The Autumn budget announced on 26 November 2025 by Chancellor Rachel Reeves marks the opening chapter of the 2026/7 tax year.
Below are some of the key headlines that could affect your business.
The rising cost of employment: wage changes
The most immediate and administrative challenge for businesses stems from the confirmed increase to the statutory wage floor.
The National Living Wage (NLW) for workers aged 21 and over is set to rise to £12.71 per hour from April 2026. This increase is mirrored across the lower age bands, with the minimum wage for 18-20-year-olds also rising. For many businesses, particularly those in the labour-intensive sectors such as hospitality, retail and care, this represents a major increase in operating costs.
Fiscal drag: the stealth tax challenge
While there were no dramatic changes to headline Income Tax rates, the government’s continued reliance on fiscal drag represents the biggest long-term tax challenge for personal clients. The extension of the freeze on the Personal Allowance and the Higher Rate Threshold means that as wages naturally rise, more of you will be pulled into paying tax, or paying tax at the higher 40% rate, simply because the thresholds are not moving with inflation.
The urgent reminder: stop ignoring MTD for IT
Amidst the Budget headlines, there is the looming deadline for Making Tax Digital for Income Tax (MTD for IT).
The key compliance date for the first tranche of clients – sole traders and landlords with an income over £50,000 is 6 April 2026.
HCA is offering a fully digital solution that, with a few simple setup tasks, will have you compliant without the stress. Contact us for more information.
Dividends
In a blow to our owner-managers, dividend tax rates for basic and higher rate taxpayers will increase by 2% from 6 April 2026. If you are sitting on surplus profits, now is the time to consider declaring higher dividends to take advantage of the current rates. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. The additional rate will remain unchanged at 39.35%.
Download the full budget here.
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