Autumn Budget 2025: What it means for Manufacturing & Logistics businesses

Autumn Budget 2025 – What it means for Manufacturing & Logistics businesses

Delivered 26 November 2025

The Autumn Budget 2025 mixes fresh incentives to invest with higher long-term tax and cost pressures. Here’s a focused overview for manufacturers, logistics operators, warehousing and supply chain businesses.

Capital Investment in plant, machinery & fleet

New 40% First-Year Allowance (FYA) from 1 January 2026

A new 40% FYA will apply to most main-rate plant and machinery, including many assets used by manufacturers and logistics businesses.

• You can deduct 40% of qualifying spend upfront in year one.
• The remaining 60% then goes into the pool for standard writing-down allowances.

Important: From April 2026, the main writing-down allowance falls from 18% to 14%, so relief after year one is slower.

Implication: If you’re planning major capex (production lines, warehouse automation, handling kit, fleet facilities), timing now affects the tax economics.

Full expensing & Electric Vehicle (EV) allowances

• Full expensing for qualifying main-rate assets remains in place.
• 100% FYA on zero-emission cars and EV chargepoints is extended to 2027, helpful for greener company cars, vans and depot charging infrastructure.

 

Energy Costs – manufacturing in focus

British Industrial Competitiveness Scheme (BICS)

Alongside the Budget, the government has launched a consultation on the British Industrial Competitiveness Scheme, aimed at cutting electricity costs for around 7,000 electricity-intensive manufacturers by up to £40/MWh from 2027.

This is targeted at:

• “Frontier” manufacturing sectors (advanced, high-tech)
• Foundational industries supplying them, where electricity intensity is high

Wider energy policy changes

The Budget also moves a large share of renewable and policy costs off household electricity bills and into general taxation, which mainly benefits domestic users rather than businesses.

Implication for manufacturers:

• If you’re highly electricity-intensive, BICS could be very material, worth modelling once eligibility rules are finalised.
• For other manufacturers, the Budget doesn’t significantly reduce business energy costs, so efficiency and procurement strategy still matter.

 

Workforce, Wages & Talent

National Living Wage & Minimum Wage – from April 2026

• NLW rises to £12.71/hour
• 18–20 rate increases to £10.85/hour
• 16–17 & apprentices go to £8.00/hour

These increases will hit:

• Shop-floor and line-side roles
• Warehouse operatives and pickers
• Drivers’ mates and yard staff
• Entry-level logistics and production workers

Salary sacrifice pension cap – from April 2029

Only the first £2,000 of pension contributions via salary sacrifice per employee will be exempt from NICs; anything above attracts employer and employee NICs.

Implication: Review reward packages for senior staff, key engineers and leadership who use salary sacrifice heavily.

Income Tax & NI thresholds frozen to 2031

Extended freezes mean more pay will quietly drift into higher bands, raising the effective tax burden on your workforce over time

 

Transport, fuel & road Use – logistics impact

Fuel duty & the 5p cut

• Fuel duty remains frozen at its long-standing rate until April 2026.
• The “temporary” 5p cut stays until September 2026 and is then reversed in stages.

For road haulage and distribution, this provides short-term stability, but costs will start to edge up as the cut is unwound.

New mileage charge for EVs – from 2028

• 3p per mile on fully electric cars
• 1.5p per mile on plug-in hybrids

While this initially targets cars, it signals a clear shift towards taxing road use rather than fuel, which logistics fleets will want to track as it evolves for vans and HGVs.

 

Compliance, HMRC focus & sector pressures

HMRC is being given extra powers and resources to:

• pursue promoters of tax avoidance schemes
• tighten enforcement around minimum wage
• step up activity in construction and CIS (relevant for plant, civils, and some engineering sub-sectors)
• increase general fraud and error checks

For manufacturing and logistics, that means:

• clean payroll and timesheet records
• robust CIS compliance where relevant
• tight control over expenses, benefits and vehicle use
• strong documentation around capital allowances and any R&D claims

 

What manufacturing & logistics businesses should do now

Here’s where it’s worth focusing:

Capital & energy

• Map out capex plans for the next 3–5 years and test scenarios with the 40% FYA and lower Writing Down Allowance (WDA).
• If you’re highly electricity-intensive, keep a close eye on BICS eligibility and model potential savings.
• Consider energy-efficiency investments that can leverage allowances and reduce exposure to volatile prices.

People & cost base

• Build the 2026/27 wage increases into your labour models now (production, warehouse, and logistics roles).
• Review salary sacrifice and wider reward structures for key people.
• Expect more pressure from staff as frozen thresholds push tax burdens up.

Transport & fleet

• Factor in the staged removal of the 5p fuel duty cut from September 2026 into rate and contract discussions.
• For EV and alternative-fuel strategies, recognise that road-use taxation is coming, build this into long-term fleet modelling.

Governance & compliance

• Tighten internal controls around Construction Industry Scheme (CIS), payroll, expenses and capital projects.
• Ensure documentation is strong for any capital allowance or R&D-related claims.

 

How we can help

We support manufacturers, logistics operators and supply-chain businesses with:

• Capital allowance and FYA planning
• Modelling the impact of wage, tax and energy changes on margins
• Group and fleet structuring for tax efficiency
• Cashflow and investment planning for major plant and logistics projects
• R&D and innovation incentives (where relevant)
• Payroll, employer compliance and HMRC risk reviews

If you’d like a tailored walkthrough of what this Budget means for your factory, warehouse or fleet, we can work through the numbers with you and build the changes into your forward plans, please get in touch.

Call 01932 830664, email enquiries@wardwilliams.co.uk or visit www.wardwilliams.co.uk