UK Budget 2025: Taxes on the Rise, Businesses on the Edge
Across the crowds in the Commons, Chancellor Rachel Reeves gave the big news: employers’ national insurance contributions (NIC) will climb to 15% in April 2025, an increase of 1.2% on last year. The moment at which firms must start paying is now a tidy £5,000.
Capital Gains Tax – From 10% to 18% (low) and 20% to 24% (high)
Those who earn money from selling stocks, property or assets will see their CGT hit a new ceiling, halving the low rate and stretching the high cut‑off.
Inheritance Tax – Fresh Relief Rules for High‑Net‑Worth Property
- Starting April 2026, businesses owning assets worth over £1 million will get a 50% tax break.
- All AIM shares will enjoy relief, with no minimum threshold.
Toby Tallon, tax partner at Evelyn Partners, points out that Rachel Reeves had already been courting the business crowd before polling day, but the post‑election period has turned into a wild‑west of “tax‑raiders.” These changes are felt by owners already bracing for a heavier hit on investments and employee costs.
“Will I Keep Hiring or Go On Strike?”
With NIC rising, many business owners are staring at a “tight‑rope” decision: do early hires stay or does the extra tax mean we’ll keep the current team only? The core dilemma is whether the potential growth is worth the new tax load.
Half of Business Owners Might Pack Their Bags
From a recent survey of 500 businesses, almost 50% said they’d consider leaving the UK if the new budget made taxes unacceptably steep. But the real danger is quiet capitulation: as confidence dips, the drive for “the next big thing” loses its momentum because the reward is taking a bigger bite from the pocket.
Bottom Line
The business community’s reaction will dictate how the UK’s economy moves forward. Will confidence stay high, or will looming tax hikes leave many firms stuck in a tax‑heavy slowdown?
IHT changes
Inheriting the Hassle: New Tax Rules Threaten Family Businesses
When the Chancellor announced tighter limits on inheritance tax business reliefs (IHT), longtime family firms found themselves staring at a financial cliff face. “It’s going to get pricier to hand a family‑owned company off to the next generation,” said Tallon. “If the owners owe a hefty IHT bill, the business could be on the chopping block, putting loyal workers and local growth in jeopardy.”
The Owner’s Death – The Beast of Risk
While managers plan for a ton of risks—market shifts, regulatory changes, supply hiccups—the most brutal one is the death of the owner‑manager. That press‑release feels like a march to the grave for family and community alike. Employees, suppliers, and townsfolk all frown on the idea that a beloved business must be sold merely to pay taxes. Yet with the new rules, many families face a painful crossroads: keep the business running or cut it loose to settle the IHT.
Farming: A Double‑Edged Sword Post‑Brexit
In the agricultural sector, the new budget adds extra strain:
- Reduced Agricultural Property Relief – the shield introduced in 1984 that helped protect farmland’s value from IHT. Reining it back means farmers may lose that safety net.
- Brexit’s Economic Aftershock – the scrapping of EU subsidies has already thrust UK agriculture into a tougher, more uncertain environment.
- Strategic Shifts – food security, provenance challenges, and environmental stewardship have stepped up from nice side‑kicks to front‑stage priorities.
These changes mean many agri‑businesses could find themselves between a rock and a hard place, needing to answer hard questions about their very future.
Bottom Line
With tighter IHT reliefs, family firms—especially those in farming—may need to stay on the chopping block or pivot radically. The “inheritance tax” now feels less like a gentle handover and more like a reality check that could threaten the legacy of decades of hard work. The question for all families now: is passing on a small business worth the financial gamble?
CGT changes
How the New Capital Gains Tax Rises are Stirring Up The UK Business Scene
What the Latest Research Tells Us
- Almost half of surveyed business owners (46%) are feeling the sting enough to stop dreaming about a new startup.
- Surprisingly, 48% would seriously consider handing in the UK flag and opening their shop elsewhere if the tax bill looks too grim.
- Many already have their suitcase packed—real entrepreneurs ready to move across the pond in hope of a friendlier tax climate.
Why This Matters for the Economy
- Capital gains tax has traditionally been a gentle hand, encouraging risk‑taking and growth.
- With the Chancellor’s new rates, that “buy‑in” incentive is slashing, making it harder for dreamers to turn ideas into businesses.
- Slower startup activity could trickle down to slower overall economic expansion—think of it as a domino effect, but the dominoes are actual companies.
Bottom Line: A Rethink is Needed
While the hikes aren’t a sudden megacaustic boom, they’re enough to give many a second thought about where to set up shop. If the UK wants to stay the vibrant innovation hub it’s a long road ahead, and the tax stick may need to be washed in the washroom before we can keep the ideas flowing.
Increased NIC for employers and minimum wage
UK Employers Brace for Payroll Price Surge
Nicola Tallon hits the nail on the head: the fresh National Insurance (NIC) hike means hiring gets pricier. That uptick could make business owners rethink adding new hands to their squad. If fewer jobs pop up, the country’s economic engine might sputter—worryingly.
It’s Not Just a Numbers Game
People are already fretting that dialing up employer NIC violates the party’s own pledge. Reversing that move, however, can be a sign of real strength, but only if the leaders stand by it and prove it’s a one‑time patch.
Pay Check Pain Amplified
- Chancellor’s bold move to bump the national living wage to £12.21 (£12.21 / hour) from April.
- This jump is a hefty 6.7% rise—and it even outpaces inflation.
- Businesses already juggling higher costs see this as an extra layer of pressure.
- Combining the two—NIC hikes and wage rises—creates a double whammy that could slow consumer demand even further.
Bottom line: the doubled burden of NIC and wage hikes might chill the hiring spree and, in turn, dent UK growth. Smart movers will need to pull their sleeves up and get creative—before the economy takes a breather.
