Autumn Budget 2025

The headline position is that Capital Gains Tax (CGT) rates and reliefs are unchanged for most taxpayers.

However, for individuals contemplating a sale of their business to an Employee Ownership Trust (EOT) the 100% CGT relief has been halved from today with immediate effect. This means CGT for those transactions will now be payable but at half the CGT existing rate. This will mean in many cases an increase from 0% to up to 12%.

Today’s announcement includes a very significant change to the rules impacting taxpayers who leave the UK for a ‘temporary’ period and who are in receipt of certain dividend income. The new rules effectively withdraw a relief which was introduced as part of the original Statutory Residence rules enacted in 2013. Unwary taxpayers may get caught out and could find themselves with a material tax liability on their return to the UK, in some case taxpayers may be advised to delay their return to the UK, potentially for a number of years to avoid an unnecessary tax charge.

Inheritance Tax thresholds are frozen until 2031, so with rising asset values, more families will inevitably be pulled into the IHT net. The extension of the £1m cap on Business and Agricultural Property Relief isn’t surprising, but the standout change is far more welcome: spouses can finally transfer unused APR and BPR between them. This removes a long-standing inconsistency and simplifies succession planning. That said, balancing estates between spouses remains sensible. Meanwhile, tighter rules for non-UK domiciled individuals and trusts, as well as restricting charity relief to UK bodies, signal the government’s continued push to close loopholes and limit avoidance opportunities.

For those looking to incentivise and retain key employees, from April 2026, the EMI scheme will become accessible to a much larger pool of companies, with:

• The qualifying employee limit doubling to 500
• The gross assets threshold quadrupling to £120 million
• The company-wide share option limit doubling to £6 million
• Maximum option life extended to 15 years – this even applies to existing schemes!
• And, from 2027, the removal of the burdensome EMI notification requirement

These are sweeping and long-awaited reforms that radically extend EMI’s reach.

Whilst the main rates of income tax have remained unchanged, extending the freeze on the tax thresholds will mean that everyone is going to see an increase in the amount of tax they are paying.

Overall this year’s Budget delivered a collection of small tweaks and changes which will undoubtedly increase complexity and costs for SMEs. We’ll be working hard to assess exactly how the 2% increase in rental, saving and dividend income will affect our private clients.

One of the most important messages for SMEs from this year’s Budget sits between the lines: the freeze on Income Tax and NIC thresholds until 2030/31. Although the Chancellor avoided increasing the main tax rates, the extended freeze means many business owners and their teams will still see their overall tax bills rise.

For SMEs, this has two clear effects. First, employment costs will continue to rise as more staff drift into higher tax brackets, putting additional pressure on wage expectations at a time when margins are already tight. Second, many owner-managers will find more of their own income taxed at higher rates, reducing the net benefit of extracting profits from the business.

This Budget signals a strong commitment to innovation and AI while maintaining stability in the R&D tax regime. The £2 billion investment in public compute, £137 million for AI in science, and faster grant decision‑making show a clear intent to accelerate discovery and strengthen the UK’s research ecosystem. Businesses can plan with confidence knowing the R&D framework remains steady.

For Northern Ireland, the measures were concrete: £310 million for City and Growth Deals, a new Enhanced Investment Zone expected to create over 1,000 jobs, and targeted funding for the Belfast-Derry corridor and GB-NI trade. Together, these commitments from the UK Government to NI provide a genuine boost to our R&D‑intensive sectors, balancing ambition with certainty for companies investing in innovation.