Autumn Budget 2025

Speculation around what the Autumn Budget might bring has largely focused on individuals, but it is important to consider the key areas that could impact businesses.

Finance leads must anticipate the potential impacts and plan ahead where practically possible. We discuss some of the key areas where businesses could be directly and indirectly impacted.

Tax reliefs and allowances

While the headline Corporation Tax rate is expected to remain at 25%, in line with the government’s commitment not to raise the main business tax, this does not mean companies will be unaffected. Corporation Tax reliefs and allowances could be targeted, as there has been talk of these areas being under review.

Specific areas that have been mentioned include research and development (R&D) tax credits and capital investment incentives, with possible changes that could impact value of existing claims or introduce stricter eligibility criteria. Businesses should also prepare themselves for possible changes in compliance and reporting, with HMRC’s continued focus on digitalisation.

Greater digital scrutiny

From a compliance perspective, although the government has officially scrapped plans for Making Tax Digital for Corporation Tax, HMRC remains committed to digitalisation. Current information suggests that a more tailored approach for Corporation Tax is likely. New initiatives such as standardising Corporation Tax computations, improving data quality and enhancing risk assessment are key focus areas for HMRC. Businesses should be prepared for greater digital scrutiny and further standardised reporting requirements, which are likely to increase administrative overheads and require updates to internal systems.

Overhaul of transfer pricing rules

HMRC’s April 2025 consultation outlined the most significant overhaul to transfer pricing rules since 2004.

Proposals included:

• the removal of the medium sized enterprise exemption
• the introduction of internationally controlled transaction schedules
• an exemption for domestic transactions
• a broadening of the definition of associated enterprises.

These changes are likely to increase compliance costs for large and medium-sized multinationals, increasing the need for robust transfer pricing documentation as HMRC scrutiny on cross border transactions increases. There was, however, some good news with HMRC proposing to repeal the UK-UK transfer pricing requirement where no tax advantage arises aiming to reduce compliance costs in situations where there is limited tax risk in the UK. Businesses should expect further details on these new rules either as part of the Budget announcement or shortly afterwards.

Indirect impacts to businesses

On top of the employer national insurance contributions that have already increased costs for businesses from April 2025, further changes to income tax and national insurance will impact businesses by reducing disposable income. This could also potentially lower demand in sectors like retail, hospitality, and leisure.

Additionally, with the freeze on income tax thresholds, where salary increases push employees into higher tax bands, companies may face pressure to increase salaries to maintain net pay levels. Tax increases could also affect employee satisfaction and mobility. Businesses will need to prepare for these indirect impacts by ensuring they properly consider scenarios as part of their forecast planning and future cashflow requirements.

Next steps

Overall, while the headline Corporation Tax rate is not expected to change, the combined effects of the aforementioned areas could have a significant impact on businesses cashflow, compliance requirements, and effective tax rate. Staying informed and planning ahead for what might happen on the 26 November is therefore essential for all businesses.

For further information on anything discussed in this article, or how we can help you, get in touch with your usual Crowe contact.