Chancellor Rachel Reeves delivered her second budget this afternoon, laying out the government’s taxation and spending priorities for the coming year. It came after the shocking publication of the budget by the OBR earlier today. The headline is that the budget looks to raise taxes by £26bn in 2029-30.  

The OBR expects inflation to reach around 3.5% for this year, slightly higher than forecasted in March (3.2%). Real GDP is forecasted to grow by 1.5% on overage, 0.3% slower than was originally projected.  

A Summary of the Budget

The budget focused on:

• Changes to cash ISAs, reducing the allowance to £12,000 for under 65’s to encourage people to invest in the UK stock market.  

• Introducing a ‘mansion tax’ on properties valued over £2m (£2,000) and £5m (£7,500).  

• A new mileage-based charge on electric and plug-in hybrid cars from April 2028 at around half the fuel duty rate paid by drivers of petrol cars.  

• Salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance.

• The two-child benefit cap within universal credit is being lifted from April 2028.  

• Removing the Eco Energy Scheme, reducing the average household energy bill by £150.  

What do the announcements mean for UK businesses?

Whilst most of the budget announcement focused around raising taxes through various means including a new ‘mansion tax’, taxing salary-sacrificed pensions contributions and fuel duty, there were some points addressed that may affect UK businesses moving forward, including:  

Income Tax

The Chanceller seems to have abandoned plans for a significant increase to income tax and instead, has announced that thresholds on personal tax and employer National Insurances contributions will be frozen until the end of the 2030/31 financial year, three years longer than planned, which means more people will pay higher rates of income tax as their pay rises.  

Corporation Tax

The budget talked about reducing the writing down allowance main rate in corporation tax, saving around £1.5bn.  

Increase in minimum wage

Businesses can expect to see an increase to minimum wage rates next year, giving a pay rise to millions of workers from April 2026.  

The rise will see the national living wage increase to 4.1% (to £12.71 an hour) for eligible workers ages 21 years and older – this is said to provide an additional £900 in gross annual earnings of a full-time worker and benefit around 2.4million workers.  

For 18–20-year-olds, the rate will increase by 8.5% to £10.85 per hour, and for 16–17-year-olds, and those on apprenticeships, it will increase by 6% to £8 per hour.  

Property tax increase

Some businesses may need to consider the changes introduced as a ‘mansion tax’, which is a new tax being introduced to properties in council bands F, G and H, affecting how much they pay for their office space or owned buildings.  

Funding for your business

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Last Updated: November 2025. Version Number: BS2025.11.01.AB