Chancellor Rachel Reeves has unveiled this year’s Autumn Budget, introducing key changes to employer national insurance contributions, inheritance tax, capital gains tax, and other duties, forecasting an additional £40bn in tax revenue.
In her address to the House of Commons, Reeves emphasised that the government is committed to “restoring economic stability and turning the page on 14 years” of Conservative governance, vowing that Labour will “rebuild Britain once again.”
Among the measures announced, the National Minimum Wage will rise to £12.21 per hour for those over 21 from April 2025. Employer National Insurance contributions will also increase by 1.2 percentage points, bringing the rate to 15%—though employees will not see a direct increase. For the hospitality sector, Reeves introduced a permanent reduction in business rates starting in 2026-27, with a temporary 40% relief cap of £110,000 until then. Employment Allowance will also be raised from £5,000 to £10,500, providing smaller businesses with a buffer on national insurance costs.
The carried interest tax, impacting private equity managers, will rise from 28% to 32%, and the oil profits levy will be increased to 38% with an extended duration. Additionally, the concept of non-domicile residency will be eliminated from April onward. The government’s Corporate Tax Roadmap includes capping the Corporation Tax rate at 25% for the remainder of this Parliament, the lowest rate in the G7, and retaining the current small profits rate and marginal relief. It also promises sustained capital allowances, with full expensing and a £1 million annual investment allowance.
To enhance tax policy for major investments, the roadmap outlines a simplified, user-friendly R&D relief structure, continued digitisation efforts with HMRC, and a new process to increase tax certainty for substantial investments.
Impact on SMEs and other businesses
The new Budget measures bring financial challenges for SMEs, with experts warning that the National Insurance increase could negatively impact both businesses and employees. As the cost of business rises, companies may have to reallocate funds, potentially leading to pay cuts or staff reductions.
Rather than supporting small enterprises, critics argue, the Budget risks "hindering" and “limiting” their growth. Although the Prime Minister has stated his intention to ease pressures on small businesses, the changes suggest otherwise. Concerns are particularly high among deep-tech business owners, who fear that the increased National Insurance costs will create obstacles for companies that prioritise reinvesting in innovation, growth, and talent development.
In response to the Budget, Virgin Money raised rates across its fixed range by up to 0.15% shortly after its release, despite an initially calm market reaction due to pre-Budget leaks. Brokers noted a spike in gilt yields, signalling rising investor apprehension, though Accord Mortgages also announced rate reductions, indicating market uncertainty following Labour’s fiscal policies.
Kundan Bhaduri, Property Developer and Portfolio Landlord at The Kushman Group, commented, "Rachel Reeves’ tax increases are swiftly making their impact felt, and the timing couldn’t be worse. With Virgin Money hiking mortgage rates almost immediately, landlords and homeowners are now scrambling to manage the rising costs. It’s surprising how little foresight went into these changes. Did the government consider the ripple effects? Labour claims to support working people, but this approach risks making housing even less affordable. These tax hikes add fuel to an already overheated market, further burdening households and landlords struggling with escalating expenses."
A financial challenge for healthcare providers
The planned increase in Employers’ National Insurance (NI) contributions is set to significantly impact GP practices, care homes, and other healthcare businesses as well. Unlike other NHS and public sector entities, these businesses are not exempt from paying this tax, meaning they’ll face a 1.2% increase in wage costs for all employees earning above the lower limit.
Compounding this burden, the threshold at which employers must start paying NI contributions will drop from £9,100 to £5,000, adding £615 in costs per employee. While some small businesses may offset these increases with the Employment Allowance, GP practices—whose income largely depends on public funds—are not eligible for this relief. This exclusion leaves them more exposed to rising payroll costs, with many facing difficult decisions around staffing and services.
The British Medical Association (BMA) has warned that this policy could lead to practice closures, further straining an already stretched healthcare system. GP leaders have expressed dismay over Treasury Chief Secretary Darren Jones’s recent remarks on BBC’s Question Time, where he indicated that GP practices would have to absorb the NI increase without government assistance. Historically, such increases have been fully funded by previous governments, easing the burden on practices.
