UK Chancellor Rachel Reeves has presented her Autumn Budget, unveiling measures to raise taxes by £26bn and increase the national living wage in a bid to ease cost-of-living pressures and unlock opportunities for business growth and investment.

“Growth is the engine that carries every one of our ambitions forward, through stability, investment and reform,” Reeves said during her budget speech to Parliament on 26 November, adding that the UK had signed three trade agreements with the US, European Union and India in the past year.

“Our job is to make Britain the best place in the world to start up, to scale up and to stay. We are widening eligibility for our enterprise incentives so that scale-ups can attract the talent and capital that they need,” 

The tax hikes come amid the government’s efforts to stimulate the economy and will be delivered by freezing the income tax threshold for another three years – to April 2031 – as well as introducing new taxes on properties worth more than £2mn. This could push workers into higher tax bands when they receive a salary increase.

The national living wage will increase by 4.1% to £12.71 per hour for workers aged 21 and over, while the national minimum wage for 18 to 20-year-olds will rise to an hourly rate of £10.85. Apprentices and 16 to 17-year-old workers will also receive an 8% salary hike to £8 per hour. The increases will take effect from 1 April 2026.

According to a government statement, other business-focused measures in the Autumn Budget include:

  • Permanent lower business tax rates for more than 750,000 retail, hospitality and leisure properties, worth nearly £900mn a year, effective from April 2026.
  • A £4.3bn business rates support package that will cap business rates bill increases for sectors hit hardest by revaluations, also effective from April 2026.
  • Ending the customs arrangement that allows some online retailers to import their goods duty-free, ensuring all businesses pay equivalent tariffs.
  • Introducing a permanent 40% First Year Allowance for main rate assets, giving businesses an incentive to invest in the future. The government will also retain the £1mn Annual Investment Allowance offers to give businesses immediate tax relief on plant and machinery equipment.
  • Making more than £1.5bn available for investment in employment and skills support. This will include £725mn for the Growth and Skills Levy to help support apprenticeships for young people, including a change to fully fund apprenticeships with small and medium-sized enterprises for eligible people under 25.

The Autumn Budget has focused on “relentlessly pursuing growth” for the UK economy, John Carroll, CEO of Navigator Global, said.

“The latest Santander Trade Barometer revealed record interest among UK businesses in international expansion, driven by domestic growth concerns,” Carroll added.

“When businesses go global, it drives jobs, wages and profitability. Ambitious businesses really are crucial to the economic growth of countries, especially to the UK, where over 99% of businesses are SMEs."

Updated figures released by the Office for Budget Responsibility (OBR) on 26 November show average gross domestic product (GDP) growth of 1.5% over the next five years, 0.3 percentage points slower than in March.

“The Budget delivers a frontloaded increase in spending of £9bn and backloaded increase in taxes of £26bn,” the OBR said.

“This doubles the current surplus to £22bn in 2029-30 but also leaves debt 2% of GDP higher than in March,” it added.

Carroll noted that international expansion will likely become increasingly attractive for businesses as the UK’s economic challenges continue. Santander UK’s research shows businesses that export grow two to three times faster, he added.

“With a 0.5% increase in the forecast from the OBR today, but a lowering for the next four years, it will likely do little to help businesses that are concerned about the economic outlook,” Carroll said.

“They default around four times less in normal times and 10 times less in difficult times. They are crucial to the economic growth of countries, because we know that when businesses go global, everyone wins.”