A note from Lisa Wilson, Head of Tax
The Chancellor’s Autumn Statement today brings measures that will feel particularly tough for SMEs, especially those employing staff on the minimum wage. While headline tax rates remain unchanged, the freeze on personal tax thresholds until 2031 is effectively a tax rise and more employees will be dragged into higher tax bands. Now 1 in 4 working individuals will pay more than the basic band rate of tax. Surely this was never the intention on introduction? For businesses, this creates a double squeeze: rising payroll costs and increased pressure on employees’ take-home pay.
The planned increase in the National Minimum Wage to £12.71 per hour from April 2026 will hit SMEs who have large unskilled workforces. Retail, hospitality, and care sectors will feel the pinch most, significantly increasing operating costs. Combined with frozen employer NIC thresholds and no relief on corporation tax (still at 25%), the cost of employment is set to rise sharply. Businesses will need to balance competitiveness with affordability whilst navigating tighter margins.
Other measures that will be particularly important for SMEs include a cut in capital allowance thresholds for the main pool, increases to the thresholds for Enterprise Management Incentive Schemes (for the company only but not the individual) and changes to Employee Ownership Trust tax rates. Previously, shareholders could sell and be completely exempt from paying CGT on their proceeds, tax is now levied at 50%, but the sting in the tail is that you can’t have your Business Asset Disposal Relief on the proceeds that are subject to CGT. That will make it unviable for smaller businesses who wanted to sell to employees.
All in all, not as bad as feared, but still pretty hard for business to swallow.
You can read our full report right here: Autumn Statement November 2025
Please note
There will likely be more announcements in the days and weeks that follow, and we’ll be sure to keep you up to date on these as they come through.
If you have any questions on any of the above, please don’t hesitate to get in touch with our team of experts who would be more than happy to help.
