The Budget on 26 November was packed with policy announcements, but according to the Office for Budget Responsibility (OBR), these policies will not really change the UK’s growth outlook over the next five years.
Compared with the forecast it prepared in March 2025, the OBR has lifted its expectation for growth this year but then marks it down every year through to 2030. If you were hoping for a clearer sense of the economy’s direction after the Budget, the message is mixed at best.
No Further NI Increase
One point of relief from the Budget was what didn’t happen. After last year’s significant rise in employers’ National Insurance contributions, there were no major new tax costs for employers. However, meaningful pro-business measures were also limited and could leave you wondering where business growth is going to come from.
Even businesses in sectors that did receive some targeted help, including retail and hospitality, are warning that their overall cost base is still set to rise.
Two areas - business rates and wage costs - seem to be standing out.
Business Rates: Relief, But Maybe Still Higher Bills
Business rates remain a major pressure point for high street businesses, with many seeing their rateable value increase due to the 2026 revaluation.
Many shops, pubs and hospitality businesses will have their rates calculated using a lower percentage of their property value; however, taken in combination with higher valuations many businesses are braced for higher bills.
For cash flow planning, this is something to review sooner rather than later.
Wage Costs: Good for Workers, Harder for Employers
National minimum wage increases will help workers, particularly those who are younger, but it means further cost pressure on employers already managing tight margins.
This may impact your recruitment or staffing plans or mean you need to look at raising prices to cover the additional costs.
Salary Sacrifice Cap for Pensions
The £2,000 cap on pension salary sacrifice arrangements also attracted attention. Amounts that are contributed above the cap will become subject to employer and employee national insurance contributions, making these arrangements much less desirable.
Concerns have been raised about the impact this change could have on business investment and pension funding.
It is worth noting that these changes are not proposed to take effect until 6 April 2029. So, there is still time for employers and employees to take advantage of the current rules.
If you would like advice on how a salary sacrifice arrangement for pension contributions works, please get in touch.
Wider Access to Investment Incentives
One measure that may help some growing businesses over the longer term is the expansion of the Enterprise Investment Scheme (EIS).
EIS schemes provide tax incentives to investors who invest in smaller companies, and from April 2026, investment will be allowed into businesses that have grown beyond the previous size limits.
What to Consider Now
While the Budget’s forecasts may not paint an especially bright picture for national growth, your own plans don’t have to rise or fall with the wider numbers. Many businesses continue to expand by focusing on the areas they can influence day-to-day.
You can do the same.
Some sensible steps to consider based on the Budget measures would include:
- Reviewing your business rates valuation and checking whether you are eligible for any transitional relief.
- Update your financial projections to factor in wage increases next April.
- Look again at any pension contribution salary sacrifice arrangements you have and make sure staff understand how the changes could affect them.
- If you are seeking investment for your company, it could be worth looking at the updated EIS rules to see whether they might open any new opportunities for you.
If you need help working through any of these changes - or simply want a second opinion on how they affect your plans - feel free to get in touch. We would be happy to help you!