The 2024 Autumn Budget had significant implications for UK businesses, introducing a wide range of cost increases effective from April 2025. As organisations across sectors grapple with an uncertain economic landscape, these changes are being felt at every level, from small enterprises to large multinationals.
The key measures in the Autumn Budget
The major provisions of the Budget affecting the business community were:
Business rates
Updated rateable values have increased liabilities for a significant portion of commercial property occupiers, particularly in the retail, hospitality and logistics sectors.
Employer National Insurance Contributions (NICs)
An increase of 1.2% in the rate payable and a reduction in the minimum qualifying threshold combined to push up employment costs, particularly for labour-intensive sectors and those heavily using part time staff.
The national minimum wage
This rose substantially, impacting wage bills for businesses across sectors, particularly those reliant on lower-paid staff.
Energy cost support reduction
Temporary relief schemes for business energy bills were scaled back, exposing businesses to more volatile and elevated market prices.
Environmental levies and compliance
New and enhanced levies, such as the plastic packaging tax and stricter carbon reporting requirements, have created additional compliance and operational costs, especially for manufacturers and importers.
Tax allowances
The temporary “super-deductions” for qualifying investments have ended, replaced by less generous long-term reliefs that have reduced incentives for business investment.
Immediate impact on business costs
As these measures took effect in April 2025, UK businesses experienced a sharp uptick in operational expenses. The impact has been particularly pronounced in the following areas:
Labour costs
The increase in minimum wage rates and higher NICs has driven up payroll costs for businesses of all sizes. Employers have faced the dual challenge of absorbing higher wage bills while also managing tighter margins due to other input cost increases.
Business rates
Revaluations have significantly raised business rates for companies in prime locations and sectors that saw strong post-pandemic recovery, such as warehousing and city centre retail. Reliefs for smaller enterprises were cut back, while many mid-sized and larger businesses have seen substantial increases, forcing them to reconsider their property strategies and, in some cases, accelerate moves to more cost-effective locations or reduce their physical footprints.
Energy and utilities
With the winding-down of government energy support, businesses have returned to a market where wholesale prices remain elevated and volatile. Manufacturers and other energy-intensive industries have been disproportionately impacted, but even office-based organisations have seen material increases in utility bills.
Regulatory and environmental costs
The expansion of environmental levies and tighter reporting regulations is forcing businesses to invest in compliance systems, training and, in some cases, substantial operational changes.
Sector analysis
Retail and hospitality
These sectors have faced a perfect storm of higher wage bills, increased business rates, and ongoing energy cost pressures. The British Retail Consortium estimated the cost to retailers of the Budget would be £7bn a year. Hospitality UK warned of £3bn a year in extra tax costs. Subsequent research by Retail Economics now shows £5.6bn extra costs annually for retailers, of which they will absorb £1.76bn as a hit to their bottom lines.
Many businesses have been forced to pass on some of these costs to consumers through higher prices, but competitive pressures and changing consumer behaviour have limited their pricing power. As a result, small independent firms are struggling, with some exiting the market or consolidating.
Voluntary sector
Despite the use wherever possible of volunteers, many charities rely on low paid and part time staff, making them among some of the enterprises worst affected by sharply rising staff costs. This comes at a time when support from cash-strapped local authorities is drying up at worst and is less reliable at best.
Manufacturing
Manufacturers are contending with rising input costs, higher energy bills and new environmental compliance obligations. While capital investment tax reliefs are helping, the ending of the super-deduction has made new capital projects more challenging. Exporters are facing challenges balancing cost increases with the need to remain competitive in global markets.
SMEs and start-ups
Smaller businesses have been especially vulnerable to cost increases. Many lack the financial resources or economies of scale to absorb higher costs and are taking difficult decisions regarding staffing, expansion plans and investment in innovation.
Professional services
With staff costs at between 25% and 50% of total costs, these sectors will be experiencing profit margin pressures, as well as increased compliance costs and higher property expenses in major urban centres. Remote and hybrid working has helped some firms offset rising property costs, but the overall operating environment remains more challenging than before the Budget. This puts the increasing adoption of AI strategies even higher up the priority list.
Business responses and adaption strategies
Increased technology investment
To counteract rising wage bills and productivity pressures, many businesses have accelerated investment in automation, robotics, digital transformation and AI.
Procurement and supply chain optimisation
Firms have revisited supplier agreements, sought alternative sourcing options and, where possible, brought elements of their supply chains closer to home to reduce exposure to global cost volatility and to reduce input costs.
Workforce restructuring
Firm have reduced headcount, or shifted to more flexible staffing models, balancing cost control with the need to retain key talent. UKHospitality has warned that the sector has shed 69,000 jobs already since the Budget announcements last October.
Property rationalisation
Businesses have reassessed their property needs, downsizing office and other space where feasible, embracing remote and hybrid working or relocating to lower-cost locations.
Energy efficiency
With energy prices remaining unpredictable, companies are accelerating investments in energy-saving technologies, on-site renewables and energy management systems.
Pricing strategies
Where possible, companies have passed some cost increases on to customers, though often with the risk of reducing demand. Others have focused on developing new products or services with higher margins.
The business impact so far . . .
The cost increases introduced by the 2024 Autumn Budget have reshaped the operating environment for UK businesses. While some sectors are proving more resilient than others, the overall impact has been to increase the cost base, drive operational change and accelerate the adoption of new technologies and business models. They have called into question the viability of some business models, most especially in hospitality and for charities. This is a time for maximum risk awareness, financial discipline and early intervention.
If you are seeking professional advice for your business, Opus is here to help. You can speak to one of the members from Opus, who can discuss options with you. We have offices nationwide and by contacting us on 0203 995 6380, you will be able to get immediate assistance from our Partner-led team.