Labour Government announces Autumn Budget

The UK government has delivered its much-anticipated Autumn Budget, which includes changes to taxes, wages, and public funding.

The Budget was delivered by chancellor Rachel Reeves, the UK’s first-ever female chancellor, a milestone that Reeves said she was very proud of in her Budget speech at the House of Commons.

The Budget is Labour’s first since coming into power in July 2024 when it promised it wouldn’t increase taxes for working people. Since the election the party has reported a financial “black hole” in public finances which has led to controversial and negative consequences in regard to the Winter Fuel Payment, local council funding, and business costs.

Current leader of the opposition and former prime minister, Rishi Sunak, accused the government yesterday of misleading the public and government in regard to the “black hole” claiming that the Office for Budget Responsibility (OBR) declined to support this claim.

Currently it is reported that the OBR was told about £9.5bn worth of pressures on departmental spending that it should have been known about in March, but this is not the £22bn claimed by the government.

Changes announced by Reeves include the fact that income tax band thresholds will rise in line with inflation after 2028 and changes to capital gains tax on profits from selling shares will increase from 18% to 24%.

PwC, a provider of professional services including auditing and business advice, has commented on some of the latest budgetary changes.

Claire Blackburn, head of Tax at PwC UK, says: “The Budget has been a concoction of sweet and sour for individuals and businesses. There’s relief that, in line with its manifesto promises, personal tax increases have been targeted at assets and in limiting reliefs while businesses will welcome the stability of the corporate tax roadmap announced today.

“However, the bulk of the overall £40bn in tax rises will land on businesses, making employment more costly and, in combination with the changes and additional measures in the Employment Rights Bill, will have significant impact. Such a significant increase in taxes on business signals a clear direction of travel and this Budget may well prove transformative.”

Business tax changes announced by Reeves included an increase to National Insurance payments by companies to pay 15% on salaries above £5,000 from April.

Employment allowance will also increase from £5,000 to £10,500 while tax paid by private equity managers on share of profits from successful deals will rise from 28% to 32% from April.

The British Printing Industries Federation (BPIF) points out that this latest Budget increases government spending by £70bn per year over the next five years. With half of this funded by increases in taxes this means the overall tax burden will increase to 38% by the end of the decade, its highest level on record.

Blackburn adds: “To reduce the impact on confidence, these changes and any further changes will need to be implemented strategically so as to not stifle growth, alongside ensuring policy changes are joined up to be done in a way that acknowledges the risks of undermining stability and international competitiveness. Further reassurance from the Chancellor that future changes will be limited would also be welcomed.”

Other changes announced included increases to the minimum wage with an overall goal of moving towards a “single adult rate”. As of April, the minimum wage for over-21s will rise to £12.21 per hour with the rate for 18 to 20-year-olds going from £8.60 to £10.

Reacting to the announcements, Make UK, an association for UK manufacturing has given its thoughts on the many changes announced including in-depth analysis on its YouTube channel.

Stephen Pipson CBE, the association’s chief executive officer, says: “This budget was always going to involve tough choices for business as the chancellor grapples with the state of the nation’s finances whilst, at the same time, improving the foundations of the economy.

“There is no escaping the fact that raising Employer National Insurance contributions, and the surprising change in thresholds, at a time of other cumulative increases in employment costs will be challenging for many businesses and especially SMEs. However, looking at the bigger picture and, the medium to long-term, we welcome the government’s clear path to growth for manufacturing with a number of positive measures.”

Pipson highlighted initiatives like the government’s industrial strategy, Corporate Tax Road Map, and support for programmes like Made Smarter, an initiative to connect UK manufacturers with digital tools and innovative skills and resources.

Discussing the Business Tax Roadmap, the government’s approach to business tax which gives clarity on tax and investment, Colin Graham, head of Tax Policy at PwC UK says the initiative may seem like a “small step rather a giant leap forward” but feels there are encouraging signs the government is listening to feedback.

“While only a first step, businesses will take some encouragement from the commitments to provide more clarity on tax relief for capital investments and R&D as well as the possibility of advance clearance for major investments. While there is a clear objective to achieve future tax simplification, little detail has been provided on how this will be achieved,” says Graham.

Many business owners have had negative reaction to recent government changes, taking particular issue with Kier Starmer’s views on who working people are, with one LinkedIn user commenting: “If you think these moves are motivational you are mental. Yours sincerely, one of many business owners who want to give up and leave.”

Commenting on Print Monthy’s recent post about the Budget, self-employed business coach and consultant within the print industry, Marcus Clifford says: “I speak to many business owners who are tired and stretched and some of this Budget is another kick in the teeth and erodes motivation and raises concerns about survival.

“With the drive for automation, reduced headcount is accelerated even further by adding extra costs to employment of staff. I think we will see the outcome of the Budget changes start to manifest themselves over successive quarters. Ours is a great Industry, it’s a fantastic service provider, but its suddenly become a bit harder to do the things we love doing.”

Reacting to the Budget, Darren Sewell, managing director at Brook and Mayo, an electrical contractor and maintenance company, comments: “The recent Autumn Budget presents challenges that directly penalise our employee-centred approach and limits our ability to invest further in our people.

“The 1.2% rise in employer National Insurance contributions, coupled with a lower threshold, significantly increases our payroll costs. For Brook and Mayo, these higher costs erode the very resources it allocates to enhancing employee benefits, well-being programs, and the professional development that defines our approach as an ethical employer.”

Since making the announcement, Reeves has conceded that wages will be hit by the National Insurance rise. The Bank of England’s former governor, Meryn King, said Labour should have always been more upfront about workers’ taxes.

King criticised the Conservatives for cutting National Insurance in the first place, commenting to the BBC: "Honestly, I think that would be much better now just to say to people 'this is where we are', be completely straight with people. Say 'we made that pledge in the heat of an electoral battle, it was a mistake, we regret it and we're going to unwind it'."

Other measures announced in the Budget included increased devolution funds for Wales, Scotland, and Nothern Ireland as well as £1.8bn allocated to compensate wrongly prosecuted Post Office sub-postmasters.

Speaking to the Daily Mirror, Alan Bates, a key player in the campaign for justice for sub-postmasters, called the compensation “interesting” as he was unaware of an update but says the “devil is in the detail”.