Autumn Budget 2025 Update

Employment Taxes Update | VAT Update

Mayoral Strategic Authorities

In what it described as a “historic commitment to fiscal devolution,” the government confirmed in the Autumn Budget 2025 that it will devolve at least £13 billion of funding to seven Mayoral Combined Authorities and the Greater London Authority.

The authorities receiving this funding are Greater Manchester, West Midlands, Liverpool City Region, West Yorkshire, North East, South Yorkshire, and the Greater London Authority, collectively covering nearly 40% of England’s population.

This represents a significant expansion of fiscal autonomy, allowing these regions to retain and manage a larger proportion of locally generated revenues and central government funding.

The move is intended to empower local leaders to make investment decisions tailored to the needs of their communities, support economic growth, and enhance public services, marking a substantial step toward more devolved financial governance in England.

Police and Crime Commissioners

Although this was announced prior to the Autumn Budget 2025, we considered it essential to include it as part of our update.

The government has confirmed that Police and Crime Commissioners (PCCs) will be abolished in England and Wales in 2028 at the end of the current electoral cycle.

Their responsibilities for police oversight, budgets, community safety, and victim services will be transferred either to directly elected regional mayors where these exist or to local councils supported by new policing and crime-governance boards.

Ministers argue that the PCC model has suffered from low public awareness and has not delivered consistent improvements in policing.

The abolition of PCCs is expected to free up significant savings, projected to be at least £100 million, which will be reinvested into frontline policing.

This shift will require local authorities to adapt their governance structures to accommodate the new policing oversight responsibilities.

Local authorities will need to work closely with other local leaders, and in areas without elected mayors, establish or strengthen Police and Crime Boards to ensure effective coordination and accountability.

There may also be short-term administrative challenges, including integrating PCC functions, managing budgets, and overseeing community safety initiatives.

Over time, however, the change could allow local authorities to align policing more closely with other local services and priorities, potentially creating a more integrated approach to community safety and resource allocation.

High-Value Property Council Tax Surcharge

The Budget introduces a new measure targeting very high-value residential properties.

This will take the form of an additional council tax surcharge applied to homes with a market value above £2 million. The surcharge is designed to increase the tax contribution from owners of the most expensive properties and is expected to raise approximately £0.4 billion in revenue.

According to the government, this measure aims to improve the fairness of the property tax system by ensuring that those with the highest-value homes contribute proportionately more to local services and public finances.

However, because these properties are unevenly distributed, the measure could widen funding disparities between councils unless central government adjusts existing redistribution mechanisms.

Local authorities may also face initial administrative work to identify eligible properties, update billing systems, and manage potential appeals.

Overall, while the surcharge offers a significant new income stream for some areas, it also raises questions about equity and the balance of local government funding.

Business Rates

The Budget sets out a number of reforms to the business rates system. First, it introduces revised business rate multipliers, which determine how rates rise each year. Under the new structure, retail, hospitality, and leisure properties will benefit from lower multipliers, meaning their rates bills will fall or increase more slowly. In contrast, properties with higher values will face increased multipliers, resulting in higher business rates liabilities for those at the top end of the property market.

The Budget also confirms a new transitional relief scheme to accompany the revaluation scheduled for 2026. This scheme will limit the size of any annual increases in business rates bills, giving businesses time to adjust gradually to changes in their property valuations.

In addition, the government is extending existing arrangements that allow selected local authorities to keep a greater share of the business rates revenue they collect. This is intended to strengthen local financial autonomy and encourage investment by ensuring that local authorities retain more of the proceeds from local economic growth.

Fuel Duty

Fuel duty will remain frozen at its current level until September 2026. This means there will be no increase in the tax applied to petrol and diesel for at least another year, providing continued relief to motorists and businesses facing ongoing cost pressures.

This will not directly affect local authority funding, as fuel duty is a national tax. However, it will indirectly ease cost pressures for local authorities by keeping fuel costs for their vehicle fleets, such as waste collection and social care transport, stable. It may also help control costs for contracted services like bus operators and waste contractors, supporting budgeting and service delivery.

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