What the Autumn Budget 2025 Means for SMEs: Key Takeaways
The Autumn Budget 2025 delivers a series of targeted reforms affecting small and medium-sized enterprises (SMEs) across the UK. With rising operational costs, increased regulatory scrutiny, and ongoing inflationary pressure, business owners are seeking clarity on how the Chancellor’s announcements will shape planning for the year ahead.
At Lyon Croft Consulting, we translate the shifts, from capital allowance amendments to fundamental changes in exit planning mechanics, to actionable legal and strategic counsel. This analysis provides an overview to position our clients to navigate the new landscape with confidence and to maximise opportunity.
Capital Investment Incentives: Full Expensing Extended for SMEs
The Government has restructured capital allowances to stimulate immediate investment, but the resulting regime is nuanced and requires meticulous financial planning.
New 40% First-Year Allowance (FYA): A significant measure is the introduction of a 40% FYA for qualifying main-rate plant and machinery expenditure. This is a powerful incentive for accelerating tax relief on new investment, particularly for unincorporated businesses and those acquiring assets for leasing, which are not eligible for the 100% Full Expensing Relief.
Reduced Writing Down Allowance (WDA): To balance the Exchequer, the main pool WDA is simultaneously reduced from 18% to 14% (effective April 2026). The strategic challenge is a zero-sum game. While the FYA encourages new, immediate spend, the lower WDA rate slows the rate of relief claimed on existing asset pools and new assets not covered by the FYA. SMEs must conduct a precise Capital Expenditure Strategy Review to optimise the timing of investments against the new rates.
Expanded Growth Schemes: Limits for the Enterprise Investment Scheme and Venture Capital Trusts have been substantially increased, particularly for Knowledge-Intensive Companies (KICs), enhancing access to growth capital. This signals legislative support for the high-growth ecosystem, creating opportunities for strategically structured fundraising rounds.
SME Tax Changes: Stability in Corporation Tax but CGT Requires Planning
The Budget keeps Corporation Tax Rates unchanged, providing welcome stability for business planning.
However, revisions to Capital Gains Tax allowances mean SME owners contemplating exit, shareholder, restructuring, or investment transfers should review their position early.
What SME Directors should do now?
Begin exit-planning conversation early
Reassess share structures
Review future investment disposals and director loan movements
These changes position early tax planning as a competitive advantage.
Business Rates Relief: Targeted Support for Retail, Hospitality and Leisure
The Budget offers continued support for small businesses through:
A freeze in business rates multipliers for eligible SMEs
Sector-specific relief for high-street businesses
However, larger SMEs should prepare for updated valuations from 2026, making financial modelling essential.
Corporate Governance & Compliance: Major Reforms Demand Early Preparation
The Government continues to tighten corporate governance standards, with reforms that will directly impact SMEs:
Mandatory Identity Verification begins on 18 November 2025 for all directors, PSCs, and LLP members, who must undergo identity verification as part of Companies House reform.
There will also be enhanced transparency expectations, which will increase scrutiny around:
company formation
anti-fraud measures
financial reporting
beneficial ownership accuracy
Why does this matter?
Penalties are strengthening. Non-compliance may be treated as a serious failure and not just a routine administrative oversight.
Separately, the NI Contributions relief on pension salary sacrifice arrangements will be capped at £2,000 per person annually. This mandates a proactive contractual review for employers utilising these schemes to manage long-term reward strategy and compliance.
The Pilot of a targeted R&D Advance Assurance service from Spring 2026 is a positive step, offering SMEs clarity from HMRC on complex claims before submission, significantly reducing audit risk for innovative companies.
How Lyon Croft Helps SMEs
Lyon Croft provides end-to-end support for SMEs adapting to Budget-driven changes, including:
Corporate & commercial advisory
Governance and Companies House reform compliance
Contract optimisation and legal documentation
SME scaling blueprints
Business risk management
Workforce and HR governance
Exit readiness planning for businesses
The Autumn Budget creates opportunities, but only for businesses that take strategic action. Lyon Croft helps SMEs move decisively, compliantly, and ahead of the market.
