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Autumn Budget 2025 Rachel Reeves

In this article we will take a look at Rachel Reeves’ Autumn Budget 2025: What the New Tax Measures Mean for Individuals and Businesses

For a FREE no-obligation Consultation call us on 0161 879 7175.

Rachel Reeves’ Autumn Budget 2025

At Accounting Solutions Manchester, we’ve been helping individuals, limited companies and business owners navigate changing tax rules for years. With the Chancellor’s 2025 Autumn Budget now released, the landscape has shifted once again and many of the measures announced today will affect tax planning, business operations and personal finances for the foreseeable future.

As your trusted accountants in Manchester, we break down the key changes below and explain what they could mean for you.

A Budget Built on Threshold Freezes and Stealth Revenue Raisers

After months of speculation, Chancellor Rachel Reeves chose not to increase headline tax rates. Instead, she relied on a broad mix of measures, many of them smaller but cumulatively significant, to cover a fiscal shortfall of more than £20bn.

The most substantial revenue generator is the extension of the personal tax threshold freeze to 2030–31. Although presented as a “fair and necessary” decision, this freeze effectively pushes more earners into higher bands as pay rises continue to outpace inflation adjustments.

According to the OBR, the overall package will increase tax receipts by £26bn by 2029–30, pushing the UK tax burden to an unprecedented 38% of GDP.

If you want a personalised breakdown of how this affects your future tax planning, see our guide to personal tax planning services.

A Chaotic Start as OBR Report Goes Live Early

The Budget got off to an unusually messy start, with the Office for Budget Responsibility’s full analysis being published online two hours before the Chancellor addressed Parliament. This leak followed days of Treasury briefings and media speculation, meaning most headline measures were already in the public domain.

Alongside tax announcements, the government confirmed:

  • An increase to the national minimum wage
  • An extension of the sugar levy to include milk-based drinks, such as lattes and milkshakes

Reeves reiterated that her approach avoids austerity while supporting long-term economic growth.

Key Tax Measures Explained

Personal Tax Threshold Freeze Extended to 2030–31

Originally due to end in 2028–29, the freeze on income tax thresholds will now continue for an additional two years. This policy has been in place since 2021 and remains a major contributor to rising tax receipts.

Additionally, from April 2027, individuals who only receive the basic or new state pension will no longer be required to file simple assessments a welcome simplification for older taxpayers.

If you need help understanding which tax band you’ll fall into, our personal tax return service can support you.

New £2,000 Cap on Pension Salary Sacrifice

A significant change affecting employers and employees is the upcoming limit on salary sacrifice for pension contributions. From 2029, only the first £2,000 of pension salary sacrifice will benefit from its current tax treatment. Any contributions above that will be taxed like standard employee pension contributions.

The government argues that the current model increasingly benefits higher earners disproportionately. This cap marks a fundamental shift in how pension tax planning works for directors, executives and business owners.

If your business uses salary sacrifice as part of its payroll strategy, speak to us about updating your arrangements through our payroll and pension support services.

Reduction of CGT Relief on Employee Ownership Trusts

From this month, only 50% of qualifying disposals into an Employee Ownership Trust (EOT) will receive CGT relief, down from 100%.
The Chancellor stated that the previous system created opportunities for complete tax avoidance during business sales.

If you’ve been considering an EOT structure, this change makes tax planning more time-sensitive. Our corporate tax advisory service can help you understand your options.

Corporation Tax Budget 2025

The latest UK Budget confirmed that Corporation Tax will continue to follow a tiered system, with small profits taxed at 19% and larger companies paying the main 25% rate. For Manchester limited companies, the key change wasn’t the headline rate but the renewed focus on targeted reliefs, capital allowances and incentives aimed at supporting growth.

VAT Changes After the Latest Budget

The most recent UK Budget reinforced key VAT rules and confirmed ongoing updates to thresholds, exemptions, and compliance requirements. For Manchester businesses, staying on top of these changes is essential to avoid penalties and optimise cashflow. The standard VAT rate remains at 20%, with reduced 5% and zero-rated supplies continuing for qualifying goods and services.

