On 26 November 2025, Chancellor Rachel Reeves delivered her second Autumn Budget to Parliament. Though the speech was accidentally leaked by the Office for Budget Responsibility (OBR) an hour before delivery, its substance offered limited reassurances for the technology sector. Instead, the Budget focused on funding stability, business incentives, and evolving national priorities.
Facing a Fiscal Trilemma
As with virtually every government, the current incumbents are quick to point out that they inherited a strained economy with stagnant growth, elevated unemployment, and mounting debt. Leveraging her “fiscal rules,” Reeves pledged to balance day-to-day spending and reduce public debt by 2029–30, all without raising income tax, VAT, or National Insurance – quite the headline! However, due to additional fiscal drag, freezing tax thresholds until 2031, individuals face higher tax burdens over time, and the OBR said “the government’s tax take will reach an all-time high of 38% of GDP in 2030-31”
Tech Ambitions vs Practical Gaps
Despite republishing spending commitments to establish two AI Growth Zones in Wales, plus boost Northern Ireland’s advanced manufacturing and Scotland’s low-carbon sectors, the Budget failed to provide crucial implementation details. With £10 million earmarked for Welsh semiconductor infrastructure, it’s a case of wrong place, wrong time for business in the Yorkshire region.
Strengthening Scale-Ups & Talent
To help enterprises transition from startup to scale-up, the Budget expanded tax incentives:
- Eligibility for SEIS and VCT schemes widened
- Shareholding rules under the Enterprise Management Incentive (EMI) were significantly relaxed:
- Gross assets raised from £30m to £120m
- Employee cap expanded from 250 to 500
- Option value increased from £3m to £6m
These are aimed at retaining tech talent at scale-up firms competing globally. Reeves also announced a three-year stamp duty exemption to incentivise British businesses to list domestically.
Upskilling Tomorrow’s Workforce
SMEs, which comprise over 90% of British firms, will now benefit from full funding for under-25 apprenticeship programmes, expanding on last year’s Youth Guarantee. Local leaders will oversee £13 billion for skills, business support, and transport.
NHS Digital Transformation
The NHS will receive £300 million for digital upgrades, primarily for the purpose of enhancing patient access to digital health records and automating administrative tasks. Scaling up broader digital reforms, the Summer 2025 Spending Review already included £10 billion to digitise the NHS, HMRC, and GOV.UK systems. Funding will also establish regional hubs in York, Manchester, and Darlington.
Capital Allowances Reworked
Capital expenditure rules were reformed with one hand giving and the other, taking away. A 40% First-Year Allowance enables businesses to deduct nearly half the cost of eligible assets immediately – full-expensing still exists so this change will allow companies to claim FYA on assets that weren’t previously eligible such as those being acquired for leasing. The previous 18% annual writing-down allowance is reduced to 14% so the amount of relief available each year will be lower. These changes will take effect in 2026.
Wages & Apprenticeships
The minimum wage and the national living wage will rise in April next year, the national living wage, the minimum an employer must pay staff aged 21 and over, will rise by 4.1% – from £12.21 to £12.71 an hour. From April 1, 2026, the national minimum wage for workers aged 18 to 20 – which is currently £10 an hour will increase to £10.85.
The Chancellor also confirmed a significant change to pension salary sacrifice arrangements. From April 2029, any salary-sacrificed pension contributions above £2,000 per year will no longer be exempt from National Insurance contributions. This will affect both employers and employees, potentially increasing costs for those using salary sacrifice as part of their remuneration strategy. Businesses should review their current arrangements and plan ahead to mitigate the impact.
On a positive note, the government announced funding for training for under-25 apprenticeships to be completely free for small and medium-sized enterprises.
Conclusion
Reeves’ Autumn Budget injects positive, targeted support for UK businesses especially SMEs and scale-ups through expanded EMI, apprenticeships, and infrastructure funding. The tech sector may feel frustrated by the lack of clarity and deliverables around AI plans.
Crucially, Labour now enters a critical execution phase. The government must flesh out the promised £2 billion AI deployment, deliver on NHS and HMRC digital commitments, and clarify how devolved regions will implement science and tech initiatives. The next year will determine whether these announcements translate into tangible gains or slide into a missed opportunity for Britain’s digital future.
If you’d like to understand how these changes could affect your tech business, from capital investment planning to employee benefits, contact BHP’s tax team today.
Join our experts on Thursday, 4 December 2025, for our Budget Seminar and discover what the Budget could mean for you and your business.
