such as retail, hospitality, care services and any business employing younger workers or apprentices.
Action points:
- Update payroll and budget forecasts
- Review pricing and cost structures
- Ensure payscales remain compliant with new rules
Research & Development
The Budget reaffirmed the continued move towards a simplified R&D scheme. The aim is to support innovation while reducing error and fraud.
What you should do:
- Maintain good project records
- Check eligibility before costs are incurred
- Expect compliance processes to remain strict
What to Do Now
Here is a simple checklist to help you plan ahead:
Review profit extraction
Run comparisons of salary, dividends and pension contributions under the new rates. Consider dividend deferral or alternative extraction methods.
Update forecasts
Include higher wage costs, threshold freezes and rising tax rates on dividends and property income.
Review your capital expenditure plan
Consider using the new first year allowance. Assess whether it is beneficial to bring forward planned investment.
Review rental income planning
If you are a landlord, update expected post-tax rental returns. Factor this into personal cashflow and borrowing plans.
Review your savings strategy
Savings income will be taxed more heavily. Look at ISAs and pension options as part of wider planning.
Final Thoughts
The Autumn Budget 2025 brings stability for companies but higher personal tax burdens for many business owners and landlords. The combination of frozen thresholds, higher dividend taxes and increased property and savings tax rates will reduce net income for many people over the next few years.
Forward planning is now more important than ever. Reviewing investment plans, profit extraction methods and forecasts will help protect profitability and personal cashflow.
Need Help with Your Tax Planning?
Our team at SCG Tax can help you navigate these changes and optimise your tax position for 2025 and beyond.
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