UK Budget 2025: What It Really Means for Independent Agencies and Consultants
Importantly, this is not a political review; it is a reflection on key points.
In a year already defined by economic/geopolitical uncertainty and the pressures of inflation, Rachel Reeves’ Autumn Budget 2025 marks another chapter in a challenging story for UK business owners. Independent marketing, PR, creative and digital agencies across the Pimento network are affected, and this Budget adds more complexity to financial planning, hiring decisions and long-term strategy.
It comes hot on the heels of the 2024 Budget – which introduced several significant changes already felt in agency balance sheets. Together, they represent a two-year shift toward a higher tax environment and tighter rules across business and personal finances.
So what do you really need to know?
A New Tax Era: From 2024 to 2025
Reeves’ Budget is pushing the UK tax burden over the next few years to nearly 38% of GDP – the highest in modern history. While framed as necessary for “repairing” the economy, this adds more pressure on already-stretched SMEs.
Key 2024/25 Changes:
- Employer National Insurance (NI) 2024 budget: rose to 15% in 2024, along with a reduced threshold, increasing payroll costs across the board.
- National Minimum and Living Wagesaw a significant hike in both years. In 2025, the Living Wage increases to £12.71, and for 18-20s to £10.85. If you use freelance support services that rely on lower-paid staff (e.g. events, hospitality, production), you’ll feel it indirectly.
- Dividend Tax increased in the 2025 budget. For a typical agency director taking a £12k salary and £88k in dividends, the new rules mean an additional £1,754 in tax.
- Capital Gains Tax (CGT) saw rates rise in 2024, and business sale rules were made less favourable, including:
- Business Assets on Death now form part of your estate (though taxed at a discounted rate)
- Employee Ownership Trusts now offer 50% CGT relief, not 100% as before
- Capital Gains Tax Rates and Business Asset Disposal Relief – increased CGT immediately and Business Asset Disposal Relief due one more increase to 18% in 2026 tax year
These moves make business exits more costly and underline the need for earlier planning.
The Productivity Problem – and What It Means for Growth
Labour previously described the UK as enduring “Japanese-style lost decades of growth”. Yet this Budget doesn’t seem to reverse that narrative. The Office for Budget Responsibility (OBR) has downgraded growth forecasts for the next five years.
Low productivity means less room for future tax cuts and a greater likelihood of long-term fiscal drag.
What Agency Owners Need to Consider
From your income structure to hiring plans and long-term business strategy, the Budget changes will touch most aspects of your operations:
1. Hiring & Payroll
- Wage increases and NI changes make every new hire more expensive.
- Review of salary sacrifice schemes (e.g. for pensions) – these still offer savings but may be tightened in future so build into your budget early
2. Profit Extraction & Dividends
- Review how you pay yourself. Dividends remain tax-efficient, but the gap is narrowing.
- Consider integrating pensions more actively into the remuneration strategy and also with spare cash held personally, use your ISA allowances (although cash ISA allowance will reduce to £12k for over 65s).
3. Exit Strategy & Succession Planning
- Don’t wait until an offer lands. Business sales are now more complex and costly. Plan and have a strategy.
- Employee Ownership Trusts are still attractive, but with reduced benefits.
4. Personal Financial Planning
- ISA rule changes (e.g. cash ISA limit falling to £12k) and IHT reform make long-term tax planning essential.
- Fiscal drag and frozen allowances are quietly increasing your liabilities. Don’t underestimate the impact Fiscal Drag has on your and your employees finances. If the nil rate personal allowance increased by RPI from its frozen 2021 value, we would earn £4,900 more before we paid tax. The IHT nil rate allowance has been frozen since 2009 – so the impact is even bigger.
What Should You Do Now?
The best time to plan for a business sale is YEARS before a sale. The second-best time is now. Here’s what we recommend:
- Build your advisory team – business strategists, accountants, financial planners and legal support all play a vital role in managing what’s ahead. Waiting until the offer will limit your growth, your asking price and your tax efficiency on exit.
- Engage a financial planner who understands the interplay between business and personal wealth.
- Model different exit scenarios – don’t assume a sale or wind-down will be tax-neutral. Understand what you need for the lifestyle you would like in the future.
- Review your current salary/dividend/pension mix to optimise under current rules – part accountant/part financial adviser.
- Stay agile with cashflow – rising costs (payroll, tax, inflation) demand tight forecasting.
Pimento offer agencies, consultancies and small businesses a broad range of Support Services from leading professionals in our network. Pimento members can also receive discounts and trial offers on many of these professional services:
- Legal
- HR
- Insurance
- Recruitment
- Finance
- M&A
- IT
- New Business
- Print Services
- Procurement
- Data
- Marketing Services
- Marketing Automation
- and many more
Our partner Now Next Why are offering a free diagnosis session. Whether you’re looking to grow your creative agency, clarify your positioning or prepare for acquisition, NowNextWhy provides sector-specific support. From strategic audits to leadership coaching and M&A advisory, they help agency founders turn complexity into clarity, and momentum.
Final Thought
This isn’t a call to panic. It’s a nudge to prioritise planning.
If you’re running a successful agency today, the best thing you can do is make sure your financial decisions (business and personal) are future-proof.
If you’re wondering how Pimento could help with your 2026 growth plans, please get in touch.
A note from Geoff
Wilcox Day Wealth Management works with agency owners to make that happen – helping you grow, extract and protect your wealth in a world that’s getting more complex.
Here is a video if you want to learn more: https://youtu.be/1AjaBbkBOUA [youtu.be]
See more here: https://www.wilcoxday.co.uk/business-owners [wilcoxday.co.uk]
Reach out if you’d like to talk through what these changes mean for you.
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