Spring Budget 2025: A Tough Road Ahead for Businesses

The UK’s 2025 Spring Budget has been met with mixed reactions—and for good reason. While it doesn’t come with the same shockwaves as the Autumn 2025 Budget, it offers little relief for businesses already facing rising costs and economic uncertainty. The government’s focus seems to be on managing an increasingly tight fiscal situation, but unfortunately, the impact on businesses is far from positive.

Let’s break down what’s in this year’s budget, what it means for your business, and why we’re likely in for another tough year ahead.

1. Employer National Insurance Increases

Starting this April, employer National Insurance contributions will rise by 1.2 percentage points, bringing the rate to 15% on earnings over £5,000.

What this means for your business:
For many businesses, particularly those with a large workforce, this is going to hurt. In the wake of last autumn’s changes, any increase in staffing costs will only make things worse. Sectors already struggling with tight margins—like hospitality, retail, healthcare, and logistics—will face even greater pressure. You might need to reconsider recruitment plans, delay hiring, or even look at how you structure your teams to avoid the worst of these cost hikes.

This increase is particularly hard for small businesses that are already operating in a tough environment, and the reality is that there’s little room for manoeuvre to absorb these additional costs.

2. Affordable Housing and Infrastructure Investment—But At What Cost?

The government is allocating £2 billion to build 18,000 new affordable homes.

What this means for your business:
While this could be an opportunity for construction and related industries, the broader business landscape doesn’t exactly benefit from this spending in the short term. It’s another sign that the government is focused on long-term projects rather than providing immediate relief to businesses that need it right now. For many smaller companies, the waiting game just continues. And with rising material costs and labour shortages, even these opportunities may not be as profitable as they initially seem.

3. Pension Contribution Allowance Boost

The pension contribution limit is increasing from £40,000 to £60,000.

What this means for your business:
This might seem like a positive for business owners and high earners, but in reality, it does little to alleviate the immediate financial pressures businesses face. For many companies, especially those already struggling with operational costs, this boost in pension contributions is not high on the agenda. It’s a change that benefits a small proportion of businesses but does little for the wider economy and SMEs that need help with cash flow, investment, and growth.

4. The End of Non-Dom Tax Status—Another Blow for International Businesses

From April 2025, the UK will phase out the non-domiciled tax status in favour of a residency-based system.

What this means for your business:
While this may not directly impact all businesses, it signals a tightening of the UK’s tax regime that could make the country less attractive to international investors and talent. If your business relies on foreign investment or international talent, this could make things more difficult. The loss of “non-dom” status may prompt wealthy individuals and businesses to reconsider the UK as a place to work or invest, especially at a time when competition from other markets is growing.

5. No Major Corporate Tax Cuts—Just More Pressure

Corporation Tax remains at 25%, and there are no new tax reliefs to soften the blow of rising costs.

What this means for your business:
If you were hoping for tax relief to help with the mounting pressures on margins, this budget is a letdown. The government has opted for stability, but for businesses already struggling to cope with inflation, higher operating costs, and a slowing economy, that “stability” feels like stagnation. The absence of any fresh incentives for businesses is yet another reminder that companies are largely on their own when it comes to navigating a difficult economic environment.

Tight Margins, Rising Costs, and Little Relief

While the government is making moves to address longer-term challenges like housing and pension savings, businesses are once again left to face the reality of rising costs with little immediate support. The increase in National Insurance, combined with no new tax breaks or reliefs, means businesses will continue to struggle with tighter margins.

For many companies, especially smaller businesses, the lack of direct financial assistance will feel like a missed opportunity. With inflation still an issue and economic growth sluggish, the government’s approach to managing the economy is more about containment than recovery. The result? Businesses are being asked to weather a storm without much in the way of help.

What Can You Do Now?

The budget may have delivered more of the same, but that doesn’t mean there’s no way forward. The key for businesses will be finding ways to stay agile—cutting unnecessary costs, diversifying income streams, and seeking alternative sources of financing.

In this kind of environment, maintaining flexibility in your financial strategy is critical. Whether that means adjusting how you manage assets or seeking lending options that allow for greater cash flow control, being prepared to pivot and adapt is the only way to stay resilient.

It’s clear that the challenges aren’t going away anytime soon, but with careful planning, businesses can still navigate the turbulence ahead.