UK Chancellor of the Exchequer Rachel Reeves delivered her Budget speech on Wednesday 26 November, announcing no changes to headline income tax, National Insurance, and VAT rates. However, income tax and National Insurance contribution thresholds are to be frozen for a further three years beyond 2028, when the current freeze was due to end.
Other announcements included measures on the writing-down allowance (WDA), apprenticeships, and increases to the national living and minimum wages.
On the government’s fiscal rules, Reeves said: “My fiscal rules will get borrowing down while supporting investment.
“The stability rule — that day-to-day expenditure must be met through tax receipts … and the investment rule — which allows me to increase investment while getting debt on a downward path.
“Those fiscal rules are non-negotiable.”
The Office for Budget Responsibility’s (OBR’s) five-year forecast for the UK’s economy and public finances, also published Wednesday, predicts that UK GDP will grow by 1.5% on average over the forecast period, which is 0.3 percentage points lower than it projected in March 2025.
The OBR also expects consumer prices inflation to be 3.5% in 2025 and 2.5% in 2026, 0.2 and 0.4 percentage points higher, respectively, than in its March 2025 forecast. In 2027, inflation is projected to return to the Bank of England’s 2% target.
Business costs, productivity
Reeves said: “Despite the challenges we face on productivity, the path of our deficit reduction remains broadly the same as in the Spring.”
Andrew Harding, FCMA, CGMA, chief executive-Management Accounting at the Association of International Certified Professional Accountants, said the Budget failed to address strategic problems facing the UK economy, including “an over complex tax system, a lack of investment in skills, and growing costs being forced onto businesses operating in the UK”.
He added: “Tackling these priorities would have helped build confidence to invest, drive productivity, and strengthened economic resilience.”
The Budget announced a reduction to the WDA main rate from 18% to 14% from April 2026, alongside a new 40% first-year allowance from January 2026. This is expected to raise £1.5 billion in 2029–2030.
Also announced were permanent lower business rates tax rates for more than 750,000 retail, hospitality, and leisure properties, worth nearly £900 million a year from April 2026.
Reeves announced that from April 2026 the national living wage is to increase for the over-21s to £12.71 an hour and the national minimum wage to £10.85 an hour for those aged 18–20.
Entrepreneurship
Reeves said that in addition to “widening eligibility for our enterprise incentives — so scaleups can attract the talent and the capital that they need”, there will be a call for evidence to gather views and evidence on tax policy support for investment in high-growth UK companies.
Apprenticeships
Changes — with more to follow — to the apprenticeship system were announced, including an additional £725 million for the Growth and Skills Levy. This includes a change to fully fund SME apprenticeships for eligible people under 25. The Budget also reconfirmed commitments to changes to the Growth and Skills Levy announced in the UK Post-16 Education and Skills White Paper.
CIMA released a briefing on the white paper in October.
Personal taxation
The Budget announced that income tax thresholds would be frozen for a further three years beyond 2028.
For property, savings, and dividend income, there will be a 2-percentage-point increase on basic and higher-rate income tax.
From 2029, there will be a £2,000 cap on employee and employer pension contributions made via salary sacrifice that are exempt from National Insurance contributions.
Before the Budget, CIMA submitted a set of 27 recommendations to HM Treasury on achieving sustainable economic growth, strategic tax reform, empowering SMEs, skills and productivity, and public finances and inflation.
Read the Autumn Budget 2025 — Members Briefing.
— To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.
