Autumn Budget 2025 (Part 3): What It Really Means for SMEs, Fleets & the Self‑Employed

As we wrap up our Budget analysis series, here’s a practical breakdown of what the Autumn Budget 2025 (26 November 2025) means now, and what businesses and fleet operators should watch for going into 2026.

No "Direct" Tax Rate Hikes

The Chancellor avoided raising headline tax rates (income tax, VAT or employer NICs), but the Government has now confirmed that income-tax thresholds will stay frozen until 2030/31. This means the personal allowance and higher-rate thresholds will not rise with inflation. As wages increase over time with inflation, more people are pushed into higher tax brackets and pay more tax. In real terms, many will become worse off even if their salary goes up.

 

What this means for businesses

This "stealth tax" or "fiscal drag" adds to ongoing wage pressure for businesses already operating on tight margins, as staff feel financially squeezed more and more.  People spend less when they have less disposable income, due to inflation and increased tax burdens. This reduces demand for goods and services and can slow business activity, creating a vicious cycle for the market.

 

Fleet Costs Stay Under Pressure - Mixed Messages for EV Switchers

Drivers and fleet operators didn't see any dramatic changes (www.rac.co.uk).   Fuel duty and Vehicle Excise Duty (VED) remain unchanged, meaning the overall cost of running petrol and diesel fleets stays high, with no additional relief for businesses.

The Budget did provide new support measures on EVs (www.cittimagazine.co.uk), including:

• £1.3 billion to extend the Electric Car Grant (ECG) until 2029/30, supporting consumers and fleets with up to £3,750 off new EVs priced under £37,000.

• £200 million for EV charging infrastructure rollout, including support for local authorities and homes/workplaces to accelerate public charge point deployment.

• 10‑year 100 percent business‑rates relief for eligible public chargepoints and EV‑only forecourts

• continued 100 percent first‑year allowances for zero‑emission vehicles and chargepoints (extended to 2027)

This is positive news, but the Treasury is also sending mixed messages.

Alongside new grants and tax reliefs, the Government confirmed that electric car drivers will face a mileage-based charge called eVED from April 2028. This will be set at 3p per mile for battery‑electric cars and 1.5p per mile for plug‑in hybrids in the first year. Electric vans, trucks and motorcycles will initially be exempt (www.whatcar.com , www.rac.co.uk).

 

What this means for businesses

• Overall fleet operating costs remain high

• EV transition lacks significant incentives for most SMEs

Even with these measures, EVs remain expensive to buy and run, and petrol and diesel prices are still high. This means many transport‑dependent businesses will not see immediate cost savings from switching to EVs, so the transition is likely to remain a longer‑term plan rather than a short‑term solution.

 

Business Costs, Capital Expenditure and What It Means for SMEs

The Budget kept full expensing in place for 2026, but several new tax changes will still affect SME investment plans over the next year.

Key points, in simple terms:

• A 40 percent first-year allowance will start on 1 January 2026. Businesses can claim 40 percent of the cost of certain equipment upfront, helping reduce their tax bill earlier.

• The writing down allowance (the tax relief for equipment that does not qualify for full expensing) will fall from 18 percent to 14 percent from April 2026. This means businesses will receive less tax relief each year, so it takes longer to claim back the full value of the equipment through tax deductions.

• Smaller retail, hospitality and local high‑street businesses will receive permanent business‑rates cuts, which reduce their property‑tax costs and help with day‑to‑day expenses (Real Business Rescue).

• However, larger asset‑heavy businesses – such as big workshops, logistics depots and vehicle‑repair sites – do not receive this support. Properties valued at £500,000 or more will instead face a slightly higher business‑rates multiplier to help fund the small‑business relief.

• The 100 percent first-year allowance for zero‑emission cars and EV charge points has been extended to March/April 2027 as mentioned in the section above.

 

What this means for SMEs

• The 40 percent allowance offers some early tax relief, but the slower writing-down rate reduces long-term benefits.

• SMEs planning to buy equipment may benefit from doing so before April 2026, when relief becomes less generous.

• EV-related allowances help a little, but do not change the wider lack of EV support for SMEs.

