What does the Autumn Budget mean for London's small businesses?

On 26 November, as part of the 2025 Autumn Budget, Chancellor Rachel Reeves announced a raft of measures that affect London's small businesses.

These include tax changes and threshold freezes, business rates reforms and an increase to the National Minimum Wage.

Learn about the key measures and their potential impact on your business and your money.

Business rates reform and relief

In a bid to support the high street, 750,000 small retail, hospitality and leisure (RHL) businesses are to benefit from "permanently lower business rates" set at 5p less than the standard national multiplier (48p).

In 2026–2027:

• The small business RHL multiplier (on properties with a rateable value under £51,000) will be 38.2p.

• The standard RHL multiplier (on properties with a rateable value between £51,000 and £499,999) will be 43p.

Funded by higher rates (50.8p) on properties worth £500,000 or more – such as the distribution warehouses of large online retailers – the measure is expected to raise £270 million that will directly support in-person retail.

Additionally, from April 2026, the government is to introduce a business rates support package worth £4.3 billion over the next three years. It includes:

• A cap on business rates bill increases for the smallest businesses set to lose rates relief or rural rates relief.

• An extension from one to three years on the period that properties eligible for Small Business Rates Relief can retain that relief on their first property after acquiring a second property.

Income tax and National Insurance

Income tax and National Insurance (NI) thresholds for the employed and self-employed are to be frozen for an additional three years beyond 2028 until 2031.

That means:

• Your personal allowance (the income you pay no tax on) remains at £12,570.

• The basic rate on income between £12,571 and £50,270 remains at 20%.

• The higher rate on income between £50,271 and £125,140 remains at 40%.

Corporation tax and taxes on dividends

Limited companies won't pay any more corporation tax as a result of the budget as rates remain unchanged at 19% (small profits rate) and 25% (main rate).

However, if you pay yourself dividends as a director or receive dividends as a shareholder, you will be taxed at a slightly higher rate.

From April 2026, the government is increasing tax on dividends by 2%, from 8.75% to 10.75% for the ordinary rate and from 33.75% to 35.75% for the upper rate.

Taxes on savings and property income are also set to increase from April 2027.

National Minimum Wage and Living Wage

The Chancellor announced increases to the National Minimum Wage and the Living Wage.

From 1 April 2026, businesses must pay an hourly wage of:

• £12.71 to workers aged 21 and above.

• £10.85 to workers aged 18 to 20 years old.

• £8 to under 18s and apprentices.

At the same time, the cost of training apprentices aged under 25 is to be fully funded for small businesses.

Penalties for late tax return submissions

There are several changes to late submission penalties, including:

• Any taxpayers mandated for the first year of Making Tax Digital (MTD) for income tax (2026–2027) won't be penalised for missing quarterly submission deadlines.

  However, penalties for missing the annual submission deadline for income tax still apply.

• An increase to penalties for late submission and payments of income tax and VAT from 1 April 2027.

• Penalties for late submission of corporation tax returns are to double from 1 April 2026.

Allowances on assets

From 1 January 2026, businesses can claim a 40% first year allowance (FYA) for most main rate assets, including those purchased for leasing and by unincorporated businesses.

The measure also reduces the main rate of writing-down allowance (WDA) on plant and machinery from 18% to 14%.

However, the government is keeping the £1 million Annual Investment Allowance, which allows you to deduct the full value of any qualifying plant and machinery from your pre-tax profits.

Fuel duty freeze

The freeze on fuel duty (currently 52.95p per litre) has been extended from March 2026 to September 2026.

After this, the 5p cut first introduced in 2022 is to be gradually reversed and updated annually from April 2027.

Electric vehicle tax

From April 2028, drivers of electric vehicles (EVs) will pay a new road charge of 3p per mile, while drivers of hybrid vehicles will pay 1.5p per mile.

The Office for Budget Responsibility (OBR) claims this is about half the rate drivers of petrol cars pay in fuel duty.

At the same time, the government has pledged £2 billion to support the EV transition and is offering 100% business rates relief for eligible changepoints and EV-only forecourts.

It has also extended the 100% FYA for new, unused zero emissions cars and equipment for EV charge points to April 2027.

That means you can write off the full cost of the EV and infrastructure against your business profits for the first year.

Expansion of the sugar tax

From 1 January 2028, the soft drink industry levy is to apply to pre-packaged milk-based drinks (including milkshakes or coffee drinks with milk) with more than 4.5g of sugar per 100ml.

As well as affecting producers, retailers may have to pay slightly more to stock these products.

An end to low-value import relief

By March 2029 at the latest, customs relief is to be removed on items below £135. This means increased rates for online retailers currently able to import low-value goods duty-free.

Find out more about the 2025 Autumn Budget on the UK government website.

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