Autumn Budget 2025: The impact on rural businesses

There has probably never been as much speculation preceding a Budget than for that of the Autumn 2025 Statement, particularly for the agricultural community given the previous Budget. The widely expected tax increases did appear, but what were the key points that will affect rural businesses?

• The freeze on tax bandings has been extended to 2031 meaning more taxpayers will become higher or additional rate taxpayers.
• Tax rates on rental profits and savings income will increase by 2% from April 2027 thus moving to 22%, 42% and 47% for basic, higher and additional tax rates respectively.
• From April 2026, taxes on dividends will increase by 2%, to 10.75% (basic rate) and 35.75% (higher rate), but the additional rate will remain at 39.35%.
• The hourly National Minimum/Living Wage will increase from April 2026; workers over 21 to £12.71, those aged 18 to 20 to £10.85 and those aged 16 to 17 to £8.00
• The High Value Council Tax Surcharge (or “Mansion Tax”) was announced which will result in properties valued at more than £2m paying a charge of between £2,500 and £7,500 per year from April 2028. Details of the valuation methodology or possible exemptions are yet to be determined.
• Pension contributions via salary sacrifice in excess of £2k will be subject to national insurance from April 2029.
• The Cash ISA limit will reduce to £12k per annum for under-65s from April 2027.
• Capital allowances; the writing down allowance on main pool assets will decrease from 18% to 14% from April 2026, but a 40% First Year Allowance (FYA) on new equipment will be introduced from January 2026 which may be of benefit to unincorporated businesses.

The changes above are not particularly encouraging for rural businesses, but trying to end on a positive note, the Budget could have been significantly worse. Capital gains tax (CGT), particularly related reliefs, remained relatively untouched and a slight concession on the Inheritance Tax (IHT) changes in that the 100% allowance for APR/BPR (Agricultural/Business Property Relief) will now be transferrable between spouses and civil partners.

The information contained herein is given by way of general guidance only, is correct and applicable only at the time of delivery and no action should be taken solely on the basis of the information contained herein. Ensors Accountants LLP will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.