In a letter to Jones, Dr Katie Bramall-Stainer, chair of the BMA GP Committee UK, emphasised the financial strain this hike would impose on practices. “This will be a huge shock to many in the profession who simply cannot afford these increases,” she wrote, warning that practices may be forced to reduce staff and services, or even close entirely.
For many GP practices, this change could add up to tens of thousands in additional costs per year. Dr. Bramall-Stainer also challenged Mr. Jones’s statement on the Employment Allowance, pointing out that practices serving public healthcare needs are excluded from this allowance, leaving even small practices without relief.
Calling for “absolute certainty” that GP practices will be exempt from these increases, she stressed that without support, practices may need to reduce services, lay off staff, and in some cases, shut down. This, she warned, would be disastrous for patient care, as practices already struggle to recruit enough staff to meet demand.
A care home executive, in conversation with BBC recently, called the Budget "one of the worst" in memory for the sector and warned that the policies introduced by Chancellor Rachel Reeves could lead to weekly fee hikes of up to £80 per resident. He described social care as "the poor cousin that has been ignored," with care workers remaining underpaid and the sector critically underfunded.
Care providers are concerned about the impact of new financial pressures, as the sector faces increased National Insurance contributions and mandated raises to the National Minimum Wage and National Living Wage. Providers have cautioned that these changes could push some care homes to close.
Inheritance tax rise and generational wealth
The abolition of the non-domicile (non-Dom) system, coupled with a significant increase in inheritance tax announced in the Budget, is poised to cause a considerable shift in the transfer of generational wealth. The new tax measures are likely to encourage families to pass on their wealth earlier, aiming to cushion the effects of higher inheritance tax rates on their children’s inheritances.
For British Asian families, who often place a strong emphasis on intergenerational wealth transfer, this change will necessitate substantial adjustments to their estate plans. Many families may begin gifting assets sooner to avoid the impending tax increases, which could affect their financial liquidity and long-term wealth strategies. Traditionally, these families have prioritised the importance of passing down wealth, particularly in terms of property ownership.
Currently, fewer than one in 20 estates—around 4 percent—are subject to inheritance tax, impacting approximately 27,800 estates each year. However, economists at the Institute for Fiscal Studies project that this number could rise to 7 percent by 2032 under the new rules.
Additionally, changes to inheritance tax will affect small family farms, which include land used for crop cultivation, animal husbandry, and related properties that were previously passed down without incurring tax liabilities. The reform of agricultural and business property relief means that assets valued over £1 million will now be subject to a 20 percent tax rate. This development will significantly impact landowners, farmers, and business owners, making it crucial for those affected to reassess their estate planning and will structures.
Business pledges £500m investment after Budget
A US-based firm has committed £500 million to a UK research campus following the Chancellor’s first budget, bolstering the government's efforts to attract private investment and drive its industrial strategy.
The investment from San Francisco-based developer Prologis will generate thousands of jobs, accelerate lifesaving biomedical research, and inject millions into the UK economy annually. This announcement comes just two days after the Budget focused on encouraging private investment to fuel economic growth.
Chancellor Rachel Reeves has praised the investment, which will expand Cambridge’s renowned biomedical research centre. Prologis’ £500 million investment will fund a 115,000-square-foot expansion of the Cambridge Biomedical Campus, a leading global biomedical cluster that currently contributes £4.2 billion to the UK economy each year.
The new development will feature state-of-the-art labs, advancing clinical trials and diagnostic services. It will create over 2,120 highly-skilled jobs, ranging from research to diagnostics. This latest investment from Prologis builds on the £63 billion in funding secured at last month’s record-breaking International Investment Summit, which is expected to create 38,000 jobs across the UK.
Attracting such investment is key to the government's goal of boosting economic growth, creating jobs, and improving living standards for communities and families across the country.
