Autumn Budget 2025 – Key insights for healthcare, life Sciences, medtech and social care

The Autumn Budget signals confidence in healthcare, life sciences and medtech with £300 million for NHS digital upgrades, the creation of 250 Neighbourhood Health Centres (100 by 2030 initially) via public-private partnerships, and extended venture investment incentives. It commits up to £520 million through the Life Sciences Innovative Manufacturing Fund and introduces new Investment Zones to boost advanced manufacturing and reshore production, alongside £86 billion in long-term R&D funding announced at the June 2025 Spending Review and reaffirmed association with Horizon Europe.

 

Customs reforms propose abolishing low-value import duty relief by 2029 following consultation, increasing costs for medical device suppliers and distributors to key markets such as the NHS and residential care. Higher capital gains tax, frozen National Insurance thresholds until 2031, a £2,000 cap on NIC-exempt pension salary sacrifice from April 2029, and significant National Minimum and Living Wage rises from April 2026 will further pressure margins, especially in social care.

 

Innovation in digital health, advanced therapies and manufacturing is set to accelerate, alongside consolidation for scale and efficiency. With inflation easing and interest rates projected to decline, M&A activity should remain robust. However, global uncertainty persists, driven by what we term the “Trump Pharma Policy Lag” – a slowdown in innovation and investment as companies await clarity on U.S. regulatory frameworks following disruptive policy changes and agency realignments. Domestic healthcare deals will continue to sustain the market, making this a critical time to protect value and prepare for growth into 2026

 

Key Highlights

NHS investment

  • £300m for digital upgrades and 250 Neighbourhood Health Centres (100 by 2030) via PPPs (Public–Private partnership) – opportunities for medtech and digital health innovators.​

 

Life cciences & pharma

  • Venture investment incentives extended.​
  • EMI schemes expanded: employee limit doubled to 500, asset limit to £120m, option holding period extended to 15 years.​
  • VCT & EIS reforms: investment limits doubled for Knowledge Intensive Companies; upfront VCT relief reduced to 20%.​
  • Government signalling interest in improving UK pricing competitiveness; NICE processes likely to feature in that discussion.​

 

Medical devices & supply chain

  • Customs duty relief for goods under £135 planned to be abolished from March 2029, raising import costs (subject to final consultation).​
  • Tariff code simplification and quarterly duty submissions under consultation.​

 

Advanced manufacturing

  • Up to £520m via Life Sciences Innovative Manufacturing Fund and new Investment Zones to reshore production.​
  • Permanent 40% First-Year Allowance from January 2026 for qualifying capital expenditure.​
  • £86bn public R&D funding (June 2025 Spending Review) and reaffirmed association with Horizon Europe.​

 

Tax & regulatory changes

  • CGT relief for Employee Ownership Trusts cut to 50%.​
  • Pension salary sacrifice capped at £2,000 from April 2029; NIC applies above this threshold.​
  • Dividend tax rates rise from April 2026; property and savings income rates increase from April 2027.​
  • VAT threshold frozen at £90k; stricter late payment penalties from April 2027.​
  • New SDRT "listing relief" offers 3-year exemption for UK listings.​

 

Labour costs

  • Significant NLW/NMW increases from April 2026 will raise payroll costs, especially in social care, likely accelerating consolidation and adding further pressure on government budgets and taxpayers.

 

Closing insight

The Budget reinforces confidence in healthcare and life sciences through major NHS investment, advanced manufacturing incentives and R&D commitments. However, rising labour costs, planned import duties and tax changes will pressure margins, particularly in social care and medtech supply chains. These dynamics are expected to drive innovation and consolidation, with M&A activity anticipated to rebound in early 2026 as inflation eases and interest rates fall