The Budget and business support: What’s coming for 2025

In Labour’s first Budget in 14 years, Chancellor Rachel Reeves presented a series of measures designed to offer targeted support to struggling sectors, promote sustainable investment, and maintain fiscal security, especially for small and mid-sized businesses. However, these reliefs are balanced by increased tax burdens for a number of companies.

As we approach 2025, it’s important to stay informed on these developments to ensure your business understands the changes likely to affect you and is prepared for the year ahead. In this article we take you through the key headlines.

We cover upcoming support for business and the impact upon larger organisations, as well as an in depth look at every fiscal and tax change announced in the October Budget in our latest Guide to the Autumn Statement.

Financial support for business investment and rates relief

One component of the Budget was the maintenance of corporation tax rates, with the main rate capped at 25% for the duration of the Parliament. Smaller companies with profits under £50,000 will still benefit from the reduced rate of 19%.

The lifetime limit for business asset disposal relief (BADR), which offers a reduced rate for qualifying business disposals, was maintained at £1m to encourage entrepreneurship and business investment. The BADR rate will remain at 10% this year but will rise to 14% in April 2025 and 18% from April 2026, aligning with the main CGT rates.

Investment in green and digital infrastructure

The Energy Profits Levy on oil and gas companies was increased by three percentage points to 38% and extended until 31 March 2030, with the 29% investment allowance also removed.

The money raised will be diverted toward environmental projects. In line with sustainability goals, the Budget introduced green grants and subsidies for energy-intensive sectors, such as logistics and manufacturing, to help businesses reduce carbon emissions.

The Chancellor also announced a heavy investment in HMRC modernisation to improve tax compliance and close the tax gap. This includes funding for 5,000 additional compliance officers and updates to tax processing systems, which aim to make filing more efficient and lessen the administrative load on SMEs.

Sector-specific support and incentives for growth

There is a £20.4bn R&D allocation for 2025/26 to assist with industry-specific recovery and encourage innovation, especially within the high-tech, pharmaceutical, and manufacturing sectors.

The annual investment allowance remained at £1m, allowing companies to deduct investments in machinery and other qualifying assets. This provision, combined with the full expensing scheme for capital expenditures, incentivises technology-driven growth and may aid businesses in scaling up by making infrastructure upgrades more feasible.

Additionally, fuel duty remains frozen for another year at a flat rate of 52.95p per litre, in a bid to contain costs for logistics and transport-heavy industries.

Draught alcohol duty will be cut by 1.7% from February 2025, equivalent to a penny off each pint, a relief aimed at supporting the hospitality sector.

Reforms and long-term rate adjustments

The small business rates multiplier will remain frozen at 49.9p for another year, extending relief to small enterprises across the UK. Looking ahead, the Government plans to reform business rates permanently for retail, hospitality, and leisure sectors starting in 2026/27, introducing a lower multiplier intended to reduce long-term costs for high-street businesses. These upcoming reforms aim to stabilise property tax expenses for smaller operations, with the view to incentivising further investment in physical storefronts and revitalising local economies.

New compliance rules target umbrella companies

The Chancellor also introduced measures to address non-compliance and fraud within umbrella companies.

One key measure is the establishment of mandatory due diligence requirements. Businesses engaging with umbrella companies will need to ensure these entities comply with tax obligations or face penalties. The initiative, effective from April 2026, is expected to enforce stricter adherence to PAYE (Pay As You Earn) tax and NIC regulations within the supply chain.

Additionally, HMRC will now be able to reclaim unpaid taxes directly from other entities in the labour supply chain if an umbrella company defaults. This approach mirrors existing rules for agencies and places responsibility on larger recruitment firms and end clients to ensure compliance throughout their labour networks.

Prepare for the future

As we head into 2025, businesses should take stock of these changes and ensure they are prepared for the impact upon their business and evolving fiscal landscape. For a deeper dive into the full details and more strategies to navigate the coming year, download our comprehensive guide.

Alternatively, if you require support and guidance, contact our experts at info@verallo.com or call us on 0203 912 9933.