• Good news for smaller retail and hospitality businesses, but less helpful for larger businesses with big, high-value properties

Overall, the Budget gives SMEs some short-term tax‑planning options, but mixed relief depending on business size and property value.

 

The Self‑Employed, Contractors & Gig‑Economy: Status Quo, No Relief

The Budget introduced:

• No changes to Class 4 NIC thresholds or rates (Reuters)

• No tightening of expense rules

• No new reporting burdens beyond existing digital‑platform data submissions

 

What this means for businesses

• The income‑tax and Class 4 NIC threshold freeze means higher effective tax for sole traders as income rises.

"Stability" for now, but many self‑employed people will be worse off in real terms. Freelancers, tradespeople and gig‑economy workers will need to manage cash flow very carefully in 2026.

 

Skills, Labour Shortages & Tech Investment - Mixed Signals

The Government reaffirmed major investment in AI and digital infrastructure, including funding for AI development, national supercomputing capacity, and digital‑skills training. These initiatives may encourage future innovation but will take time to show real impact, but they do not address the immediate staffing shortages many operational sectors are facing.

New and Expanded Training Schemes

Current unemployment remains relatively high at around 5 percent, with youth unemployment reported at over 15 percent. At the same time, many sectors continue to experience labour shortages.

The Autumn Budget 2025 introduced several important training measures aimed at helping young people into work and giving SMEs better access to early-career talent:

• £820m Youth Guarantee to give all 16–24‑year‑olds access to work or training.

• £725m for apprenticeships, including fully funded training for under‑25s in SMEs.

• A new Growth and Skills Levy, bringing total training investment to over £1.5bn.

• More flexible modular apprenticeships from 2026.

These reforms aim to make training more accessible and help sectors facing skills gaps, including transport, logistics and repair services.

What’s Still Missing

Despite these improvements, the Budget did not provide direct, targeted measures to solve existing labour shortages in sectors such as:

• HGV driving

• Warehousing

• Vehicle repair and mechanics

• Hospitality and retail

We will see if the new training schemes will help build the workforce over time, reduce high unemployment rate, especially among the youth, and close the gap between the labour shortage and unemployment.  The budget also did not address the concern that, without careful consideration, the growing use of AI and automation may worsen the unemployment rate and threaten job security for many people, which could create a contradiction to the training schemes.

 

 

How These Budget Changes Could Affect Your Business

1. Expect rising staff costs and wage pressure
   With frozen tax thresholds and inflation, employees may feel their take‑home pay is shrinking. This often leads to higher wage expectations, creating pressure for businesses already facing tight margins.

2. No easy pivot to EV fleets
   Despite new EV‑related funding in the Budget, there were no specific new incentives for electric vans or targeted support for commercial fleet charging infrastructure, many businesses will struggle to justify switching. Fleet electrification remains costly for SMEs, particularly those with high mileage or multi‑vehicle operations.

3. Plan carefully before investing
   Full expensing remains available, but uncertainty around wider economic conditions means many SMEs may hesitate before upgrading equipment or replacing vehicles unless necessary.

4. Watch cash flow carefully if self‑employed
   Threshold freezes and broader living‑cost increases mean sole traders may face tighter budgets. Pricing adjustments or improved financial planning may be needed to stay profitable.

5. Insurance becomes more important
   With high operational costs, uncertain economic conditions and infrastructure challenges, having appropriate insurance and risk mitigation helps protect against unexpected expenses and business interruption.

6. Stay alert for future policy changes
   Threshold freezes, EV taxation, property taxes and further labour‑market measures may evolve in the months ahead. Flexibility and awareness will help businesses adapt early and avoid surprises.

 

Final Thoughts

The Autumn Budget 2025 provides some "stability" but little direct relief for SMEs, fleet operators and self‑employed workers. Rising costs, unchanged transport incentives and sector‑specific recruitment difficulties mean that careful planning and strong risk management will be essential throughout 2026.

If you would like help reviewing your insurance to adapt to the current environment and plan ahead, our team is here to support you.

Get in touch with us today for insurance advice tailored to your business.