How will business and self-employed workers be affected by the November 2025 budget?

It has been a budget build up full of speculation, anticipation and political manoeuvrings. Plenty of pre-budget leaked ideas were topped off by the actual budget being published on the OBRs website ahead of Chancellor Rachel Reaves’ speech.

But what people really want to know is the effect of the budget on their personal circumstances.

Markel’s tax team has given their expert opinion on some of the key issues affecting SMEs and self-employed workers alike:

Tackling fraud within the construction industry

The government is looking to further strengthen HMRC’s powers to tackle fraud within the Construction Industry Scheme. They are also announcing regulations for a technical consultation to simplify and improve administration of the changes which will take effect from April 2026. This will bring further scrutiny on ensuring compliance within the construction industry. The proposed changes are trying to reduce administrative burdens to prevent fraud and it’s a chance for the industry to have its say. Contractors and subcontractors should engage in the consultation to influence practical reforms and also take the opportunity to review their internal CIS processes to ensure they are doing things correctly.

A new ‘hidden economy’ team

The government is planning to crack down on employers who fail on meeting their obligations to workers and undermine legitimate businesses. From April 2026 the government is setting up a dedicated ‘hidden economy’ team within the new Fair Work Agency to take action in sectors known to breach employment rights legislation alongside illegal working and tax issues. This means tougher checks on supply chain compliance and increased penalties for businesses that fail to meet their obligations.

VAT rates and thresholds

The Chancellor confirmed in her statement that there would be no changes to the VAT registration threshold or to the rate of VAT which initially suggested VAT would escape this budget with little to no impact. However, it is not until you delve into the detail that you realise how VAT will be impacted. The information is sparce at present and a lot of these changes are planned for some time in the future, but the key areas that will be affected are:

• Tour Operators’ Margin Scheme (TOMS) – affected from 2nd January 2026.
• VAT relief for business donations on goods to charities – affected from 1st April 2026.
• Motability Scheme – affected from 1st July 2026.
• Combined County Authorities VAT refunds – affected from 1st December 2025.

If you’d like to see more detail on the VAT points mentioned above, go to our extended article: The budget’s hidden VAT implications.

Loan charge review – key settlement opportunity features

The independent review of the loan charge, published today, introduces a new settlement opportunity aimed at resolving outstanding liabilities for individuals and employers affected by disguised remuneration schemes. Its purpose is to bring closure for affected taxpayers, ensure fairness, and implement review recommendations while making the scheme more progressive. For individuals, the terms offer significant benefits, with most expected to see at least a 50% reduction in liabilities and around 30% potentially settling without paying anything, supported by tailored assistance from HMRC caseworkers. This is a time-limited opportunity, with details to follow in the Finance Bill 2025–26, and it applies only to loans within the scope of the loan charge (9 December 2010 to 5 April 2019).

Find out more here

Key features

• Reduced Liability: Settlement calculated using historic tax rates (not 2019 rates).
• Deduction for historic promoter fees (up to £10,000 per year).
• Additional £5,000 reduction per individual.
• No late payment interest charged.
• There is a maximum reduction of up to £70,000 per person.
• Inheritance Tax Relief: Any IHT due on relevant loans will be written off.
• Flexible Payment Terms: Up to five years instalments without affordability checks (interest applies on forward payments).
• Eligibility: Individuals and employers with unresolved loan charge liabilities. Promoters of avoidance schemes are excluded.

Closing in on promoters of Marketed Tax Avoidance Schemes

This policy paper sets out HMRC’s latest measures to clamp down on promoters and enablers of marketed tax avoidance schemes. It targets not only the promoters themselves but also businesses that provide services facilitating these schemes, such as financial institutions, insurers, and social media platforms. The overarching aim is to strengthen enforcement and disrupt the business models that allow tax avoidance schemes to thrive, thereby reducing the tax gap and safeguarding public revenues.

These measures include:

• Direct civil penalties under DOTAS and DASVOIT: HMRC can now issue penalties without tribunal approval for failure to disclose tax avoidance arrangements.
• Universal Stop Regulations (USRs): A ban on promoting arrangements with no realistic prospect of success, backed by financial penalties and potential criminal prosecution.
• Promoter Action Notices (PANs): These compel businesses—such as banks, insurers, and tech firms—to stop providing goods or services that enable promotion of avoidance schemes.
• Expanded powers: HMRC can publish details of promoters, issue anti-avoidance information notices, and impose sanctions on controlling minds behind schemes.

The measures aim to make a decisive break from the past by eliminating the small but persistent group of promoters who undermine tax compliance. By combining civil and criminal sanctions with reputational consequences, HMRC seeks to deter scheme promotion, protect taxpayers from mis-sold arrangements, and restore fairness and trust in the tax system. Ultimately, this initiative is designed to close the estimated £500m tax gap attributable to marketed avoidance and ensure that revenues are available for essential public services.

Arguably, this budget was as eventful as the last, more so in the eyes of many. £26bn in tax rises is a significant sum, driven largely by the need to increase the fiscal headroom and raise government spending. Commentators will be discussing its implications for weeks to come and time will tell if the Chancellor made the right choices for the UK.

Should you or your clients need any assistance with any of the above, please get in touch with us at taxconsultancyuk@markel.com.