How Your Business Can Counteract Increased Business Taxes in the Budget

A Finance & Procurement Perspective

With the latest Budget (the Chancellor will deliver the Budget on Wednesday 26 November 2025) potentially introducing higher business taxes, most organisations are facing tighter margins and
increased pressure to maintain profitability. Whether it's a rise in corporation tax, reduced reliefs, or new levies on international payments, the impact is being felt across departments from Finance to Procurement to Operations.

But while tax increases may be unavoidable, their impact can be mitigated.

Here’s how your business can respond strategically, using both financial and procurement levers to counteract the pressure.

1. Reassess Cost Structures and Supplier Agreements

One of the fastest ways to offset increased tax liabilities is to reduce operational costs:

• Renegotiate contracts with key suppliers, especially long-term agreements that haven’t been reviewed in the past 12–18 months.
• Re-review current agreements deemed untouchable. We have saved organisations significant sums in business insurance reviews when agreements were less than 6 months old.
• Consider volume discounts, early payment incentives, or performance-based pricing.
• Explore group purchasing or consortium buying to leverage economies of scale.

Finance teams should work closely with Procurement to model the cost savings vs tax impact, ensuring that renegotiated terms translate into real margin protection.

2. Optimise Tax-Efficient Procurement Strategies

Certain Procurement decisions can directly influence your tax exposure.

• CapEx vs OpEx: Consider whether leasing or subscription-based models (OpEx) offer better tax treatment than outright purchases (CapEx).
• Location-based sourcing: With new legislation like the proposed HIRE Act in the U.S., sourcing from certain regions may trigger additional tax liabilities. Review your supplier geography and assess whether nearshoring or domestic sourcing could reduce cost and exposure.
• VAT recovery: Ensure your Procurement processes are optimised for maximum VAT reclaim, especially on cross-border purchases.

Finance teams should audit Procurement workflows to ensure tax efficiency is baked into sourcing decisions - not just cost.

3. Invest in Automation and Process Efficiency

Higher taxes mean every pound saved is more valuable. Investing in automation can reduce overhead and improve compliance.

• Automate invoice processing, contract management, and supplier onboarding to reduce manual errors and improve audit trails.
• Use AI-driven spend analytics to identify hidden inefficiencies, duplicate spend and identify cost saving opportunities.
• Implement eProcurement platforms that integrate with Finance systems for real-time budget tracking and tax reporting.

These investments not only reduce costs but also improve visibility, helping Finance teams forecast liabilities more accurately.

4. Reevaluate Global Structures and Transfer Pricing

For businesses operating across borders, increased taxes may prompt a review of entity structures, intercompany agreements, and transfer pricing policies.

• Ensure that intercompany charges for services, IP, or goods are aligned with current tax regulations.
• Consider whether certain functions (e.g. Procurement hubs or shared services) should be relocated to lower-tax jurisdictions.
• Review tax exposure on cross-border payments, especially in light of new legislation targeting outsourcing.

Finance leaders should collaborate with tax advisors and Procurement to ensure global sourcing strategies remain compliant and cost-effective.

5. Strengthen Budget Discipline and Forecasting

Increased taxes can erode profitability quickly if not accounted for in planning cycles. Don’t stick to previous plans and be more agile to update.

• Finance teams should update forecasting models to reflect new tax rates and potential legislative changes.
• Procurement and Operations should align sourcing plans with revised forecasts and budgets, ensuring that cost targets are realistic and achievable.
• Introduce periodic scenario planning to model the impact of further tax changes or economic shocks.

This cross-functional alignment ensures that cost and tax increases don’t lead to budget overruns or reactive decisions later in the year.

6. Communicate with Stakeholders

Transparency is key. Whether it’s internal teams, suppliers, or investors, clear communication about how your business is responding to tax changes builds trust.

• Share updated Procurement guides and budget priorities with suppliers.
• Engage internally on cost-saving initiatives and tax-aware decision-making.
• Provide investors and board members with a clear narrative on how tax increases are being managed.

Finance and Procurement should jointly own communication strategy, reinforcing the message that the business is aligned and proactive, not reactive.

Final Thought: Turn Tax Pressure into Strategic Opportunity

While increased business taxes present a challenge, they also offer an opportunity to streamline operations, strengthen supplier relationships, and improve financial discipline.

By working together, Finance, Operations and Procurement can turn tax pressure into a catalyst for smarter, more resilient business practices.

The key is to act early, collaborate deeply, and think strategically.

If interested how a business can create P&L impactful savings, read our blog Commercial thinking Procurement – is your function creating enough P&L value?