Autumn Budget 2025: Tax and Policy Changes Needed

Ahead of the Autumn Budget 2025, Ryan leaders outline why the UK’s current growth plan is falling short and set out the tax and policy changes needed to boost productivity, competitiveness, and innovation.

Productivity and inflation mean the current growth plan won’t work

Tom Shave, President of European and Asia-Pacific Operations at Ryan, said: “The Autumn Budget comes at a moment when productivity is falling, inflation is still at 3.8%, and unemployment is at 5%, so the current “build-our-way-to-growth” strategy needs a rethink. Rumours of further tax increases, frozen thresholds, and cuts to pension relief may plug short-term gaps, but they won’t fix the UK’s long-term growth problem, and investment in infrastructure alone will not shift the dial quickly enough. If Chancellor Rachel Reeves wants to supercharge the UK’s growth trajectory, she needs to incentivise ideas, innovation, and knowledge capital, as in the U.S., Ireland, and Singapore. She needs to use tax and policy as active levers to reward the creation of intellectual value, not just physical assets.”

Use tax deferrals to pull innovation into the UK and not just subsidise spend

Jenny Batchelor, Principal, Corporate Tax at Ryan, said: “Despite the UK having constrained public finances, a targeted tax approach could still be structured to raise revenue. A deferral in corporation tax liabilities for UK-headquartered companies innovating in key priority sectors such as AI would allow current funds to be reinvested into people, skills, and commercialisation, whilst the businesses scale. Alongside that, a more dynamic VAT system, including payable VAT deferral for firms in those sectors, would straight-line cash flow and accelerate investment. This is not a giveaway but a mechanism to bring forward private capital faster, which drives taxable output sooner.”

UK capital allowances and research and development (R&D) need to catch up with modern business models

Justin Arnesen, Principal, EAP Innovation Funding at Ryan, said: “A meaningful pro-innovation budget needs to update existing reliefs, so they reflect where modern IP value actually sits. The UK should widen the 100% full expensing regime so that the purchase of patents, licences, and software can qualify just like plant and machinery. At the same time, the R&D rules need to remove the overseas restriction on R&D activities. If the innovation supports a UK entity, it should be claimable, irrespective of geography. Innovation is global by nature, and the UK government should enable, not limit, collaboration that drives growth. These are small technical fixes, but they would make the UK materially more competitive overnight, and they do not require major new spend.”

A simpler, more inclusive R&D regime is essential for UK innovation

Nigel Holmes, Director of R&D at Ryan, said: “To truly empower innovation, Chancellor Rachel Reeves must back a simpler, more inclusive R&D tax relief regime that reflects how modern businesses innovate. 

“Expanding the cost base to cover rent, rates, capital expenditure, and patent legal fees would recognise the full cost of developing new products and technologies. At the same time, replacing the current dual system, where large companies claim through the R&D Expenditure Credit (RDEC) and some smaller loss-making companies use the Enhanced R&D Intensive Support (ERIS) scheme, with a single, impactful 40% credit would cut complexity and give companies the certainty they need to invest. Alongside this, the newly introduced Claim Notification Form can block genuine claims and creates unnecessary complexity; this could be abolished and replaced by a better advance assurance scheme.

“Finally, the overseas restriction, which prevents companies from claiming relief on some R&D work carried out abroad, should be removed. Innovation is global by nature, and the UK government should enable, not limit, collaboration that drives growth, strengthens supply chains, and keeps the country at the centre of global R&D.”

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