Property Tax Reforms and High-Value Council Tax Surcharge

Several property-related measures were included:

  • A 2% rise in basic and higher rates for savings, dividend and property income.
  • A new annual council tax surcharge on high-value homes in England:
    • £2,500 for properties valued over £2m
    • £7,500 for properties over £5m

This surcharge will be collected as part of the standard council tax bill.

New Mileage Charge for Electric and Hybrid Vehicles

From April 2028, electric and hybrid vehicles will face a mileage-based tax:

  • 3p per mile for full EVs
  • 1.5p per mile for hybrid vehicles

Fuel duty is frozen for a further five months but will begin staged increases from September 2026.

Businesses with electric fleets or high annual mileage should begin modelling cost changes now. We can assist through our business forecasting service.

Minimum Wage Increase and Free SME Apprenticeships

The national minimum wage will rise again:

  • Ages 18–20: £10.85 per hour
  • National living wage: £12.71 per hour

To support businesses facing higher wage bills, SMEs will receive fully funded apprenticeships, a measure particularly useful for firms looking to bring new talent into their teams.

Business Rates Relief for Retail, Hospitality and Leisure

Over 750,000 properties in retail, hospitality and leisure will benefit from permanently reduced business rate multipliers. This is one of the more generous elements of the Budget, designed to support sectors still recovering from slow growth and rising operating costs.

Making Tax Digital

Digital reporting requirements, including Making Tax Digital (MTD) for VAT, remain a priority for HMRC. Companies must maintain accurate, real-time records and submit returns via MTD-compatible software. Accounting Solutions Manchester helps local businesses navigate these updates, claim eligible reliefs, and ensure VAT returns are timely and accurate. By understanding the latest Budget measures, Manchester companies can reduce errors, maximise efficiency, and avoid unnecessary costs all while staying fully compliant.

Additional Announcements

The Budget also included:

  • Expansion of the sugar levy
  • Introduction of a tourism tax for English local authorities
  • Gambling duty reform
  • ISA allowance changes
  • Anti-avoidance measures targeting CIS fraud
  • Continued pursuit of avoidance scheme promoters
  • Publication of the government’s loan charge review response

Economic Outlook: Slow Productivity and Limited Growth

The OBR forecasts average growth of 1.5% over the next few years, driven down by weaker productivity expectations.
However, near-term growth has been revised up from 1% to 1.5%.

The government now has £22bn of fiscal headroom, slightly more than forecast earlier this year, but still faces a narrow margin going forward.

What This Budget Means for Individuals and Businesses

While this wasn’t a Budget filled with surprises, the cumulative effect of multiple mid-sized tax adjustments will be substantial. Businesses will need to plan for rising wage costs, new vehicle charges and changes to pension and CGT rules while individuals will feel the impact of prolonged threshold freezes.

This is a Budget built on gradual, long-term revenue generators rather than headline-grabbing tax hikes.

If you want tailored guidance on how these changes affect you or your business, we’re here to help.

How Accounting Solutions Manchester Can Support You

As specialist accountants in Manchester, we work closely with business owners, directors and individuals to help:

  • Reduce tax liabilities
  • Improve financial planning
  • Navigate new legislation
  • Optimise company structures
  • Build sustainable growth strategies

Reduce tax, increase profit, and save time.

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Conclusion

Rachel Reeves’ 2025 Autumn Budget was less about dramatic moves and more about long-term positioning. The prolonged freeze on tax thresholds, tighter pension rules and targeted levies will impact tax bills for years to come. For businesses, especially those in hospitality, retail and property, the changes will require a renewed focus on planning and profitability.

At Accounting Solutions Manchester, our role is to help you stay ahead of these shifts, protect your position and plan confidently for the future.

If you’d like us to turn this into a downloadable PDF, a social media summary, or a version for your newsletter, just let me know.