Autumn Tax Rises on the Horizon? What Higher UK Borrowing Means for Your Business
Newly released figures from the Office for National Statistics (ONS) show that government borrowing rose to £20.2 billion in April 2025 — £1 billion higher than the same month last year and significantly above forecasts. This marks the fourth highest April borrowing figure since records began in 1993, prompting fresh warnings that further tax rises may be introduced in the Chancellor’s Autumn Statement.
Chancellor Rachel Reeves, who implemented £40 billion in tax increases in her October 2024 Budget, had previously pledged not to raise taxes further. However, with weak economic growth forecast and growing public spending pressures — including a partial reversal of cuts to winter fuel payments — many analysts believe that additional tax measures are now likely.
What’s Driving the Borrowing Increase?
While tax receipts were actually £5 billion higher year-on-year — helped by increased employer National Insurance contributions — government spending has also risen. Contributing factors include:
Public sector pay rises
Higher pension and benefits costs
Inflation-linked expenditure across departments
Borrowing for the 2024–25 financial year has been revised down slightly to £148.3 billion, but this still exceeds the Office for Budget Responsibility’s forecast by £11 billion.
What This Could Mean for Our Clients
For businesses and individual taxpayers, the implications could be significant:
Potential tax increases: Further rises in corporation tax, dividend tax, or personal allowances thresholds freezes may be on the table to meet fiscal rules.
Impact on planning: Clients should prepare for possible changes in tax reliefs, allowances, or VAT thresholds that could affect profit margins or take-home pay.
Funding pressures: Any reduction in government support schemes or business grants could put pressure on cash flow, particularly for SMEs.
Interest rate sensitivity: While borrowing costs have fallen slightly due to recent interest rate cuts, continued fiscal instability may limit further reductions.
Now is a prudent time for clients to review their tax planning strategies, business forecasts, and pension arrangements ahead of the Autumn Budget.
We’ll be closely monitoring developments over the coming months to keep you informed and prepared for any potential changes.
Disclaimer: This content is for general information only and does not constitute legal or financial advice. Always consult a professional for guidance tailored to your specific circumstances.