What Changed in Budget 2025 That Affects Entities
The Spring Budget 2025 brought forward multiple reforms that influence how you structure a business:
- Writing-down allowances for main rate assets will drop by 4 percentage points to 14% from April 2026. However, a new first-year allowance of 40% for main rate assets will begin from 1 January 2026, excluding cars, second-hand assets, and overseas leasing assets.(gov.uk)
- Remote Gaming Duty increases sharply from 21% to 40% starting April 2026. Bingo Duty is abolished.(gov.uk)
- Business rates for retail, hospitality and leisure (RHL) properties are permanently lowered multipliers, benefiting smaller RHL properties, but higher rates apply to very high-value properties.(gov.uk)
Entity Types to Consider Under the New Regime
Here are how different structures compare under new Budget policies:
| Entity Type | Advantages under Budget 2025 | Possible Drawbacks |
|---|---|---|
| Sole Trader / LLP | Simpler admin; MTD applies cleanly if under thresholds | Less limited liability; allowances & deductions less generous for large capital investment |
| Limited Company | Better positioned for capital investment using allowances; corporate rate stable; possible reliefs for differentiating income/expenses | More complex filings; remote gaming/commercial property exposure; dividends tax has changed |
| Trusts / Employee Ownership Trusts | Certain reliefs still apply, but CGT relief available on qualifying disposals to Employee Ownership Trusts falls from 100% to 50% for disposals after 26 Nov 2025.(gov.uk) |
Example Scenario
Suppose “TechStudio Ltd” plans to invest heavily (£200,000) this year in equipment for its studio. Under the main rate writing-down allowance, only 14% annually may be deducted once in use (post-April 2026). However, the first-year 40% allowance (available from 1 Jan 2026) lets TechStudio deduct a large chunk sooner. That favors a company structure that holds the assets directly.
Conversely, “Vintage Rentals”, a small business running listed equipment, may find business rates relief on their retail premises helpful, especially if property rateable value is under £500,000. Higher value properties will face extra rates.(gov.uk)
Practical Tips for Structuring wisely
- Use limited company status for high-capital-expenditure ventures to get full effect of first-year allowances.
- Where founders are building businesses expected to scale, factor in the reduced CGT relief for Employee Ownership Trusts when planning exit events.
- If operating in remote gaming, check whether your structure (company vs sole trader etc.) affects duty liabilities; rule changes favor duty‐registered entities.
- Real-estate heavy entities should monitor business rates reforms, especially rateable value thresholds for reliefs.
Conclusion
Budget 2025 shifts things: capital allowance changes, tax on gaming, relief reductions. Choosing structure isn’t “one-size-fits-all”—entity setup now must align with your assets, income type, and growth expectations. Smart planning now reduces leaks later.