The Budget 2025 has landed, and while the headlines focus on big spending and politics, it’s the fine print that really matters for small businesses, landlords, contractors and company owners.

From tweaks to Making Tax Digital (MTD) and National Insurance, through to Business Rates and tougher Construction Industry Scheme (CIS) rules, these changes will shape how you run and structure your finances over the next few years.

At Worthwhile Accountancy, we work with clients across Norfolk and East Anglia – from sole traders and landlords to limited companies and CIS contractors, so we’ve pulled together the key points that matter most to you.

Here’s a revised version of your Budget 2025 blog, brought in line with the tone, structure and internal-link style of the “What Is CIS Accounting?” blog.

Making Tax Digital (MTD): A Softer Landing, But Don’t Ignore It

If you’re a sole trader or landlord with income over £50,000, MTD for Income Tax Self Assessment (MTD for ITSA) is still due to start from April 2026.

The good news? Budget 2025 confirmed a soft landing for the first year.

No Late Submission Penalties for Quarterly Updates (2026–27)

For the 2026–27 tax year:

  • You’ll still need to submit quarterly updates using MTD-compatible software
  • Late submission penalties will not apply to those quarterly updates in that first year
  • Penalties will still apply if you miss the final annual declaration

So you get some breathing space on the quarterly side – but you still need to be organised, digital and ready to go.

Our recommendation: use this “penalty-free” period to get systems bedded in, not as a reason to delay.

  • Need help choosing and setting up software (Xero, QuickBooks, etc.)?
    Visit our Making Tax Digital page to see how we can get you ready.

National Insurance & Employment Cost Thresholds Frozen

If you employ staff (or are thinking about it), National Insurance remains a big consideration.

Employer NIC – Secondary Threshold Frozen

The Secondary Threshold for employer National Insurance contributions will stay at £5,000 until April 2031.

What that means in practice:

  • As wages rise over time, more of your payroll will fall into NI-paying territory
  • Your overall employment costs are likely to increase, even if the rate doesn’t change

Employee & Self-Employed Thresholds Frozen Too

The thresholds for:

  • Employees (Primary Threshold), and
  • The self-employed (Lower Profits Limit)

are also being frozen until April 2031.

This “fiscal drag” means more income will gradually be pulled into the tax and NIC net.

Salary Sacrifice: Changes from April 2029

From April 2029, employer and employee NICs will be charged on pension contributions made via salary sacrifice above £2,000 per year.

If you use salary sacrifice to boost pensions tax-efficiently:

  • Start modelling now how this might affect total reward packages
  • Keep an eye on future guidance as we get closer to 2029
  • Worried about payroll compliance and cost planning?
    Our Payroll Services team can help you stay compliant and manage RTI submissions accurately.

Business Rates: Relief for the High Street, Pressure on Larger Sites

For businesses with physical premises, Business Rates remain a critical cost.

Lower Multipliers for Smaller Retail, Hospitality & Leisure (RHL)

From 1 April 2026:

  • Two permanently lower multipliers (tax rates) will apply to Retail, Hospitality and Leisure (RHL) properties with a rateable value (RV) under £500,000
  • This is designed to support high street and local businesses

If you operate a shop, cafe, restaurant, pub or similar, this could help ease some cost pressure.

New High-Value Multiplier for Larger Properties

To pay for this, there will be a new high-value multiplier for properties with an RV of £500,000 and above.

  • If you occupy large premises (e.g. warehouses, showrooms, bigger offices), you may see higher Business Rates over time.

Extended Small Business Rates Relief (SBRR) Grace Period

Good news for growing small businesses:

  • The SBRR grace period will increase from one year to three years
  • This applies when you move from one property to owning/occupying a second property
  • You’ll keep the relief on your first property for longer while you grow
  • Planning an expansion or second site?
    Speak to us about Small Business Accounts and how these changes affect your growth plans.

Construction Industry Scheme (CIS): Tougher Stance on Fraud & GPS

For clients in the construction industry – especially those using CIS – Budget 2025 brings some important changes.

From 6 April 2026, HMRC will have stronger powers to tackle suspected CIS fraud.

Immediate Removal of Gross Payment Status (GPS)

HMRC will be able to immediately remove Gross Payment Status where a business:

  • Makes or receives a payment it knew or should have known was connected to fraud

Losing GPS has a huge impact on cash flow, as contractors must start deducting CIS from your payments.

Longer Ban on Reapplying for GPS

  • The reapplication ban after GPS removal will be extended from 1 year to 5 years
  • Penalties could be as high as 30% in serious cases

This makes CIS compliance and due diligence more critical than ever.

  • Need to protect your GPS and CIS position?
    Our specialist CIS Accountant service ensures your verifications, deductions and processes are robust.

(If you’d like a deeper grounding in how CIS works, you might also enjoy our explainer-style content similar to “What Is CIS Accounting?” on our site.)

Corporation Tax & Capital Allowances: Timing Matters

For limited companies, the main rate of Corporation Tax stays at 25%, but capital allowances are shifting.

Writing Down Allowances Reduced

From April 2026:

  • The main Writing Down Allowance (WDA) rate will fall from 18% to 14%

This means it will take longer to write off the cost of certain assets over time.

New 40% First-Year Allowance

From January 2026, a new 40% First-Year Allowance will be introduced for main pool expenditure.

  • This gives an upfront boost to relief for qualifying assets
  • It may make sense to time major investment carefully around these changes
  • Unsure when to buy new equipment, vehicles or kit?
    Talk to our Limited Companies team about the most tax-efficient timing.

What Does Budget 2025 Mean for You in Practice?

In summary, Budget 2025:

  • Encourages digital record-keeping and MTD adoption, but with a softer first year on penalties
  • Uses frozen thresholds to gradually increase the tax/NIC take over time
  • Offers targeted relief for high street and smaller RHL businesses, but increases pressure on larger premises
  • Tightens compliance for CIS and Gross Payment Status
  • Adjusts capital allowances to nudge investment behaviour

For:

  • Sole traders and landlords – you’ll need to get ready for MTD and stay on top of cash flow and records.
  • Limited companies – you should review capital spending plans and how frozen thresholds impact directors’ remuneration.
  • Construction businesses under CIS – you must tighten your processes to protect your GPS and avoid falling foul of HMRC’s new powers.
  • Growing small businesses with premises – you may benefit from extended SBRR grace periods and lower multipliers (if in RHL).

Remember, Budget changes don’t sit in isolation – they interact with your business structure, sector, and long-term plans.

Need Help Navigating Budget 2025?

At Worthwhile Accountancy, we support:

  • Sole traders and landlords moving to digital records and MTD
  • Employers managing payroll, thresholds and salary planning
  • Limited companies planning Corporation Tax and capital investment
  • Construction businesses staying compliant with CIS and protecting Gross Payment Status

We don’t just file forms – we help you make informed decisions based on the rules as they evolve.

Speak to an Accountant today or call us on 01842 646441 to discuss how Budget 2025 affects your business.