Autumn Budget 2025: How could small business owners be affected?

As part of a planned national property levy, business owners who own their property or operate from home could end up paying an annual fee. Homes worth over £500,000 would incur an annual levy of 0.54% on the portion of the value above £500,000, and homes worth over £1 million would incur a levy of 0.81% on the portion above £1 million.  

• A home worth £600,000 would incur a levy of 0.54% on £100,000, equating to £540 per year. 
• A property worth £1.2 million would face  0.81% on £200,000, or £1,620 annually. 

This could potentially mean valuation changes for business owners if property prices adjust to reflect the new levy. Borrowing, investment, or sale decisions could be impacted. The housing market could also potentially slow, which would impact businesses tied to property transactions, such as tradespeople or estate agents. 

Although the proposed property levy is good to be aware of, it’s unlikely to be a major concern for most business owners.  

In contrast to the property tax, proposed changes to Council Tax could result in several benefits for business owners. 

1. There is a chance that we will see Council Tax billed annually rather than monthly, which could make monthly budgeting simpler and allow business owners to spread costs more evenly throughout the year. 
2. Reforms to Council Tax debt recovery could reduce financial stress for those facing temporary cashflow issues, with more flexible payment plans and fewer aggressive enforcement actions. 
3. It could also be made easier to challenge Council Tax, meaning business owners who feel their property is overvalued could potentially reduce their annual tax burden. This could be especially beneficial for businesses operating from home. 
4. If Council Tax is eventually merged with or replaced by the proposed national property levy, it could change how business owners are taxed on property — possibly shifting costs from purchase (Stamp Duty) to ongoing ownership. 

Potential changes to Stamp Duty Land Tax (SDLT) could come with benefits for small business owners, but there are also a handful of potential drawbacks to be aware of, especially if you own high-value property.

Pros 

• If Stamp Duty Land Tax is replaced with an annual property tax/levy, business owners buying property (e.g. office space, retail units, or investment properties) may benefit from reduced upfront costs.
• This could improve affordability and cash flow during the buying process.

Cons 

• Although a new annual levy could reduce upfront costs on business properties, recurring annual charges may increase operating costs and force business owners to be more frugal with long-term budgeting and financial planning.
• This in turn could make renting more sustainable than owning for business owners with properties valued at over £500,000, who would pay 0.54% tax on the portion of the value above £500,000.
• There could also be regional disparities where property values are higher. Although this will mostly affect areas in London and the South East, business properties situated in Bristol, Bath, and Exeter could be disproportionately impacted.

It’s highly possible that landlords could be subjected to Class 4 National Insurance contributions on their rental profits, as well as continuing to pay Income Tax. Currently, NI typically applies at 8% on employment earnings, and drops to 2% on earnings over £50,270. This means a landlord earning £50,000–£70,000 could face £1,000+ in extra tax per year. 

This would, of course, reduce net rental income for business owners who have invested in property, leading to funding constraints, especially on businesses that rely on this income to support operations or overheads. Landlords unhappy with the extra taxes may also decide to leave the rental market, shrinking the supply and pushing up rents. This could mean extra expenses for business owners operating from or living in rented properties. 

The government is reportedly considering reforming ISAs and pensions. Small business owners should be aware of how these changes could impact personal finances and long-term planning. 

1. Cash flow and investment strategy: Lower Cash ISA limits may restrict safe savings options, pushing business owners to make higher-risk investments.
2. Retirement planning: A flat-rate pension tax relief could benefit lower earners but reduce incentives for higher earners to contribute. 
3. Estate planning: It’s been confirmed that pensions will be included in Inheritance Tax (IHT) from April 2027; however, this could be postponed. 
4. Business resilience: If saving becomes less tax-friendly, owners might take more money out of their business now or work longer before retiring. 
5. Strategic planning opportunities: These changes might push business owners to rethink how they save, invest, and run their business to stay tax efficient. 

Further changes to both IHT and Capital Gains Tax (CGT) are also very much on the table. 

As previously mentioned, pensions could become included in IHT. In addition to this, current reliefs such as Business Property Relief (BPR) could be further restricted in the Autumn Budget announcement, which would make passing on a business to family members even more expensive. This would perhaps make selling a more enticing option, but possible CGT rises, or Business Asset Disposal Relief (BADR) restrictions, would likely mean higher tax bills when doing so. 

If the CGT annual exemption is cut further, even modest gains from selling shares, property, or business assets could be taxed, impacting owners who rely on these for income or retirement.

There is a real possibility that the Labour Party could break its manifesto pledge not to raise the main rates of Income Tax. This is due to a reported public finance budget gap of up to £40 billion, as well as sluggish economic growth and rising borrowing costs. 

The personal allowance threshold – currently set at £12,570 – is frozen until 2028 but could be frozen for longer. As wages or profits rise with inflation, business owners face the prospect of being dragged into higher tax bands, even if their real earnings haven’t increased much.

Of course, higher personal tax bills would mean less disposable income to reinvest or save.

Of course, there’s no way of truly knowing what will be in the Budget announcement, but we do know for certain that the government is under huge pressure to raise funds to fill its enormous public finance deficit. These funds will have to come from somewhere, likely from both raised taxes and spending cuts. 

For small business owners, this could mean paying more tax on the same income, tightened pension and inheritance rules, or needing to rethink how you save and invest. Even if headline tax rates stay the same, subtle changes such as frozen allowances and shifting thresholds could quietly eat into profits and personal income, making it more important than ever to plan ahead and stay on top of your finances.

At Old Mill, we offer tailored advice to business owners. We can help you to plan and navigate the potential changes that could come with the Autumn Budget announcement, ensuring long-term success for your business – get in touch.