The 2025 Spring Budget brings several key changes that could affect small and medium-sized businesses (SMEs) across the UK. These adjustments are aimed at helping businesses navigate ongoing challenges and take advantage of new opportunities for growth. 

One of the most significant changes is the corporation tax rate. While the rate for larger businesses has increased, SMEs could benefit from targeted tax reliefs that lower their overall tax burden. This will help smaller businesses retain more of their profits and invest in their future growth. 

Another important update is the Research and Development (R&D) Tax Credit. The government has expanded support for businesses investing in innovation. SMEs that are developing new products or improving their services can now claim more substantial tax credits, making it easier to fund these initiatives. 

Capital allowances have also been improved, offering businesses better tax relief on investments in equipment, machinery, or other capital assets. This is particularly beneficial for businesses looking to upgrade their operations without taking on excessive debt. 

In terms of National Insurance Contributions (NICs), adjustments have been made that affect the cost of hiring employees. While this may increase costs for some businesses, the changes are designed to help businesses grow their workforce and contribute to overall economic recovery. 

Finally, VAT thresholds are set to change, which could benefit smaller businesses by allowing them to remain below the VAT registration threshold for longer. This reduces the administrative burden for businesses that might otherwise be required to register for VAT. 

These changes present both opportunities and challenges for SMEs, and it’s important to understand how they might impact your business. If you need guidance on how to take advantage of these updates, please get in touch. 

If you have any queries, please contact us at admin@mphaccountants.co.uk or contact us on 01227 277667.