How the 2025 Spring Budget Could Impact UK Businesses

The UK government’s 2025 Spring Budget has introduced several significant changes that will affect businesses across the country.

With an increase in employer’s National Insurance contributions, changes to Capital Gains Tax rates, the halving of Business and Agricultural Property Relief for Inheritance Tax (IHT), and a ramp-up in HMRC enforcement, businesses must prepare for a heavier tax burden.

While these measures may feel daunting, there are ways for businesses to adapt, manage these additional costs and continue to thrive — and that’s where business finance brokers could play a crucial role.

Main takeaways

• Employer’s National Insurance: The rate will rise from 13.8% to 15% while the threshold for contributions will be reduced from £9,100 to £5,000.
• Capital Gains Tax: The tax rates will increase to 18% for basic rate taxpayers and 24% for higher rate taxpayers. Additionally, Business Asset Disposal Relief rates will rise from 10% to 14% starting from 6 April 2025, with a further increase to 18% in the following tax year.
• Inheritance Tax: Business and Agricultural Property Relief will be cut to 50% (resulting in a 20% IHT rate) on qualifying assets above £1 million, including AIM shares. Inheritance Tax will also soon be applied to undrawn pensions.
• The UK Government's Efforts to Close the Tax Gap: £100 million will be allocated over the next five years to recruit an extra 5000 HMRC compliance staff.

Employer's National Insurance Rate Increase and Lowered Threshold

One of the most prominent changes in the budget was the increase in employer’s National Insurance contributions from 13.8% to 15%, coupled with the reduction in the earnings threshold for contributions from £9,100 to £5,000.

For businesses, this represents a significant increase in operational costs, particularly for those with a higher proportion of lower-paid employees.

This increase could lead to a higher payroll burden for businesses, potentially affecting their ability to hire or retain workers. As costs rise, employers may feel the squeeze on their margins.

However, business finance brokers can help ease this pressure by arranging on available funding options. Whether it’s accessing working capital or using short-term loans to cover the increased costs, brokers can assist businesses in finding the right financial products to keep their operations running smoothly.

Additionally, for businesses that may need to restructure or revise their staffing plans in response to the increased employer’s National Insurance rates, finance brokers can help secure the funding necessary to handle any changes in workforce strategy.

This might include exploring business loans or credit lines that are designed to help businesses navigate tax changes and economic uncertainty.

Capital Gains Tax (CGT) Rate Increases and Business Asset Disposal Relief

The budget also saw an increase in Capital Gains Tax rates to 18% for basic rate taxpayers and 24% for higher-rate taxpayers.

The Business Asset Disposal Relief (BADR) rate is also changing, with an increase from 10% to 14% from 6 April 2025 onward, and an eventual rise to 18% in the following tax year.

These changes will impact business owners who are planning to sell or dispose of assets, potentially resulting in larger tax liabilities.

For business owners considering retirement, exit strategies, or the sale of their businesses, the increase in CGT rates could be significant as well.

Inheritance Tax (IHT) Changes: Impact on Business and Agricultural Assets

The proposed halving of the Business and Agricultural Property Relief (BPR) for Inheritance Tax (IHT) to 50% on qualifying assets exceeding £1 million is another key change that will affect many business owners, particularly those who hold family businesses, agricultural assets, or AIM-listed shares.

In addition, IHT will soon apply to undrawn pensions, further complicating the financial planning landscape for business owners.

As family-owned businesses and agricultural enterprises look to transition ownership across generations, the reduced relief could lead to higher IHT bills.

In light of these changes, business finance can play an important role in securing business continuity.

For example, bridging finance or loans might be used to cover any immediate IHT liability, providing the business with time to liquidate assets or arrange for a tax-efficient transfer of ownership.

Tackling the Tax Gap: HMRC Investment and the Need for Increased Compliance

The UK government has committed to investing £100 million over the next five years to recruit 5000 additional HMRC compliance staff, part of an ongoing effort to close the tax gap.

This means that businesses may face greater scrutiny in the coming years, with more stringent checks and audits being carried out.

This increase in HMRC enforcement could lead to more businesses being subject to tax investigations, compliance issues, and penalties for misreporting. For many business owners, managing these risks while maintaining daily operations will require significant support.

In some cases, businesses may need to secure funding to cover the costs of legal fees, back taxes, or penalties that arise from compliance issues. A finance broker can help find suitable loan products or credit facilities to manage these short-term financial strains without disrupting the business’s overall cash flow.

Adapting to the New Tax Landscape with Business Finance Support

The UK’s 2025 Spring Budget introduces a series of tax changes that will impact businesses in a variety of ways. From increased National Insurance contributions to higher CGT rates and the restructured Inheritance Tax reliefs, businesses will need to adapt quickly to maintain profitability and avoid financial strain

With the right planning and access to appropriate funding solutions, businesses can navigate these changes and ensure long-term success.

Business finance brokers are uniquely positioned to help businesses navigate the evolving business finance landscape, offering tailored solutions that help manage tax liabilities, facilitate smooth transitions, and ensure financial stability despite the increased tax burden.

By working with a trusted finance broker, businesses can turn these new challenges into opportunities for growth and success.

Whilst RLA Capital cannot offer financial advice, we can provide various business loans to assist with cash flow. RLA Capital would recommend speaking with your accountant if you are experiencing cash flow problems.