The Chancellor mentioned economic stability a number of times in her Budget, although unfortunately she didn’t take the opportunity to change the corporate tax system to help stimulate the UK’s slow economic growth.

The 40% first-year capital allowances relief from January 2026 may be of benefit for some businesses, although this additional relief does further complicate the capital allowances regime. The reduction of capital allowances writing down allowance from 18% to 14% from April 2026 is unwelcome, as is the increase of dividend taxation for basic and upper-rate shareholders to 10.75% and 35.75%, respectively, from April 2026.

The proposed salary sacrifice pension changes from April 2029, with contributions above £2,000 no longer being exempt from employees’ and employers’ National Insurance Contributions, will be another future cost for businesses.

With business confidence already low, the increased burden from the employers’ national insurance hike in April 2025 and another 4.1% – 8.5% (depending on age) increase in national living wage from April 2026, there was little in the Budget to incentivise UK businesses to invest and grow.

What businesses want more than anything is stability and a corporate tax system that encourages investment and growth.

Source: Budget 2025 Companies | Crowe UK