After much anticipation, the 2025 autumn budget statement was delivered on Wednesday. This blog summarises the key aspects from a small business perspective.
My view is that the impact will be relatively limited on most of our clients:
Limited Company / Trading Clients
Salary Sacrifice Pensions
Changes to salary sacrifice pensions will affect employed staff earning at least £50,000, who are paying into a salary sacrifice pension scheme via their employer. Pension contributions above £2,000 will not be free from NI, as they are now. Employer contributions (as made by most of our Ltd Co clients already) are not affected, nor are there any changes to the £60k annual pension allowance. NEST pension contributions at the standard contribution rates are not salary sacrifice, and in any case are capped at £50,270 so employees in this group are not affected.
Action to consider
- Owner/directors should ensure that their pension contributions are paid by your company rather than through payroll.
- Employees with other salary sacrifice arrangements in place might be most affected; keep salary sacrifice arrangements under review.
- Employees making pension contributions via their employer scheme currently save NI. This will change, meaning that Employees receive identical tax benefits from making personal contributions to a private pension scheme of their choice, compared to contributing via their employer's pension scheme. So long as there are no linked Employer contributions, Employees may want to contribute to a pension scheme of their choosing.
- Business owners with staff earning over £50k may want to look at their pension arrangements: Employees in this tax bracket pay 2% Employee NI, but Employers will be paying 15% Employer’s NI on those contributions – you could consider structuring your remuneration arrangements for senior employees differently, to make the contributions employer-only. This will remove Employee choice about whether they are in a pension scheme, and we should await detail on this legislation before making decisions.
Dividend / Savings / Property Tax Rates
Dividends
Starting with Dividends, see our blog on dividends vs salary:
The increase in dividend tax is going to encourage our small business clients, particularly 2-employee or 2-director limited companies, to think harder about the salary vs dividend balance. This is likely to drive the decision more towards maximising the Employer’s NI allowance and set annual salaries at around £29k, or even as high as £40k, as the optimum. Get in touch if you think you will be affected, and we can review this for impacted clients ahead of the changes from April 2026.
Property Tax
Property tax rates have increased by 2%, but this income has not been subjected to NI, as was speculated. Landlords may consider deferring non-urgent repair & maintenance costs until after April 2026 to benefit from the slightly higher rate of tax relief.
Savings
Savings – ISAs are unaffected (except to the extent that they now encourage investment in stocks and shares, by limiting cash ISA contributions to £12k) so make sure that you are using your ISA allowances if you receive investment income. Talk to your financial advisor about whether pension contributions would help you save tax and whether modifying your investment strategy to realise more from capital gains rather than dividend/interest income could help.
Capital Allowances
Some changes were announced to capital allowances, but for our client base, the key take away is that the Annual Investment Allowance (AIA) is unchanged, meaning that businesses can get immediate tax relief on asset purchases (other than property) up to £1M, as they can now. This will have a small impact on clients who have bought a car through their business. Our typical advice that it’s generally best to buy cars privately and claim the 45p mileage allowance is unchanged.
A Reminder on Budget Announcements
Remember, as always, the budget is released after PMQs with a great deal of fanfare, and is sometimes light on detail. Before the statements in the budget become enacted into law, they must go through parliamentary procedure, and ratified by the annual finance Act. Sometimes it is difficult to answer all questions that clients have, because the devil is in the detail, which is not available until some months later, as the full legislation is drafted.
About AJ Financial
At AJ Financial, we specialise in supporting businesses, directors, landlords, and individuals with clear, practical tax guidance. Our clients value our straightforward explanations, proactive advice, and ability to translate complex legislation into actionable steps. If anything in this budget may affect you, we’re here to help you navigate it with confidence.
📧 Email: info@aj-financial.co.uk
📞 Phone: 01823 746382
