The wait is over – Chancellor Rachel Reeves has officially announced that the 2025 Autumn Budget will take place on Wednesday, November 26th. For umbrella contractors working through SmartWork and other umbrella companies, we believe this date will be crucial for your financial planning.

A Budget That Could Impact Your Take-Home Pay

The announcement came through an unconventional YouTube video posted by HM Treasury, showing the Chancellor in a relaxed but professional setting. However, we advise not to let the casual approach fool you – we expect this budget to bring significant changes for contractors.

Despite Labour’s pre-election promise not to raise headline income tax rates, we predict there are still plenty of ways the Chancellor could affect contractor earnings through other tax measures.

What Changes Are Most Likely?

Income Tax Thresholds

One of our biggest concerns for umbrella contractors is the very likely continuation of the income tax threshold freeze. We think this is highly probable as the Treasury continues looking for ways to raise revenue. This means more of your earnings could be pulled into higher tax brackets – a situation known as “fiscal drag.”

Other Tax Areas to Watch

We predict the Chancellor may make changes to:

• Property and council tax
• Wealth taxes
• Capital Gains Tax
• Inheritance tax (IHT)
• ISAs

VAT Registration Threshold

We see mixed signals on the VAT front. While some had hoped for an increase to the current £90,000 registration threshold, we now think a reduction to this threshold looks more likely, given the Government’s need to increase revenue.

The National Insurance Concern

We’re still seeing the effects from the last Autumn Budget in October 2024. The increase in employer National Insurance contributions continues to cause challenges for businesses and is affecting hiring decisions. The OBR calculated that higher employer NICs resulted in an average annual tax increase of over £800 per employee.

We think there’s a real possibility that the Chancellor might implement further National Insurance increases in this budget. As umbrella contractors, you’re particularly vulnerable to employer NIC increases since these costs are typically passed on through umbrella companies, directly affecting your take-home pay.

What About IR35?

If you’re hoping for clarity on IR35 rules, we think you might need to temper expectations. We estimate there’s only about a 30% chance that the budget will even mention IR35 or off-payroll working rules.

We believe this is because government attention has shifted to the umbrella company market itself, particularly around Joint & Several Liability rules and upcoming regulations in 2027.

Umbrella Companies in the Spotlight

We’ve seen that the Government’s focus has turned significantly toward the umbrella industry when it comes to contractor policy-making. This means the regulatory spotlight is very much on how umbrella companies operate, which we expect could lead to important changes in sector governance.

We think contractors placed inside IR35 face a particularly unfair situation – they’re effectively paying tax as employees but without any of the employment benefits that come with it. We believe this issue needs addressing.

Corporation Tax Changes Unlikely

For those considering a move from umbrella to limited company structures, we don’t anticipate any corporation tax relief. We would be very surprised to see any changes to corporation tax rates on November 26th, particularly any that would specifically benefit contractor-focused Personal Service Companies.

Making Tax Digital – A Key Concern

One area we expect to get attention is Making Tax Digital (MTD), which starts in April 2026. We hope the budget will include announcements about a ‘soft landing’ period under the new MTD penalty regime to help people adapt to these significant changes.

We think many self-employed individuals may struggle to adapt quickly to these new requirements, so we’re advocating for either a delayed penalty implementation or at least one full cycle to get familiar with the new MTD software requirements.

The Financial Reality

We have concerns about reports of a £20-£50 billion black hole in public finances, which we think could put severe pressure on the Government to break some of its pre-election tax promises.

This budget appears to be set up to deliver challenging news for contractors and the self-employed, despite the Chancellor’s relaxed presentation style.

What This Means for You

As an umbrella contractor, here’s what we think you should be preparing for:

Most Likely Impacts:

• Continued income tax threshold freeze affecting your tax bands
• Potential changes to VAT thresholds if you’re considering going limited
• Possible further National Insurance increases affecting your net pay

Less Likely But Possible:

• Changes to IR35 rules (though we see the Government’s focus directed elsewhere)
• Corporation tax changes for limited companies

Areas We’re Monitoring:

• Making Tax Digital developments and implementation timelines
• Further umbrella industry regulation announcements
• Any measures affecting employment status determination

Our Recommendations

The 2025 Autumn Budget on November 26th could bring significant changes that affect your working life and take-home pay. Here’s what we recommend:

Before the Budget:

• Review your current financial situation
• Consider how potential tax changes might impact your earnings
• Ensure you understand your current tax position

After the Budget:

• We’ll provide a detailed analysis of any changes affecting umbrella contractors
• Consider whether any announced changes affect your preferred working structure
• Plan for any implementation timelines that might affect you

Stay Informed with SmartWork

We’ll be monitoring all developments closely and will update you with a comprehensive analysis once the Chancellor delivers her speech. Our team will break down precisely what any changes mean for your specific circumstances as an umbrella contractor.

We believe staying informed and planning ahead is crucial during these uncertain times, so don’t forget to follow us on LinkedIn and Twitter to be the first to be notified of any updates.

This article represents our analysis and predictions based on current government priorities and industry trends. All tax changes are subject to the Chancellor’s final decisions on November 26th, 2025.