While the changes were not as severe as expected and some measures were welcomed, concerns remain about the impact on businesses and the overall effectiveness of the budget in addressing the UK’s economic challenges.

Businesses Brace for Increased Costs

Several experts highlighted the significant burden placed on businesses by the budget. The increase in employer National Insurance (NI) contributions, coupled with the reduction in the threshold at which these contributions are payable, has raised concerns about job security and wage growth.

David Ward, partner and head of specialist taxes at Johnston Carmichael, warned that this measure, while presented as a tax on employers, is effectively a “tax on jobs”. Justine Riccomini, head of employment at ICAS, echoed this sentiment, suggesting that employers may limit pay rises or reduce recruitment to offset the increased costs.

Tax Changes for Business Owners and Investors

Changes to Capital Gains Tax (CGT) and Inheritance Tax (IHT) have also drawn attention. The increase in the CGT rate and the gradual reduction in Business Asset Disposal Relief could discourage investment and entrepreneurship, according to Chris Campbell, head of tax at ICAS.

Furthermore, the inclusion of pensions in IHT calculations from April 2027 has raised concerns about succession planning and the potential for increased tax liabilities for families. James MacKinnon, Private Client Partner at Aberdein Considine, stressed the need for individuals to review their estate planning in light of these changes.

Mixed Reactions to Corporation Tax and Capital Allowances

The Chancellor’s commitment to maintaining the current corporation tax rate and capital allowances regime was welcomed by some as providing much-needed certainty for businesses. However, Chris Campbell of ICAS suggested that extending full expensing to include used plant and machinery would have further benefited businesses facing supply chain challenges.

National Minimum Wage Increase Offers Hope for Workers

The increase in the National Minimum Wage was generally well-received, with experts acknowledging its potential to benefit low-paid workers. However, concerns remain about the potential for employers to absorb this cost through pay freezes or job cuts, ultimately undermining the intended benefits for workers.

Scotland-Specific Impacts and the Upcoming Scottish Budget

Experts also highlighted the specific implications of the budget for Scotland. The increase in employer National Insurance contributions could exacerbate the challenges faced by Scottish businesses already contending with higher income tax rates. The additional £3.4 billion allocated to Scotland through the Barnett Formula is expected to provide some relief for public services, but questions remain about how this funding will be allocated in the upcoming Scottish Budget.

Overall Assessment and Future Outlook

The Autumn Budget has been characterised as a “short-term pain for long-term gain” approach. While some measures, such as the investment in public services and the focus on clean energy, have been welcomed, concerns persist about the impact of tax increases on businesses and the potential for unintended consequences. The true test of the budget’s success will lie in its ability to stimulate sustainable economic growth and improve living standards for all.