AUTUMN BUDGET 2025 – business and insolvency sectors reaction

Chancellor Rachel Reeves has announced the autumn budget for 2025. Commenting on the Budget, James Burgess, Head of Commercial and Insolvency expert at Atradius UK, said “Personal tax changes, including freezing all personal income tax thresholds until 2030-31, will potentially curb spending and weaken demand,  further pressuring business revenues at a time when businesses are already stretched by weak demand and high costs.

“Companies should act quickly to protect their working capital – tightening credit control, reviewing payment terms, and leverage trade credit insurance to safeguard against defaults in an uncertain trading landscape. Our latest Resilience Gap Report shows how far emergency cash reserves have already been eroded by rising risks, underlining that higher tax burdens may hit firms at a moment when their financial buffers are at their weakest.

Jayne Gardner, Partner & Head of Debt & Asset Recovery at Shakespeare Martineau said “This Budget will have a real impact on both households and businesses. Freezing tax thresholds while hiking taxes on dividends, property, and savings could squeeze disposable incomes, making it harder for some to keep up with debts. For businesses, corporation tax changes and investment allowances may ease cash flow, but the strong focus on tax compliance and debt collection signals a tougher enforcement environment. With changes to pensions, salary sacrifice rules, and exemptions like infected blood compensation, financial planning and disclosure will need careful attention. Creditors and businesses alike will need to be proactive, ensuring robust credit management and debt recovery strategies to navigate the shifting landscape.”

Mike Hackett, Chief Commercial Officer, ThinCats said “As a lender to mid-sized businesses, the key question from today’s Budget for us is whether it will support growth and encourage borrowing.

“Judging by the policies announcement, it will be a challenge for many, more so for smaller businesses, who are less resilient and are already addressing higher taxes and employee costs. This is alongside the proposals to strengthen employee rights.

“Salary sacrifice changes will add further costs to business, while undermining pension savings – at a time when we want pension schemes to be investing in UK assets and growth businesses.

“Changes to CGT rules on Employee Ownership Trusts (EOTs) will undoubtedly dampen what has become a popular route for owner and family managed businesses exploring a sale, albeit we may see an acceleration in deals before the new rules take effect in April.

“There are some positives – notably the freezing of fuel duty, rate relief for small businesses and strengthening the Enterprise Management Incentive, but these pale in comparison.

“This is not going to stop businesses from growing, acquiring and investing, especially mid-sized businesses who will be planning years in advance, but for certain sectors and for companies at different points of the cycle, it will delay plans and reduce borrower appetite.”

Neil Rudge, Chief Banking Officer for Commercial at Shawbrook, said “This Budget was a balancing act driven by fiscal tightening, and for many mid-sized firms it will feel like one step forward, two steps back. We welcome the support for skills – specifically the commitment to make under-25 apprenticeships free for SMEs. This directly addresses a critical need for mid-sized businesses, with nearly a quarter (23%) telling us they need support with hiring and training. This is a tangible investment in the future workforce and a clear signal of support for growth.

“However, this positive step is overshadowed by persistent cost pressures. The increase in the National Living Wage will immediately squeeze margins, and the new cap on National Insurance relief for salary-sacrificed pension contributions adds another layer of operational cost. This tax change, which 42% of mid-sized companies already feared would negatively impact their business, makes long-term workforce planning and retention more complex. Furthermore, the decision to strip back tax relief for those considering selling their business to Employee Ownership Trusts is a disappointing withdrawal of a key incentive for long-term business stability. 

“While the Chancellor speaks of growth, the core operational demands of mid-sized firms – like relief on energy bills, accessing new markets, and business rates – were not substantially addressed. This Budget ultimately feels like a missed opportunity to truly fuel the ambition and growth potential of the businesses that drive the economy.”

Edgar Randall, Managing Director, Dun & Bradstreet UK&I, said “We welcome the Chancellor’s commitment to helping the UK become the best place for businesses to grow and innovate. In a data-driven economy, certainty and capital are the fuel for expansion, and today’s announcement offers a promising step forward.

“The introduction of a three-year stamp duty exemption for new UK stock market listings sends a strong signal that the UK is open for investment, helping to reinvigorate our capital markets. Furthermore, the 40% first-year allowance for upfront investment costs is a vital lever for productivity. It will empower leaders to make the bold, capital-intensive decisions necessary to scale operations.”

“Looking ahead, we need consistent, long-term conversation about the wider business environment. That includes creating the conditions for AI-ready infrastructure and trusted data ecosystems, which are essential for competitiveness and innovation. Without stability and clarity, major investment decisions become more challenging, risking the UK’s ability to lead in emerging technologies and attract inward investment

Derek Ryan, UK Managing Director at Bibby Financial Services said “Today’s silence on specific SME support is hugely disappointing. With 44 percent* of SMEs having delayed investment decisions until after the Budget, the absence of meaningful and targeted measures today will further hold back capital expenditure.

