The United Kingdom goes into another Autumn Budget on 26 November 2025 with a familiar script: a Chancellor promising “shared sacrifice”, pundits and political aides flying kites about where the money will come from, and ordinary people and small firms left guessing which of them will carry the bill. This year, the formal fiscal referee — the Office for Budget Responsibility (OBR) will publish its Economic and Fiscal Outlook (EFO) alongside the Budget, and the numbers the OBR hands the Chancellor will shape every cut and tax-raise on the dispatch box.[1]

If you run a small business, the past 12 months have not felt like shared sacrifice so much as selective unloading: successive policy choices have shifted cost onto employers and firms at the sharp end of the economy. The talks of “growth” and “levelling up” are often the measures they deploy to either squeeze household incomes or pile extra fixed costs on small firms. This article summarises the political theatre and the realities behind it: what the official numbers say, what has leaked or been widely speculated, and why small business owners have reason to feel they’ve already been bearing the brunt.

The cold facts (from the public record)

Growth is flat to weak. The ONS reports that GDP grew only 0.1% in Q3 2025 versus the previous quarter and 1.3% year-on-year; hardly the bounce needed to reduce the pressure on public finances. Weak growth limits the Chancellor’s options: higher taxes will depress activity further, but borrowing more would breach Ms Reeves’s fiscal constraints.[2]

The labour market is softening. The ONS November releases show unemployment has risen (recent estimates put it at around 5.0%) and payroll employment has fallen materially over the last year. Softer employment and slowing wage growth both reduce tax receipts and increase pressure on public spending.[3]

The OBR’s judgment matters, and it’s due on Budget day. The OBR has signalled its EFO will appear on 26 November and will be the official scoring of measures;  it will show the starting point the Chancellor must fix. That scorecard is central to whether headline statements on tax rises or cuts are credible.[i]

What small businesses have already taken

Two policy changes stand out as direct, verifiable hits to employers and therefore to many small firms:

Employer National Insurance (NICs) The Government raised the employer NIC rate from 13.8% to 15% and reduced the secondary threshold (the level at which employers start paying) from £9,100 to £5,000 with effect from 6 April 2025. That change increases the fixed cost of employing people for many firms, particularly low-margin small businesses, even if the Government partially compensates by expanding the Employment Allowance.

Corporation tax regime The main corporation tax rate was raised to 25% for larger profits as part of earlier fiscal adjustments (the differentiated small-profits rate regime remains in place for the smallest companies). The combination of higher employer NICs and a higher corporation tax rate means many small-and medium-sized enterprises (SMEs) face both higher payroll costs and higher tax on retained profits.

Those measures are not theoretical: the Confederation of British Industry (CBI) and business surveys show business tax receipts rose and business groups reported higher tax burdens in 2024/25. The data is consistent with the view that firms are already contributing a growing share of tax revenue.

Leaks, kites and Westminster theatre:  What’s actually being briefed out

All pre-Budget seasons have their “kite-flying”: officials or ministers float an idea to test reaction. This autumn has seen several such briefings and some outright leaks that are worth noting because they frame public and market expectations.

Income tax moves: Reportedly off the table (for now). In recent days, multiple outlets reported that plans to raise basic rates of income tax had been considered and then quietly shelved or watered down; the Chancellor publicly decried leaks as “not acceptable” after reports of U-turns. Reuters and The Guardian both covered the back-and-forth: the story they tell is that income tax increases were mooted as an obvious way of filling any multi-billion-pound fiscal gap, but political and market sensitivity made the Treasury pause.

Targeted wealth and sector levies remain on the table. Reporting across analysts’ briefings and trade press points to measures aimed at higher net-worth households (changes to ISAs/cash ISA allowances, inheritance tax or mansion type levies), taxes on certain sectors (gambling, tobacco, or very profitable tech firms), and more targeted property or capital taxes. These are “less visible” politically but still raise revenue.

Speculation on ISA/cash-savings curbs. Multiple commercial briefings have floated a reduction in the cash portion of ISA allowances (figures being discussed publicly range widely), aimed at nudging savers into riskier investments or expanding tax revenue on interest. These are leaks/rumours rather than official measures, so treat them as ‘kites’ rather than confirmed policy.

Important caveat: the most sensitive leaks (e.g., “income tax rise confirmed”) have often proved to be trial balloons or misread briefings. Where credible reporting suggests a U-turn or abandonment, it is usually because the Treasury has measured the political fallout and ditched the idea, which tells you as much about political incentives as it does about fiscal arithmetic.

Politics: everyone’s to blame, but the outcomes are asymmetric

It’s tempting to treat the Budget as a technocratic exercise. It’s not. Fiscal decisions are political choices. Two uncomfortable truths:

No party has offered a painless plan. Whether through austerity, tax shifts or higher borrowing, all routes impose costs. The Institute for Fiscal Studies and public commentators have underlined the political constraints facing Labour’s manifesto promises not to raise income tax or NI on workers, the political unpopularity of VAT increases and the electoral risk of cutting public services, which steer policymakers toward measures that either hit corporate profits, wealth or employers. Each of these choices transfers pain somewhere, and small employers and working households sit closer to the frontline.

Small businesses have already carried a disproportionate share. The employer NIC rise is not an abstract “tax on firms”; it is a higher fixed cost that reduces margins, discourages hiring (or forces cuts) and filters through into price rises or lower investment. When corporation tax and payroll taxes both rise, the combined effect is both an immediate cashflow hit and a longer-term dampener on growth. Business surveys and sector analyses since the 2024/25 fiscal changes show firms responding by raising prices, cutting hours or deferring investment.

What to watch on Budget Day

OBR scoreboard: the EFO’s assessment of the fiscal gap will determine whether headline tax rises are unavoidable. If the OBR shows a large shortfall in the public finances, expect difficult, targeted revenue measures.

Employment measures vs employer costs: any attempt to aid households (higher benefits, tax credits or direct support) will likely be paid for by business-facing levies or “stealth” measures (threshold freezes) unless the Chancellor is prepared to expand borrowing.

Where the burden falls: watch small changes to thresholds and allowances (tax-free bands, Employment Allowance tweaks, thresholds frozen or adjusted), these are the mechanisms that shift the distribution of pain.

Verdict: a Budget curated for political survival, not for small-business rescue

The objective reality is straightforward: Britain’s fiscal room is limited, growth is sluggish, and the OBR will not magic up growth on Budget day. That creates a perverse political logic: tax rises targeted at headline-unpopular groups (the “wealthy”, corporations or specific sectors) are politically easier to sell, but when combined with payroll taxes and frozen thresholds, they redistribute the pain toward small businesses and working households. It is not a conspiracy; it is the arithmetic of constrained choices and an indictment of political imagination.

If there’s a silver lining, it is that the most transparent fix for higher growth through investment, skills and demand is still the least deployed policy. On Budget day, watch which party rhetoric wins out: quick revenue through targeting relatively small groups or a more honest plan to back growth (which requires patience, credible institutions and, crucially, political consensus).

[1] Office for Budget Responsibility

[2] Office for National Statistics

[3] The Guardian

[i] The Office of Budget Responsibility