Autumn Budget: What small business owners need to know

At a glance

• There are long-term cost pressures for SMEs including higher minimum wage, and a cap on NI-free pension salary sacrifice contributions.
• Investment and growth levers exist, but details are thin: EMI, VCT, and listing reliefs are referenced to aid scaling, but no new CGT or major relief updates are confirmed yet.
• Plan for rising costs, reassess exit strategies, and stay alert to changes while acting now rather than waiting for future budgets.

This Budget arrived under unusual circumstances. The Office for Budget Responsibility accidentally released its report two hours early, creating confusion before the Chancellor even stood up. Outside Westminster, around 10,000 farmers were protesting, highlighting deeper economic discontent across multiple sectors.

Against this backdrop, the government leaned heavily on the language of growth, promising support for scale-ups, startups, and innovative businesses entering new markets.

The measures that matter to SMEs

1.    Investment and growth incentives
The Chancellor highlighted reforms to Enterprise Management Incentives (EMI) schemes, Venture Capital Trusts (VCTs) and Listing reliefs. The stated aim is to make the UK a fertile environment for investment and scaling. However, details were thin, and much of what was mentioned had already been announced previously.

2.    Frozen tax thresholds
This headline measure is the one with the biggest impact. The decision to freeze both tax and national insurance thresholds for three more years means more employees will be pushed into paying income tax, and more workers will enter higher tax bands as wages rise. For employers, this increases payroll pressure, reduces net take-home pay for staff, and complicates recruitment and retention. However, immediate changes will likely only be felt by those firms with employees on the minimum wage.

3.    Salary sacrifice cap
The amount of money that can be saved through pension salary sacrifice free of national insurance contributions is to be capped at £2,000 per year. This will take effect from April 2029. Currently, contributions to a company pension benefit from tax relief and are free of NICs, up to a threshold of £60,000 a year (this limit varies according to pay and income). Once the change comes into play, both employers and employees will have to pay NIC on pension contributions of more than £2,000 made through salary sacrifice.

Not all employers offer salary sacrifice so it won’t be an issue for many. However, We we know that recruitment and retention are a real issue for small businesses at the moment, and overall packages are a key tool we recommend in efforts to find and keep valuable employees

4.    Employee ownership trusts (EOTs)
The big news for owners planning an exit via an EOT is that tax relief will drop from 100% to 50% with immediate effect. 50% relief means an effective capital gains tax (CGT) rate of 12% .

While business asset disposal relief may soften the blow, this is still a major shift, and it may diminish the attractiveness of a previously popular exit route.  

5.    National minimum wage
For employees over 21, the minimum wage will increase from £12.21 to £12.71 per hour from April 2026. This 50p rise will add to wage pressures across retail, hospitality, care, and other labour-intensive sectors.

There were no meaningful updates on CGT or Business Asset Disposal Relief.

When you strip away the rhetoric, this Budget contains significant, long-term tax increases delivered subtly through frozen thresholds, increased wage requirements, and reduced reliefs. For many SMEs, this will feel like higher costs with little new support.

While the Budget might not bring immediate relief, it does offer one thing: certainty. Tax thresholds, relief structures, and wage forecasts are now clearer for the next few years. So here are my key recommendations:

If you’re considering growth, plan ahead for rising labour and tax costs.

If you're planning to sell, review your exit strategy, especially if an EOT was on your radar.

If you need to raise investment, stay alert: EMI, VCT, and listing relief changes could become meaningful once further detail emerges.

Most importantly, now is not the time to pause. Business owners and senior leaders cannot and should not wait for more generous spring statements or future budgets.

This Budget may not have been designed with SMEs front and centre. But the environment it creates, predictable, yet challenging, means business owners can refocus on what they can control.

Growth is still possible. Exits are still achievable. But it’s up to the SME community to control the controllables, take action, and move forward decisively.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

We work in conjunction with an extensive network of external growth advisers and SME specialists, such as Elephants Child, who have been carefully selected by St. James's Place. The services provided by these specialists are separate and distinct to the services carried out by St. James's Place and include advice on how to grow your business and prepare your business for sale and exit.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James's Place.