“This Budget offered little to ease the pressures SMEs are facing day in, day out. Inflation and rising operating costs remain the most pressing challenge for two-thirds of SMEs, and without intervention to ease this burden, the Government risks stalling their ability to invest in jobs, innovation, and growth.

“SMEs are the beating heart of the UK economy, and today they needed a signal of confidence. Instead, while this Budget stopped short of harming SMEs, it also stopped short of helping them. For a Government that promised to champion small business growth in its Plan for Change, this is a missed opportunity.”

Anna Leach, Chief Economist of the Institute of Directors, said “Whilst this Budget further increases the tax burden on business, it is partially offset by some helpful measures.

“We welcome the funding for the Youth Guarantee and the full funding of SME apprenticeships for those eligible under 25, which will support young people in their careers. The decision not to converge the two rates of Landfill Tax will also be a relief to the construction sector.

“We also welcome the more than doubling of the headroom against the fiscal rules. This will help calm the frenzy of speculation which has surrounded fiscal events. The decision to only assess performance against the fiscal rules once a year may also contribute to greater stability in policy making. But the leaking of policy choices in the run-up to this Budget is of grave concern. It has contributed to substantial declines in business and consumer confidence, with real impacts on economic activity.

“This Budget does not substantively change the UK’s growth outlook, however – the OBR judge that none of the policies announced have a material impact on GDP.  Public spending is higher, and business investment even lower than before. The scaling back of National Insurance relief on pension contributions – even while the government has launched its Pension Commission – will undermine retirement savings and the very investment pools that we need, as well as heaping further costs on employment.”

Tina McKenzie, Policy Chair of the Federation of Small Businesses, said “Today’s tax-raising Budget shows the peril of a continuing economic doom loop – we must not be in the same place again next year, with more tax hikes to balance the books due to a lack of economic growth. The tax burden at a record high is the cost of failure to get growth and trim spending.

“Hikes to dividend tax mean the Government continues to make investing in your own business one of the least tax-friendly things you can do with your money. Plans to charge employers for supporting pension savings are a bad idea. The business rates measures will not help small firms and high streets nearly enough.

“We need the Government to follow this Budget through with serious, pro-growth measures that restore the confidence small businesses need to grow, invest and hire. While the Chancellor has taken important steps today on SME training and the new jobs guarantee scheme, ministers must now bring forward pro-business, pro-growth policies. Otherwise, we’ll be back at square one, stuck in the same rut we were in last year.

“Sorting out the Employment Rights Bill, fixing the broken small business energy market and backing more people to start new businesses are all necessary measures we need to see action on immediately.”

Tom Russell, President of R3,  the UK’s restructuring, turnaround and insolvency trade body and a licensed insolvency practitioner and director at James Cowper Kreston, said “With so much speculation ahead of today’s Budget, many business owners will welcome the certainty that comes with finally seeing the Chancellor’s plans. Greater clarity gives firms the ability to plan with more confidence around investment, staffing and growth.

“The decision to lower business rates for retail, hospitality and leisure is particularly welcome and will provide a lifeline to many SMEs in sectors that continue to face significant financial pressures. Directors will also be hoping that the measures aimed at easing cost-of-living pressures will help support consumer spending.

“On the other hand, businesses will need to factor the increased costs of the minimum wage rise into their planning, as this may drive wider inflationary wage pressures across their workforces at a time when tackling persistently high inflation remains a priority.

“We welcome the additional funding for the Insolvency Service to pursue rogue directors who abuse the insolvency process to avoid tax. R3 has long called for greater resourcing in this area. It is hoped the numbers being disqualified will expand significantly to protect creditors and others.

“There are also measures in the Budget that demonstrate HMRC’s continued commitment to robust tax collection in support of the public finances. While ensuring tax is collected where it is due is positive for taxpayers, it will add further cashflow pressures for businesses already in distress.

“As the leading voice for the UK’s restructuring, turnaround and insolvency profession, R3 will continue to draw on its specialist knowledge to guide and support businesses through the evolving economic landscape.”

Mike Randall, CEO, Simply Asset Finance said “As the pre-budget rumour mill went into overdrive, many SMEs were discouraged from investing in their future growth until the Chancellor had spoken.  So, it was encouraging to see the Government announce a number of measures which genuinely give a much-needed boost to productivity and future talent pipeline and could be a step towards building an altogether more positive investment environment

“Founders and investors have been very vocal about what changes would be most impactful when it comes to unleashing the growth potential of UK businesses. SMEs of all shapes and sizes want action – and while today we’ve seen the Government take the first few steps, it now needs to follow through on its policy aims to successfully unlock business growth.”