Chancellor John Healey announced a series of measures aimed at supporting small businesses, particularly those on the high street, while introducing changes that may pose challenges for larger corporations. Central to the package was an increase in the threshold for small business rate relief from £12,000 to £18,000. This adjustment is expected to lift approximately 70,000 businesses in the retail, leisure, and hospitality sectors out of liability for business rates altogether.

The changes come as part of a broader effort to ease the financial pressures facing small enterprises, alongside tax breaks designed to stimulate entrepreneurship. One such measure raised the tax-free trading allowance from £1,000 to £3,000, encouraging new business ventures at the entry level. Additionally, founders and investors holding at least 25 percent stakes in qualifying startups can now benefit from a reduced capital gains tax rate of 10 percent on the first £10 million of proceeds upon sale, provided the business meets criteria including £10 million in revenues, a workforce of 15 employees, and innovation status.

Despite these benefits for smaller firms, the government introduced a slowdown in the rate at which larger companies—including utilities and manufacturers—can depreciate investments for tax purposes. Beginning next April, the annual write-off rate will decrease from 14 percent to 12 percent, effectively raising tax liabilities and creating a £5 billion cashflow impact. To mitigate this, the Treasury increased the first-year investment write-off allowance from 40 percent to 50 percent starting in January, aiming to incentivize new expenditure amid ongoing efforts to boost economic growth.

Reactions to these changes varied among industry groups. Fhaheen Khan, senior economist at Make UK, which represents manufacturers, expressed concern that the reduced depreciation rate may dampen corporate confidence in approving long-term investments. In contrast, Andrew Goodacre, chief executive of the British Independent Retailers Association, welcomed the expansion of business rates relief as a significant positive step for independent retailers.

Large retail chains, however, remained critical of the overall impact on their operating costs. The British Retail Consortium highlighted that business rates for bigger retailers are still expected to rise by roughly 3.5 percent, in line with inflation, while the national minimum wage increase of 3.9 percent to £13.21 per hour adds further financial strain. The organization characterized these developments as a “body blow” to the sector.

These measures reflect a balancing act within the government’s broader economic strategy, seeking to support small business growth and innovation while managing fiscal demands from established corporate players.