Autumn Budget 2025: What Central London Businesses Need to Know

The main intention of the Government’s Autumn Budget 2025 was to set out a “fair and necessary” decision framework to stabilise sentiment in financial markets while closing an estimated £20–30bn structural gap in UK public finances, without reverting to austerity or relying on unsustainable levels of borrowing.  

This confirms a clear direction from the Government: higher overall taxation, tight spending control, and a strong focus on “fiscal credibility,” with only limited immediate relief for business costs. The dominant themes impacting businesses in London are new higher wage floors, extended tax “drift,” a potential new overnight visitor levy, and changes to how investment, vehicles and imports are taxed. 

Big picture for the UK economy 

The Budget raises roughly £26 billion over the next few years, largely through tax changes rather than deep spending cuts. By the end of the current parliamentary term, the UK tax burden is projected to reach a record share of GDP. Markets appear broadly reassured that the plan is manageable, but many businesses are likely to feel increased cost pressure. 

Business rates and new multipliers 

Coming into effect from 1 April 2026 will be a new multiplier structure introducing two lower business rates multipliers for Retail, Hospitality and Leisure (RHL) properties with Rateable Values (RVs) below £500,000, which is being funded by a new higher multiplier for RVs of £500,000 and above.  

Around 750,000 properties will benefit from the introduction of these lower multipliers. The £110,000 cap on retail relief also no longer applies. 

John Webber, head of business rates at Colliers, says: “By this action the government has effectively shifted the cost of this support from itself to UK plc, putting an even further strain on businesses across the board- and putting even further pressure on the high street since it is the big retail and leisure operators who provide anchor tenants, encourage footfall and create the jobs.” 

Learn more about our call for Real Rates Reform:

Wage rises and staffing costs 

From 1 April 2026, the National Living Wage (for 21+) rises to £12.71/hr, a 4.1% increase; for 18–20‑year‑olds, the rate goes up to £10.85/hr (8.5%). This will push baseline payroll costs higher, especially in labour‑intensive sectors such as hospitality, retail and leisure. 

Income tax, NICs and “fiscal drag” 

The government is freezing personal income tax and equivalent NIC thresholds from April 2028 to April 2031, broadly meaning that as wages rise, more people will be pulled into higher tax brackets: a phenomenon often referred to as “fiscal drag”. While headline rates remain the same, employees’ net pay will erode over time, which could affect morale, take‑home pay, and ongoing wage negotiations. 

Salary‑sacrifice pension cap 

From April 2029, the amount of employee salary that can be sacrificed into pensions (or similar benefits) before triggering NICs will be capped at £2,000 per year. Any sacrifice above that will attract both the employer and employee NICs. This diminishes the attractiveness of generous salary‑sacrifice benefit schemes and may prompt businesses, especially larger professional firms, to reconsider their remuneration packages. 

Overnight visitor levy (potential) 

The Budget gives powers to regional mayors to introduce an overnight visitor levy on hotel stays and short‑stay accommodation. A formal consultation is now open to determine how the levy might work. Revenues are intended to be ringfenced for local reinvestment (e.g., visitor infrastructure, public realm, destination marketing). For central London businesses - hotels, serviced apartments, event venues, restaurants, retail and cultural attractions - this could affect pricing for visitors. If the levy drives up accommodation costs, it may dampen demand from price‑sensitive segments (e.g., domestic visitors). Conversely, good use of levy revenues could fund enhancements that help attract higher‑value visitors. 

Ros Morgan, Chief Executive, HOLBA, says: "The plans and consultation have only just been announced, so it remains too early to draw firm conclusions. The key issues will lie in the detail: who is included, how the scheme will operate, and how revenue will be spent.  Businesses have raised concerns, stressing that this is not about protecting profits but about ensuring London remains competitive internationally, particularly given the administrative time and costs the proposal could create. Comparable tourism taxes in France, Spain and Italy operate alongside VAT rates of around 10%, in contrast with the UK’s 20% rate. If a scheme is adopted, it must be simple, fair, and fully reinvested to help, not hinder the industry." 

Imports, online sales and low‑value parcels 

The Budget ends the exemption on low‑value imports: from March 2029 at the latest, goods imported into the UK valued at £135 or less will be subject to customs duty. For central London retailers, e‑commerce brands, and marketplaces that rely on imported low‑value goods - such as fashion, gifts, and consumer tech - this might mean higher costs in sourcing and fulfilment. Retailers may need to revisit pricing strategies or sourcing decisions.   

Vehicles, logistics and transport costs 

A new mileage‑based charge (Electric Vehicle Excise Duty, “eVED”) will apply from April 2028 to battery-electric (BEV) and plug-in hybrid vehicles. The proposed rate is 3p per mile for BEVs and 1.5p per mile for plug-in hybrids — roughly equivalent to half the fuel duty burden for petrol/diesel cars. Meanwhile, the temporary cut to fuel duty is extended only until August 2026, after which duty rates will gradually return to previous levels. For businesses operating EV fleets (deliveries, taxis, private hire, facilities), this will add a new recurring cost that must be budgeted alongside other levies (e.g., congestion, clean‑air zones).   

Gambling, tourism and leisure industries 

The Budget raises online gambling taxes: Remote Gaming Duty jumps from 21% to 40% (from April 2026), while a new “Remote Betting Rate” of 25% will apply from April 2027 under General Betting Duty. At the same time, the traditional Bingo Duty will be abolished from April 2026. There is no change to in‑person betting or casino duties for now. For central London’s night-time economy - casinos, betting shops, bingo halls, arcades, leisure venues - this shift may alter consumer spending patterns: heavier taxation on remote (online) services may push some demand back towards physical venues, but overall consumer expenditure could be squeezed.  

Business investment, capital allowances and tax reliefs  

From 1 April 2026 (Corporation Tax side) (and 6 April for Income Tax), the government will reduce the main rate for the writing-down allowance (WDA) on qualifying assets from 18% to 14%, while simultaneously introducing a new 40% first‑year allowance (FYA) for many main‑rate assets. The move is designed to encourage upfront investment, but the lower WDA rate means long-term depreciation will be slower — affecting the tax treatment of major capital investments. 

Skills, planning and local growth support 

The Budget allocates more than £1.5 billion over the spending review period to support skills, apprenticeships and a “Growth and Skills Levy,” aiming to ease barriers for young people entering work. The government also signals support for high‑street and hospitality businesses through planning system reforms and potential further business‑rate relief for EV charging infrastructure (e.g., charge‑point forecourts). For central London firms, this could matter. Especially for businesses needing to expand, retrofit premises (e.g., for EV charging), or recruit young/entry-level staff. 

Actions businesses can take: 

• Map your exposure to a potential overnight visitor levy (directly, or via visitor demand) and consider responding to the consultation to ensure central London business voices are heard.
• Audit reward and benefits structures, especially salary‑sacrifice pensions or other benefits, ahead of the 2029 NIC cap for salary‑sacrifice.
• For retail/e-commerce / import‑heavy businesses: factor in increased import duty costs for low‑value parcels from March 2029. Revisit sourcing, pricing, and fulfilment strategies accordingly.
• For businesses using EV fleets (deliveries, taxis, private hire, facilities): build in the new eVED per‑mile cost from April 2028.
• Consider the implications of changes to savings, ISA allowances and investment‑related taxes on any staff/shareholder remuneration plans or long-term business‑owner succession planning. 

For further information or support on any of the announcements this week, please reach out to your account manager or reach our team at hello@holba.london